The Blubber

Bridgewater Associates founder and billionaire investor Ray Dalio issued a stark warning on Monday, arguing that Moody’s recent downgrade of the U.S. sovereign credit rating fails to reflect the full scope of risk facing U.S. Treasury holders—particularly the threat of the government resorting to money printing to service its debt.

“Credit ratings understate the true credit risks,” Dalio wrote on X (formerly Twitter). “They only reflect the likelihood that a government won’t pay its debt, not the bigger danger—that governments will print money to meet their obligations, which reduces the value of the payments bondholders receive.”

Dalio emphasized that such monetary responses could result in losses for investors—not because they’re receiving less money, but because the money itself is worth less.

On Friday, Moody’s downgraded the U.S. from its top-tier Aaa rating to Aa1, citing the growing federal budget deficit and surging interest costs. The move marked the final downgrade from the big three credit rating agencies, following similar decisions from Fitch and S&P in recent years.

Markets reacted sharply on Monday. U.S. stocks fell, and bond yields climbed, with the 30-year Treasury hitting 4.995% and the 10-year rising to 4.521%, reflecting investor concerns about government debt.

“For those focused on preserving the value of their money, the risks associated with U.S. government debt are more serious than the rating agencies suggest,” Dalio added.

Bridgewater Associates, once managing as much as $150 billion, saw its assets under management fall 18% in 2024 to around $92 billion, according to Reuters.