"Japan is closest to its limits, Europe is a step behind it, the US is a step or two behind Europe, and China is a few steps behind the United States."

I can only imagine the mood in the room was a bit tense after that comment.

Mr. Dalio, founder of the $160 billion investment firm Bridgewater Associates, was invited to speak at the Federal Reserve Bank of New York's 40th Annual Central Banking Seminar yesterday.

Rather than gush about how wonderful the Fed's zero interest rate policies have been since the financial crisis, Dalio gave them a fire hose of reality.

His primary thesis was that the debt supercycle that has lasted for decades is coming to an end, and that there's going to be a "big squeeze".

"The biggest issue," he said, "is that there is only so much one can squeeze out of a debt cycle, and most countries are approaching those limits."