- Bridgewater founder Ray Dalio said Moody's downgrade of the U.S. credit rating does not take into account the risk of the federal government printing money to pay its debt.
- Bond holders would suffer losses due to the depreciating value of the money they are getting paid, Dalio said.
Bridgewater Associates founder and billionaire Ray Dalio warned Monday that Moody's downgrade of the U.S. sovereign credit rating understates the threat to U.S. Treasurys, saying the credit agency isn't taking into account the risk of the federal government simply printing money to pay its debt.
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WATCH HERE"You should know that credit ratings understate credit risks because they only rate the risk of the government not paying its debt," Dalio said in a post .
"They don't include the greater risk that the countries in debt will print money to pay their debts thus causing holders of the bonds to suffer losses from the decreased value of the money they're getting (rather than from the decreased quantity of money they're getting)," the Bridgewater founder said.
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SIGN UP Moody's on Friday one notch to Aa1 from Aaa, citing the federal government's ballooning budget deficit and soaring interest payments on the debt. It was the last of the three major credit agencies to downgrade the U.S. from the highest possible rating.
U.S. Monday as the jumped to 4.995% and the 10-year note yield climbed to 4.521% in response to Moody's downgrade.
"Said differently, for those who care about the value of their money, the risks for U.S. government debt are greater than the rating agencies are conveying," Dalio said.
Money Report
Bridgewater's assets under management dropped 18% in 2024 to some $92 billion, , down from a recent peak of $150 billion in 2021.
