Ray Dalio Warns: U.S. Treasury Risk Greater Than Moody’s Downgrade Suggests
Published: May 19, 2025 | Updated: 15 Minutes Ago
Ray Dalio, founder of Bridgewater Associates, says the real risk to U.S. Treasuries goes beyond Moody’s credit downgrade—pointing to the danger of money printing and inflation eroding bondholder value.
Ray Dalio Says U.S. Treasury Risk Is Bigger Than Moody’s Credit Rating Reflects
Billionaire investor Ray Dalio, founder of the world’s largest hedge fund Bridgewater Associates, issued a stark warning Monday about the true risk facing U.S. Treasuries, claiming that Moody’s recent credit downgrade of the United States underestimates the broader threat.
In a post shared on social media platform X (formerly Twitter), Dalio argued that traditional credit ratings fail to account for the financial impact of excessive money printing, which can silently erode the real value of debt repayments.
“Credit ratings understate credit risks because they only assess whether a government will pay its debts—not whether it will print money to do so,” Dalio wrote.
The Hidden Danger: Inflation from Government Money Printing
Dalio emphasized that bondholders face a greater financial risk from inflation than from default. While Moody’s and other credit agencies focus on the risk of missed payments, Dalio pointed out that repayments in devalued currency still lead to real financial losses.
“The greater risk is that countries in debt will print money to repay, reducing the purchasing power of the money received,” he added. “That’s a different form of loss for bondholders.”
Moody’s downgrade on Friday moved the U.S. credit rating from Aaa to Aa1, citing escalating budget deficits and rising interest payments on federal debt. It marked the final step among the “big three” rating agencies in lowering the U.S. from its once top-tier status.
Market Reaction: Bond Yields Spike, Stocks Slide
Following the downgrade, U.S. financial markets reacted swiftly:
The 30-year Treasury yield surged to 4.995%
The 10-year Treasury yield climbed to 4.521%
U.S. stocks fell sharply amid investor anxiety
These moves reflect growing investor concerns about the long-term stability of U.S. government debt and the potential for inflation-driven losses.
“Real Value Risk” Overshadowing Credit Ratings
Dalio concluded that investors need to look beyond surface-level ratings.
“For those who care about the value of their money, the risk associated with U.S. government debt is greater than what rating agencies are currently indicating,” he said.
Bridgewater Associates: Navigating Volatile Waters
Dalio’s remarks come at a turbulent time for his firm. Bridgewater Associates’ assets under management fell by 18% in 2024, shrinking to $92 billion—a sharp decline from its $150 billion peak in 2021, according to Reuters.
Despite this, Dalio remains one of the most influential voices in global finance, frequently warning about the macroeconomic consequences of unchecked debt and inflation.
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Final Thoughts: A Wake-Up Call for Bond Investors?
Ray Dalio’s criticism of credit agencies like Moody’s underscores a crucial blind spot in how sovereign risk is assessed. While the U.S. may not default outright, inflation from monetary policy may quietly undermine the value of long-term government bonds.
For investors and policymakers alike, Dalio’s message is clear: creditworthiness isn’t just about repayment—it’s about what that repayment is really worth.