American financier Ray Dalio. Photo:Bloomberg/Getty Images
The global economy is approaching a critical point, according to Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates. In an interview with NBC’s Meet the Press programme, the financier, who predicted the 2008 financial crisis, made a number of alarming predictions that have already resonated with business and political circles, The Guardian reports.
“We are at the threshold of a big choice. If these changes are not well managed, we will get something much worse than just a recession,” said Dalio.
According to the billionaire, the current situation is reminiscent of the events of the 1930s – a period of profound changes in the world order, political crises, financial disasters and the rise of radicalism. He stressed that the current economic imbalance includes:
- Huge US budget deficits;
- Growth of public debt;
- Hacks in the global trade chain;
- Undermining the international monetary system;
- A return to economic nationalism.
The expert paid special attention to the new duties imposed by the Donald Trump administration. The current US president has announced a 145% increase in tariffs on Chinese goods, which has already caused excitement in global markets.
“History is repeating itself. Such steps are a typical scenario: the rise of protectionism, political pressure, and the breakdown of alliances. If we add to this the destabilisation of economic mechanisms, we will get an extremely dangerous mix,” warns Dalio.
“The monetary order is collapsing”
Ray Dalio notes that the current state of the economy is no longer a classic recession. According to him, we are witnessing the “disintegration of the monetary order” in which the world has lived for the past decades.
“A recession is two quarters of falling GDP. But what we have now is much deeper. It is a game changer, a geo-economic restructuring,” he stressed.
He also expressed concern about the growing polarisation in American society, calling on politicians to govern responsibly.
“In the US, the budget deficit could exceed 7% of GDP if the right steps are not taken. I call for what I call the ‘3% commitment’ – this is the limit to which the deficit must be brought in order not to lose investor confidence and not to drag the economy into the abyss,” the financier said.
Trump’s tariffs: stimulus or chaos?
When asked by a journalist whether he considered Donald Trump’s approach to be dangerous, Dalio responded diplomatically:
“There is logic in the idea of restoring production and creating jobs in the US. But the key question is how exactly this is implemented. If it is done in a balanced manner, with quality negotiations, it can be constructive. But if it is done chaotically, with aggression and without a plan, it is a path to crisis.”
The expert believes that the world still has a chance to avoid shocks if the key players, in particular the US and China, can reach an agreement and restructure global economic relations without confrontation.
Financier Ray Dalio warns that the world is on the verge of a deeper economic crisis than the recession. The reason is trade wars, rising debts, and the destruction of the monetary order. Trump’s tariffs only exacerbate the situation.
