Ray Dalio on America’s $37 trillion debt problem

• In today’s CEO Daily: Diane Brady talks to Bridgewater founder Ray Dalio.
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Good morning. This past week, I talked with Ray Dalio, the billionaire investor and founder of Bridgewater Associates, about the period of profound political and economic change we’re in right now. In his latest book, How Countries Go Broke: The Big Cycle, he writes about the confluence of forces threatening to undermine U.S. prosperity. (We also ran this excerpt on his views of AI.) Of particular concern to Dalio and others: America’s escalating national debt, which is about to hit $37 trillion and could increase by $2.4 trillion under the Republican bill now moving through Congress.

In Dalio’s view, servicing that debt squeezes out more productive spending, makes us beholden to investors who are increasingly reluctant to buy our bonds (Hello China!) and prompts actions like interest-rate hikes or currency devaluation that can harm the economy. “You get both the central government and the central bank creating debt to pay for debt and you begin a spiral,” he says. “There are no easy answers.”

He also suggests a “3% solution” that involves halving the annual deficit-to-GDP ratio to 3% by cutting spending, raising taxes and lowering interest rates. For investors, Dalio has long preached diversification, which he defines as a portfolio of 15 uncorrelated assets. As for Fortune 500 leaders, Dalio’s advice is to “immunize yourself: What is a currency-neutral position? What is an interest rate-neutral position? Do you have secure funding? What is your flexibility for being able to source?”

“We are coming into a period of much greater risk,” adds Dalio. “I made a lot of money with these kinds of understanding for many years. I’m now at a point in time where I want to pass along knowledge that could be helpful.”

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Contact CEO Daily via Diane Brady at diane.brady@fortune.com

This story was originally featured on Fortune.com