Winter is Coming for U.S. Treasurys: Even Dragons Can't Save Bad Debt!

A Dragon Queen's Decree on Debt

Greetings my loyal subjects! Your Khaleesi Daenerys Stormborn of the House Targaryen First of Her Name Queen of the Andals and the Rhoynar and the First Men Protector of the Realm Lady of the Seven Kingdoms the Unburnt Breaker of Chains and Mother of Dragons (phew that's a mouthful even for me!) brings tidings from a land far far away – a place called… America. Apparently they have debts. Big ones. Bigger than Drogon's appetite after a long flight! And one Ray Dalio a man with more gold than the Lannisters is sounding the alarm.

Moody's Blues: Not Just a Dragon's Breath Away

This Dalio fellow speaks of Moody's one of the 'credit rating agencies' – sounds like a council of Maesters doesn't it? They've downgraded the U.S. credit rating muttering about ballooning deficits and interest payments. It appears that even in this strange land debts must be paid. Unlike some kings I know (cough Robert Baratheon cough) these Americans can't just feast and forget. Dalio claims Moody's isn't considering the possibility of the government printing money like a mad scribe copying books – which as any good Dothraki knows leads to coin being worth less than a handful of sand!

When the Iron Bank Comes Knocking

Dalio wisely points out that agencies like Moody's "only rate the risk of the government not paying its debt." He notes that the real risk lies in inflating away the debt with rampant money printing! It is like burning the Iron Throne to keep warm... a short term solution with devastating consequences. "They don't include the greater risk that the countries in debt will print money to pay their debts thus causing holders of the bonds to suffer losses from the decreased value of the money they're getting (rather than from the decreased quantity of money they're getting)," Dalio said. Such actions would certainly inspire the Dothraki to unleash fire and blood.

A Lannister Always Pays His Debts...Right?

The news from across the Narrow Sea is not good. Stocks are falling and bond yields are rising. It seems even without dragons circling overhead markets can sense a storm brewing. Dalio warns "for those who care about the value of their money the risks for U.S. government debt are greater than the rating agencies are conveying." Perhaps these Americans should consult with Tyrion; he always had a knack for dealing with tricky situations – usually involving wine and wit.

Bridgewater's Burning Bridges?

Now even Dalio's own kingdom Bridgewater seems to be feeling the heat. Their assets under management have dropped. It's a reminder that even the wealthiest houses can face misfortune. It is just like the Targaryen's downfall when we were ousted from the Iron Throne!

Fire and Blood...or Just Financial Ruin?

So what does this all mean? It means that winter is coming not just in Westeros but perhaps in the lands of these Americans as well. Whether they face fire and blood or simply financial ruin remains to be seen. But as your Khaleesi I urge you to be vigilant and prepare for whatever storms may come. After all as I always say "I will take what is mine with fire and blood!" – though perhaps in this case a savvy financial advisor might be more useful. Now if you'll excuse me I have some dragons to feed…and perhaps a kingdom to rebuild.