Ray Dalio Warns of a Critical Turning Point in the Global Economy
Ray Dalio, the founder of Bridgewater Associates, the largest hedge fund in the United States, recently stated in an interview that the current global economy is at a critical turning point, necessitating caution against a crisis that could be more severe than a recession. He urged the U.S. government to swiftly reduce the budget deficit to 3% of GDP.
(Background: Gold hits a new historic high! The market’s “capital flight to safety” amid Trump’s global tariff war, intensified oil and U.S. Treasury volatility.)
(Context: Trump announces a “national emergency,” tariffs ravage Asian stocks, with the Nikkei index plunging by 3% and South Korea holding an emergency meeting…)
Bridgewater’s Founder Dalio Discusses Global Financial and Political Shifts
Dalio participated in a special interview on the program “Meet the Press” this week, clearly indicating that the current global financial, political, and international order is at a historic turning point, gradually shifting from a U.S.-led multilateral world system to a unilateral system dominated by competition and disputes.
Five Major Forces Driving Human History
Dalio pointed out that there are five major driving forces in human history: financial debt cycles, domestic wealth disparity and political divisions, international power shifts, natural disasters and diseases, and technological changes. He noted that these factors are currently intertwined, rendering the existing global order exceptionally fragile.
He stated that the tariff issues stemming from the current U.S.-China trade frictions are not merely trade disputes, but rather one of the symptoms of global economic imbalances and shifts in international politics. Dalio warned that if the ongoing trade policies remain chaotic and are not properly addressed, it could significantly reduce global economic productivity, potentially leading to a broader and more severe economic turmoil.
Imminent U.S. Debt Crisis: Reducing Debt Deficit is Key
Discussing the domestic economy of the United States, Dalio specifically warned that the current budget deficit is approaching a point of being out of control. He indicated that the current U.S. budget deficit is approximately 7% of GDP, and if it can be timely adjusted to a more stable level of 3%, it would help avoid a worsening debt crisis. However, if the government fails to reach bipartisan consensus on this issue and take concrete actions, the potential debt problems could trigger a crisis similar to the global financial turmoil of 2008 or even lead to a more severe economic collapse.
He suggested that the U.S. Congress should immediately commit to controlling the budget deficit and work through bipartisan cooperation to maintain economic stability, thus preventing further market volatility. He pointed out that from 1991 to 1998, the U.S. effectively reduced its deficit, demonstrating that bipartisan cooperation is both feasible and necessary.
Ongoing Tariff Chaos and Intensified Short-Term Global Market Turbulence
When asked about the tariff policies implemented by the Trump administration, Dalio admitted that the execution of these policies is currently extremely chaotic and destructive, potentially exacerbating global economic uncertainty. This situation is akin to “throwing a massive stone into the global production system,” which not only increases product costs but also undermines the efficiency of global economic development.
Regarding the future trajectory of the global economy, Dalio added that if the tariff and trade friction issues are not skillfully resolved, the global economy is likely to fall into recession. He emphasized that the current U.S. economy is already very close to the brink of recession, and any misstep could lead to a more severe crisis, potentially resulting in catastrophic consequences akin to the Great Depression.
Warnings of International Conflicts and Financial Security Risks: Urging Global Cooperation
Dalio stressed that people must recognize that the current financial risks far exceed economic recession. He particularly warned about the uncertainty surrounding the value of the dollar, which could deliver a fatal blow to global asset holders. He indicated that the financial system and monetary structure today are no longer as stable and reliable as in the past, with a noticeable weakening of the dollar’s debt-bearing capacity.
Dalio further pointed out that historically, every time the monetary order collapses, it is accompanied by severe internal turmoil and serious international conflicts. He even alluded to the potential risks of future international conflicts, including the possibility of military confrontation, thus urging countries to engage in cautious diplomatic negotiations and in-depth cooperation on economic control issues to avoid further deterioration of the situation.
His recently published new book, “How Countries Go Broke,” will be released in June and may provide a more comprehensive and detailed analysis along with response recommendations. However, there is currently no Chinese version available; interested readers can continue to follow updates.
