Ray Dalio expects the US to hit a full-blown debt crisis within three years, which would be bad news for the dollar, bond investors, and American power abroad.

• The government spends about 40% more than it takes in, and has for years.
• Interest payments on that debt keep growing, crowding out everything else the government wants to spend on.
• Dalio sees bond yields heading toward 6%, which makes the debt pile up even faster.
• Trump has hinted inflation could help shrink the debt, but printing money to pay it would weaken the dollar and scare off buyers of US Treasuries.
• Once a country tips into a debt crisis, getting out is nearly impossible — Japan has been stuck in a slow decline for decades.

Outlook: Expect more pressure on the dollar and bond markets, and more US pullback from overseas military bases as the bills get harder to pay.