Ray Dalio, the billionaire hedge fund manager of Bridgewater Associates, said over the weekend that he’s worried about “something worse than a recession” because of President Donald Trump’s trade war.
“I think that, right now, we are at a decision-making point and very close to a recession,” Dalio said on “Meet the Press” when asked if the U.S. was headed toward a recession because of the president’s tariff policies. “And I’m worried about something worse than a recession if this isn’t handled well.”
Dalio’s comments come in response to weeks of tumult in the global markets because of Trump’s ever-changing policies.
The Bridgewater founder likened the current economic climate to that of the 1930s, saying, “I’ve studied history. And this repeats over and over again.” He added that we currently “have a breaking down of the monetary order.” He said the current mix of tariffs, high debt, and China (“a rising power challenging existing power,” the U.S.) is “very, very disruptive.”
“How that’s handled could produce something that is much worse than recession,” he said.
After Trump announced his 90-day pause on most tariffs, Dalio wrote on X (formerly Twitter) that negotiating with China would be a “win-win”— namely, a deal that appreciates the Yuan against the dollar that’s “achieved by the Chinese selling dollar assets, while also easing their fiscal and monetary policies to stimulate their demand.”
On “Meet the Press,” Dalio said, “We are having profound changes in our domestic order… and we’re having profound changes in the world order.”
Kristen Welker, who was moderating the panel on the NBC (CMCSA+1.99%) show, noted that Dalio predicted the 2008 recession and pressed him on what his comments about the current state of the country mean. He said the U.S. is “at a juncture.”
Dalio said the situation could be “managed very well” if members of Congress take what he calls the 3% pledge — that they will “in one way or another” reduce the budget deficit to 3% of the country’s gross domestic product (GDP).
“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,” Dalio said. “And the results of that will be worse than a normal recession.”
He said the worst-case scenario here is “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.”
When asked by Welker what his biggest fear is in terms of a financial crisis, Dalio said he was worried about the value of money, adding, “We’re going to be in a situation where, if that storehold of wealth is in jeopardy because there’s too much supply and demand and so on and we have a monetary inflation. We will have great disruptions.”
“And that could be like the breakdown of the monetary systems of ’71. It could be like 2008. It’s going to be very severe,” Dalio said.
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