Conversation with Ray Dalio: Why I Only Trust Gold, Not Bitcoin?

Guest: Ray Dalio, Founder of Bridgewater Associates

Host: David Sacks

Podcast Source: All-In Podcast

Original Title: Ray Dalio: “AI Is Eating Everything – and It Might Eat Itself”

Release Date: March 3, 2026

Key Takeaways

In his third appearance on the All-In Podcast, renowned investor Ray Dalio provided an in-depth analysis of the severity of the U.S. debt crisis and offered predictions on its potential trajectory. He detailed the five major forces reshaping the global order, the structural constraints facing the Government Efficiency Department, the drivers behind gold hitting new all-time highs, the reasons for Bitcoin’s underperformance, the real story behind tariffs and trade 定义cits, and explained why he believes the U.S. may be nearing the brink of collapse.

Highlights Summary

On the Nature of Debt and the Economy

• The debt cycle issue is like the circulatory system of the human body. When debt servicing costs grow relative to income and become unpayable, it’s like plaque building up in the arteries, squeezing out other expenditures.

On the Structural Dilemma of Government Reform

• It’s not easy to make an efficient government more efficient. Trying to reform in a ‘surgical’ manner, to be both effective and fast while also not provoking too much opposition, is almost impossible.

On the Underlying Logic of Money

• Mechanically, money is essentially a debt. When you hold money, you are actually holding a debt instrument, which is just a promise that someone will give you money. When central banks have too much debt, their power is to print money.

On the Irreplaceability of Gold

• Gold is the only long-term historical asset that can be transferred, cannot be manufactured in large quantities, and does not rely on anyone else’s promise. In other words, most currencies, debts, stocks, etc., are just promises from someone to deliver purchasing power.

On the Differences Between Bitcoin and Gold

• Bitcoin lacks privacy; its transactions can be monitored and may even be indirectly controlled. Central banks would not want to buy or hold Bitcoin. Additionally, there are questions about the development of new technologies, such as whether quantum computing will impact Bitcoin.

On the Misunderstanding of Tariffs and Inflation

• A common mistake economists make is not including taxes in inflation. I mean, if your tax burden increases, that’s also inflation. Why should that be any different from how a rise in house prices affects you?

On the Three Keys to a Nation’s Success

• First, educate your children well. Second, society needs to provide an orderly, civilized environment. Third, you must avoid war. If these three things are done, the country will succeed. This is a fact proven repeatedly by history.

On the Endgame of Social Division

• We are moving towards that “war,” and in fact, we are already in it. When the positions people support become more important to them than the system itself, the system is in crisis.

On the Paradox of AI “Eating Itself”

• AI seems to be eating everything, but it might ‘eat itself.’ It may not generate enough profit… China might view AI as infrastructure like electricity, making it free for everyone to use. In that case, how do we compete?

On the Metaphor for America’s Current State

• This is precisely our problem—the need for instant gratification and ignorance about whether something will be productive.

The Five Forces Determining America’s Future

David Sacks: Looking back at the government’s actions, congressional activities, and economic performance over the past year, I want to ask you a question: Are we on the right path now? Or has nothing really changed compared to a year ago? Or perhaps, are we moving too slowly?

Ray Dalio:

I have studied the major cycles of the past 500 years and found that five major forces intertwine to determine the answer to your question. The first is the issue of debt and money, which I will elaborate on later. The second is domestic division, including gaps in wealth and values. These gaps lead to irreconcilable differences between the left and the right, which in turn affect tax policies, democracy, and how everything operates. The third is major power conflict internationally. This is the classic pattern of a ‘rising power challenging an existing power,’ changing the global order. The fourth is technological advancement. In every historical cycle, technology has played a significant role. Finally, there are natural disasters, including droughts, floods, and pandemics.

When we talk about order, we mention monetary order, and all monetary orders eventually collapse for the same reasons. Similarly, all political orders, whether domestic or international, also change. The U.S. political order has been relatively stable for the past 250 years, but it has experienced one civil war. Internationally, order shifts more frequently, such as the transition from a unipolar to a multipolar world, and technology is constantly changing the world.

Now, since these factors exist, let me further explain the government’s fiscal situation and answer your question. A country’s economic operation is basically similar to that of a company or an individual, except the government has the ability to print money. If we view the government as a company or an individual, its spending is about $7 trillion, while its revenue is only $5 trillion, resulting in a deficit of 40% of spending. The U.S. has been running deficits for a long time, with current debt at 6 times its revenue, allowing for projections based on this.

The debt cycle issue is like the circulatory system of the human body, with capital markets pumping credit to different parts of the economy. If this credit is used to increase productivity and generate enough income to service the debt, it’s a healthy process. But the problem is that when debt servicing costs grow relative to income and become unpayable, it’s like plaque building up in the arteries, squeezing out other expenditures.

现在， the U.S. has a $2 trillion deficit, half of which is interest payments, and we also need to roll over $9 trillion in maturing debt. If you put this situation on a company or an individual, it’s clearly a problem. To stabilize the situation, a deficit of 3% of GDP might be a reasonable level. But the current situation is very unhealthy, not only because it squeezes spending but also because there is an issue with the supply and demand for debt.

We need to roll over $9 trillion in maturing debt and sell an additional $2 trillion in debt. So who are the buyers of this debt? Partly domestic buyers and partly foreign buyers, accounting for about one-third. From their perspective, this situation is riskier.

First, dollar-denominated debt already constitutes a high proportion of their portfolios, possibly beyond prudent investment levels, and there is also geopolitical risk. For example, you can imagine potential conflicts with China, or even tensions with Europe. Europeans might worry about being sanctioned, such as debt service payments being halted due to sanctions, and the U.S. also needs to worry about whether it can attract sufficient capital.

The situations I’ve described have occurred repeatedly throughout history. For instance, we saw similar dynamics between 1929 and 1945. So, this fiscal situation itself is unhealthy for the U.S. government, but the bigger problem is that other factors exacerbate these issues.

Why Government Reform Is Almost Impossible

David Sacks: You mentioned this issue before and offered a diagnosis: if we could reduce the deficit-to-GDP ratio to 3%, it could mitigate the impact. But that hasn’t happened. At this time last year, we had high hopes for Elon Musk’s decision to lead the Government Efficiency Department. He planned to implement some drastic reforms, including cutting government spending, cracking down on fraud, etc.

Do you think the failure of this reform was due to problems with the actions taken themselves, or because at this stage of the cycle, the entire system has become unchangeable? Is it because there is too much capital flowing in the economy, the entire economy is too dependent on this capital, and too many individuals and businesses rely on it, making us structurally unable to escape this predicament? Does this attempt tell us whether government reform is even possible at this stage?

Ray Dalio:

It’s not easy to make an efficient government more efficient. Especially when action must be taken quickly, because there is electoral pressure, and people generally dislike these reforms, you might ultimately lose popular support. Furthermore, in our society, whatever you do will be criticized and questioned. This also raises a question: Can democracy and our system truly support an administrative leadership model that is both efficient and acceptable to everyone?

For example, when we talk about cutting spending, programs like school lunch programs get cut. Trying to reform in a “surgical” manner, to be both effective and fast while also not provoking too much opposition, is almost impossible.

If you look back at history, from a political perspective or just common sense, you’ll find that finding an administrative leadership model that satisfies the majority while pushing reforms quickly is a very difficult challenge.

David Sacks: There was also a major recent news story about potential massive fraud in public funds in Illinois. For instance, some non-existent daycare centers received billions of dollars. Do you think this is a symptom of the current cycle stage? How do you see this situation relating to the issues we’re discussing?

Ray Dalio:

Yes, this is indeed a manifestation of this cycle stage. If you want a well-managed government, you have to ask yourself: How well can the government actually be managed? For example, go to the Department of Motor Vehicles, and you’ll see how big, complex, and chaotic the system is. So, when you see these inefficiencies, are you surprised? You probably aren’t.

Gold vs. Bitcoin

David Sacks: You mentioned before that part of your portfolio is in gold, and the price of gold has risen from $2,900 to $5,200 per ounce. How has gold performed over the past year? Is it because the market has finally realized the cycle stage you’ve been mentioning for years, or because China has structurally abandoned the dollar and U.S. Treasuries, turning more to gold? Or is it because other central banks are also shifting to gold? Or because individual speculators and market participants have significantly increased their interest in gold?

Ray Dalio:

This is related to the big cycle. What we need to understand is that gold is not just a speculative precious metal as most people think. Gold is one of the oldest, most stable forms of money and the second-largest reserve currency held by central banks. Therefore, for various reasons—economic supply and demand, politics, geopolitics, etc.—central banks themselves are buying gold to increase their reserves. At the same time, individuals and other investors are also looking for an alternative currency.

The question is, what is money? Mechanically, money is essentially a debt. I mean, when you hold money, you are actually holding a debt instrument, which is just a promise that someone will give you money. As I mentioned before, when central banks have too much debt, their power is to print money. If you understand this, then you can see what’s happening now. The key question is, David, what kind of money do you think is safe?

David Sacks: I want a currency backed by an asset, an asset with actual physical limitations.

Ray Dalio:

Especially an asset that can be transferred from one place to another. After all, money is both a medium of exchange and a store of wealth. If a country’s central bank or government wants to pay another government, it needs real money, not fixed assets like buildings. If you want to trade, you must trade with something that can be transferred. And gold is the only long-term historical asset that can be transferred, cannot be manufactured in large quantities, and does not rely on anyone else’s promise. In other words, most currencies, debts, stocks, etc., are just promises from someone to deliver purchasing power.

Wealth and money need to be distinguished. Wealth can exist in forms like stocks, buildings, companies, but you can’t spend this wealth directly. When you want to spend, you need to convert wealth into money. And now, we have a very high ratio of wealth relative to money. The problem is that when you try to convert wealth into money, they might choose to print money. This has been happening since we’ve had fiat currency.

David Sacks: So, when you communicate with market participants, are they converting wealth or money into gold? In the market cycle of dollar-denominated gold value, how much room for growth is left?

Ray Dalio:

I usually observe who holds which assets, including the assets held by central banks and the composition of these assets. I look at the ratio of wealth to money, or wealth to gold. We can see that the total amount of wealth and the amount of other currencies held by central banks are enormous relative to hard money like gold.

The price of gold has risen from a very low level to a high level, and this price increase and change in asset composition have almost returned to historical average levels, though not completely. However, because the ratio of total wealth to money is still very high, this remains a major issue.

A practical example is the potential risk of a wealth tax. Someone might ask: “Are we in a bubble now?” For instance, are AI-related stocks and other similar stocks in a bubble? But we know that a characteristic of a bubble is that it creates demand for money, which forces people to sell assets to obtain funds to meet this demand.

Typically

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