Billionaire hedge fund mogul Ray Dalio says he fears “something worse” than a recession resulting from President Donald Trump’s global tariffs.
The Bridgewater Associates founder, who correctly predicted the 2008 financial crisis, was speaking on NBC News’ Meet the Press Sunday when he said that Trump’s tariffs could shake the very foundations of the global economy and even descend into armed conflict.
“Right now we are at a decision-making point and very close to a recession. And I’m worried about something worse than a recession if this isn’t handled well,” he warned.
Dalio explained that the economic picture could be shifting, and a re-ordering could create an environment of great conflict, replacing generational synchronization. “We are going from multilateralism, which is largely an American world order-type of thing, to a unilateral world order in which there’s great conflict,” he said.
Pressed to be more specific on what he thinks could happen due to this environment, Dalio said the world could even spiral into military conflict. “To be very specific, the value of money, internal conflict that is not the normal democracy as we know it, and international conflict in a way that is highly disruptive to the world economy and could even be a military conflict, just as these breakdowns have occurred before,” he said.
Dalio pointed out that the new “unilateral” system could replace a system of co-operation that has been in place since the aftermath of World War II. He also named five elements which, when in disharmony, create disarray.
“There are basically five big forces through history that drive everything,” he said. One force, he said, is the “money-credit-debt economic cycle.”
Another is “internal conflict” through “differences in wealth and values [which cause] a conflict that we’re seeing changing our political order.”
The third is the “great world order.”
“So the first is changing our monetary order and the second is changing our political order internally and then the third is the great world order, how countries deal with each other when there is a rising power challenging the existing power,” he said.
Acts of nature and technology are the other two forces, Dalio said.
The way Trump has upset these forces has had knock-on effects on the global economy, he argued. “So far [the tariffs have been] very disruptive,” he said, adding that more clarity will be on offer at the end of Trump’s 90-day pause on his latest slew of levies.
“We have a new order that began in 1945, a new monetary order and a new geopolitical order, and these go in cycles that can be measured—and I worry about the breakdown of that kind of order,” he said.
Dalio said, however, that a breakdown “doesn’t need to happen,” because Trump’s goals could be achieved in a more “orderly way.”
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