WASHINGTON — Ray Dalio, the founder of the hedge fund Bridgewater Associates, said Sunday he is “worried about something worse than a recession” if President Donald Trump does not properly handle tariffs and other economic policies.
“I think that right now we are at a decision-making point and very close to a recession,” Dalio said on NBC News’ “Meet the Press.” “And I’m worried about something worse than a recession if this isn’t handled well.”
Dalio was responding to a question from moderator Kristen Welker about whether the United States would be likely to dip into a recession because of Trump’s tariff policies.
Dalio warned that “we have a breaking down of the monetary order,” an issue he has spoken about at length on social media.
“We are having profound changes in our domestic order … and we’re having profound changes in the world order. Such times are very much like the 1930s,” Dalio said. “I’ve studied history, and this repeats over and over again.”
Dalio referred to the combination of tariffs, excessive debt and a “rising power challenging the existing power” as changes that are “very, very disruptive.”
“How that’s handled could produce something that is much worse than a recession,” he said.
Specifically, Dalio has warned recently about what he said was the unsustainable growth of U.S. debt and creditors, such as China, holding too much of it, as well as the decline in U.S. manufacturing, leading to a reliance on other countries for necessary items.
Dalio said Sunday the situation could “be managed very well,” urging members of Congress to pledge to reduce the budget deficit by a few percentage points to 3% of the gross domestic product, a measure of the country’s economic activity.
“If they don’t, we’re going to have a supply-demand problem for debt at the same time as we have these other problems, and the results of that will be worse than a normal recession,” he said.
Asked to detail his fears about a worst-case scenario, Dalio said he was worried about “the value of money, internal conflict that is not the normal democracy as we know it, an international conflict in a way that is highly disruptive to the world economy and could even be a military conflict.”
Dalio anticipated the 2008 financial crisis. Bridgewater warned in 2007 that “imbedded risks in the system are quite large” ahead of the eventual financial crisis. A few months later, it said it believed interest rates would rise “until there is a cracking of the financial system,” adding that “no one knows how this financial market contagion will play out.” Months later, the recession began.
Dalio said in a long post on X last week ahead of Trump’s temporary reductions in his sweeping tariff increases that while the duties were “very important developments,” people are “mostly overlooking the vastly more important forces that are driving just about everything, including the tariffs.”
“The far bigger, far more important thing to keep in mind is that we are seeing a classic breakdown of the major monetary, political, and geopolitical orders,” he wrote. “This sort of breakdown occurs only about once in a lifetime, but they have happened many times in history when similar unsustainable conditions were in place.”
This article was originally published on NBCNews.com
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