Bridgewater Associates founder and billionaire Ray Dalio warned Monday that downgrades Moody’s US sovereign credit rating underestimated the threat to the US Treasury Department.
“You should know that credit ratings only assess the risk that the government does not pay debt, so you should keep your credit risk modest,” Dario said in a post on social media platform X.
“They don’t include the great risk of debt countries printing money to pay their debt, so bond holders will lose money not from the decline in the money they are getting), but from the decline in the value of the money they are getting,” the founder of Bridgewater said.
Moody’s on Friday reduced the US credit rating by one notch from AAA to AA1, increasing the federal government’s inflated budget deficits and interest payments on debt. This was the last of three major credit institutions that would downgrade the US from the highest possible rating.
U.S. stocks fell Monday as 30-year Treasury bond yields jumped to 4.995% and 10-year note yields rose to 4.521% in response to Moody’s downgrade.
“To put it another way, for people who care about the value of money, the risk to US government debt is greater than what rating agencies are telling them,” Dario said.
Bridgewater’s assets under management fell 18% in 2024 to about $92 billion, down from its recent $150 billion peak in 2021.