This episode of The Power of Zero Show revolves around a recent Ray Dalio video in which he issued warnings about the U.S. debt crisis.

In the clip, Dalio appears to be giving America three years to get their act together and to right the fiscal ship of state.

Dalio mentions the draft of his new book that goes through the mechanics of the debt – and highlights the supply-demand problem he believes will occur if the deficit doesn’t go from the current 7.2% of GDP to about 3% of GDP.

Dalio touches upon what people should do when there isn’t an adequate supply-demand balance.

He believes that looking back at history will show you that the current problems are the results of history repeating itself.

A recession isn’t the one thing Dalio is afraid of… the breakdown of the monetary order is! 

Host David McKnight talks about the bid other countries may have on the U.S. fiscal debt, as well as the related crisis of confidence of sorts.

According to a recent Penn Wharton study, if the U.S. doesn't right their fiscal ship of state by 2040, no combination of raising taxes and/or reducing spending will arrest the financial collapse of the nation.

David believes that in the next 10 to 15 years, the U.S. is likely to need huge infusions of capital to avoid a financial collapse, the likes of which we haven’t seen since the Great Depression.

What should you do? If you have the lion’s share of your Retirement Savings, IRAs or 401(k)s, you need to act now while tax rates are historically low.

Since we’re on the cusp of Trump extending his tax cuts for another 8 years, it’s important to know that, if you count 2025, we’ll have historically-low tax rates for another 9 years.

David is in favor of taking action before tax rates increase, also because he believes that, come 2034, tax rates aren't going to simply revert back to what they were in 2017.

If the American fiscal ship doesn’t get right on time, we could go back to seeing high tax rates that were part of the past – such as 94% in the last two years of World War II, or 89% as it was throughout the entire decade of the 70s.

 

 

Mentioned in this episode:

David’s national bestselling book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free video series)

@mcknightandco on Twitter 

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Ray Dalio

Penn Wharton