Ray Dalio warns of economic turmoil amid US policy shifts
"Right now we are at a decision-making point and very close to a recession," admitted Ray Dalio, the billionaire director of the world's largest hedge fund, Bridgewater. He believes Congress should address the federal deficit to prevent the USA from facing something worse than a recession. Dalio also criticised Donald Trump's trade policy.
The billionaire expressed concerns that the chaos associated with Trump's trade and economic policies poses a threat to the global economy.
Right now we are at a decision-making point and very close to a recession. And I’m worried about something worse than a recession if this isn’t handled well," Dalio assessed on the "Meet the Press" programme on CNBC News.
The end of the American order?
Ray Dalio, who has long argued that China should not be underestimated, expressed concerns on American television about trade disruptions and the increasing US debt. He also highlighted the importance of maintaining the global balance established after the end of World War II, warning that the United States is losing its position as a hegemon.
"We are going from multilateralism, which is largely an American world order type of thing, to a unilateral world order in which there’s great conflict," he stated.
The 75-year-old explained that five elements influence the course of history: the economy, internal political conflict, international order, technology, and natural disasters such as pandemics and floods. Part of this narrative includes Donald Trump's trade policy, which has an understandable goal but is being implemented in a "very disruptive" way.
Dalio also emphasised the need to reduce the federal deficit to 3% of GDP. He warned that failing to do so could create problems with the demand and supply of debt simultaneously. "The results of that will be worse than a normal recession," he added.
"The very value of money is at stake. A breakdown in the bond market, combined with events like internal and international conflict, could be an even more severe shock to the monetary system than President Richard Nixon’s cancellation of the gold standard in 1971 and the global financial crisis in 2008," he noted.
Ray Dalio is the founder and co-manager of the hedge fund Bridgewater Associates, one of the largest firms of its kind, managing assets estimated at $124 (€109) billion. Dalio's wealth is estimated at around $14 (€12) billion. During the last US presidential elections, he supported neither Donald Trump nor Joe Biden, referring to the former as a "fascist" and describing Biden as "weak." Ultimately, Biden withdrew from the race, and Kamala Harris contested the White House, losing to Trump.
