Ray Dalio, the founder of Bridgewater Associates, a major hedge fund, recently expressed deep concern about the future of the U.S. economy, warning that if President Donald Trump mishandles tariffs and other economic policies, the country could face a crisis worse than a recession.
Speaking on NBC News’ Meet the Press, Dalio emphasized that the U.S. is at a crucial decision-making point. “Right now, we are very close to a recession, and I’m worried about something worse than a recession if this isn’t handled well,” Dalio said.
Dalio’s remarks came in response to a question from moderator Kristen Welker, who asked if Trump’s tariff policies would lead to a recession. The billionaire investor explained that the current situation is far more complex than just the potential for an economic downturn. According to Dalio, the U.S. is facing “a breakdown of the monetary order,” a challenge he has frequently addressed on social media.
“We’re witnessing profound changes in both our domestic order and the global order, and these times are very much like the 1930s,” Dalio stated. “I’ve studied history, and this pattern repeats itself over and over again.”
Dalio explained that tariffs, excessive national debt, and China’s rising influence are all contributing factors to these potentially disruptive changes. He warned that if not properly managed, the situation could spiral into something far worse than a simple recession.
A major point of concern for Dalio is the unsustainable growth of U.S. debt, with China and other foreign creditors holding significant portions of that debt. This reliance on external entities, Dalio argued, has led to a weakened manufacturing sector in the U.S., making the country overly dependent on imports for essential goods.
Dalio also addressed the issue of the U.S. budget deficit. He urged Congress to reduce the deficit by a few percentage points, aiming to bring it down to 3% of the Gross Domestic Product (GDP). If the deficit continues to grow unchecked, Dalio warned, the country would face a serious supply-demand imbalance for debt, which could lead to economic consequences far worse than a typical recession.
“If they don’t act now, we’ll have a supply-demand problem for debt at the same time as these other problems, and the results of that will be worse than a normal recession,” Dalio explained.
Dalio further outlined his worst-case scenario: “I’m worried about the value of money, internal conflicts that disrupt democracy as we know it, international conflicts that could disrupt the world economy, and even the possibility of military conflict,” he said.
Dalio has a proven track record of economic predictions. In the lead-up to the 2008 financial crisis, Bridgewater Associates warned about the risks building up in the financial system. Dalio’s firm predicted that interest rates would continue to rise until they caused a breakdown in the economic system, a forecast that turned out to be correct when the recession hit.
Dalio recently posted on X (formerly Twitter) that while Trump’s temporary reduction in tariff increases was a significant development, it’s just one part of a much larger issue. “The far bigger, far more important thing to keep in mind is that we are witnessing a classic breakdown of the major monetary, political, and geopolitical orders,” Dalio wrote. “This kind of breakdown happens only once in a lifetime, but it has occurred many times in history when similar unsustainable conditions were present.”
Dalio’s warning underscores the gravity of the situation the U.S. faces, as it contemplates its economic future amidst growing global tensions. While he hopes that the problem can be managed, his concerns about the potential for a worldwide crisis remain high.
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