Although Bridgewater Associates founder Ray Dalio doesn’t see a market crisis in the near term, he believes that Americans have accumulated more debt than their assets and income can support. This according to a recent article in The Wall Street Journal.

This will “drag” on growth and markets, says Dalio, leaving the economy “acutely vulnerable” to higher interest rates, arguing that the Fed is now being forced to balance containing inflation through rate hikes with the long-term need for low rates to “work off the debt overhang and sustain high asset prices.” This balancing exercise becomes tougher over time, says Dalio.

The article notes that, in 2007, Dalio’s team asserted that Americans’ growing debt service costs were surpassing cash flow, paving the way for a crisis. Although Dalio praises the Fed’s actions in 2007 (cutting short-term rates to zero and buying bonds), he says a similar tack would be tough today. “Just as the Fed can’t cut rates much,” the article says, “it can’t raise them much either, or debt servicing would swamp cash flow and assets prices would sink.”

The promise of deregulation and lower taxes, according to Dalio, is not “changing the world as we know it.”  His biggest worry, the article says, is that “lower corporate taxes and higher stock prices do nothing for the bottom 60% of households who own almost no assets and whose stagnant wages are the mirror image of expanding profit margins, feeding resentment and political polarization.”