Can't raise taxes. Can't cut benefits. Dalio says that's the crisis.

Another Tuesday!

Hello, Curse and Coffee friends,

Today, we explore Ray Dalio’s warnings about the economic crisis.

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The take: Everyone knows the debt is unsustainable. Dalio's point is darker: the politics make it unsolvable. The trap is locked from the inside.

What happened: Bridgewater founder Ray Dalio told CNBC on Monday that the global economy faces an "unusually precarious" two years ahead, with debt cycles, political polarization, and geopolitical tensions converging.

Why it matters: "Every country cannot continue to accumulate the debt they have, yet politically they can't raise taxes and they can't cut benefits. So they're stuck." The math demands action. The voters forbid it. That's a diagnosis.

What to watch: The next Treasury auction that doesn't clear, or the next debt ceiling vote that goes to the wire. Dalio warns the US will soon "have to sell a quantity of debt that the world is not going to want to buy." When demand falters, the trap springs.

Dalio compared the current moment to 2000. That distinction matters: a slow grind—more brutal to time, easier to ignore, then impossible to escape.

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Call it democratic paralysis.

"Populism of the left and populism of the right" means neither party can touch taxes or benefits without losing elections.

So the debt compounds. The interest compounds. And the political system watches.

Interest payments on US debt nearly tripled over five years, from $345 billion in October 2020 to $981 billion in October 2025.

The Congressional Budget Office projects interest costs will hit $13.8 trillion over the next decade, up from $4 trillion over the last one.

That's money that can't fund roads, defense, or healthcare. It just services prior spending.

To fix it, you'd need to cut the deficit from 7.2% of GDP to roughly 3%.

That's the math.

The politics?

Both parties just passed legislation adding $3.4 trillion to deficits over the next decade.

Dalio's advice is counterintuitive: "You don't want to get out of it just because of the bubble—you want to look for the 'pricking.'"

Stay invested, but watch for the trigger.

When monetary tightening or forced asset sales start, that's your signal.

The mechanics, not the headlines.

The case for calm: The US has run deficits before. The dollar remains the reserve currency. Interest rates can fall. Growth can surprise. Dalio has warned of doom before, and doom didn't arrive on schedule.

The case for worry: Debt held by the public is now as large as the entire economy, beyond any point outside of a world war. Interest payments already exceed defense spending. And the politics to fix it are getting worse, not better.

Our read: A system running out of exits. Your mortgage rate, your portfolio, your retirement timeline—all of it assumes someone finds a door. Dalio's saying: start looking for the fire escape.

Joint Economic Committee — December 2025 Monthly Debt Update

"Over the past year, the rate of increase averaged $6.12 billion per day, $255.04 million per hour, $4.25 million per minute, or $70,843.42 per second."

Why it matters: At the current rate, the US will hit $39 trillion by approximately March 2026.

[Full Report]

Interest on US debt: $11 billion per week. Defence budget: $886 billion per year. The interest is catching up. [Fortune]

🔗 Dalio's full CNBC interview — On bubbles, the Middle East as "Silicon Valley for capitalists," and why you shouldn't sell just because valuations are stretched.

🔗 Michael Burry's AI bubble thesis — The Big Short investor deregistered his fund and launched a $379/year Substack called "Cassandra Unchained." He thinks the AI boom is 1999 all over again.

Join your team of caffeinated skeptics.

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