Ray Dalio, the founder of Bridgewater Associates, a hedge fund known for its foresight during the 2008 financial crisis, has raised concerns about the state of the U.S. economy under President Donald Trump’s trade policies. While many see the growing trade war and escalating tariffs as a precursor to a recession, Dalio warns that the risks go far beyond mere economic downturns. In a stark message, he cautioned that the U.S. may be facing a crisis worse than a recession.
A decision point for the US economy
In a recent appearance on NBC’s Meet the Press, Dalio stated, “I think that right now we are at a decision-making point and very close to a recession.” However, his concerns extend further. “I’m worried about something worse than a recession,” Dalio said, stressing the potential for much deeper disruptions. The 73-year-old billionaire and investor has been vocal about the unsustainable conditions that could destabilise the global economy, pointing to the rise in U.S. debt, the growing tensions between global powers, and the impact of President Trump’s economic policies.
The breakdown of global systems
Dalio’s critique focuses on the broader breakdown of the global monetary, political, and geopolitical orders. “We are having profound changes in our domestic order... and we’re having profound changes in the world order,” he observed, drawing parallels with the upheavals of the 1930s. In Dalio’s view, the confluence of tariffs, excessive national debt, and a rising global power challenging the U.S. could trigger a chain of events far worse than a typical recession.
Specifically, Dalio has expressed deep concern about the unsustainable growth of U.S. debt, which, at 121% of GDP by late 2024, is far higher than the 64% recorded in 2008. Coupled with the reliance on foreign creditors like China, the strain on the U.S. financial system could lead to disastrous consequences. Dalio warned that without addressing the national debt and pledging to reduce the budget deficit, the U.S. risks entering a crisis where debt could become unsustainable, triggering a series of economic and social disruptions.
A historic crisis looms
Dalio’s warnings are not limited to economic concerns. He expressed fear that the U.S. could face more than just a financial crisis. "I’m 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," he added. For Dalio, the risk is not just a recession but a complete breakdown of societal and global norms that could lead to geopolitical instability.
Dalio’s reflections also touch on the rise of populist movements and the erosion of democratic values. He believes that the widening wealth gap and the growing political divide in the U.S. are symptoms of a deeper systemic failure, which could lead to the rise of autocratic leadership. This dynamic, he argues, mirrors historical precedents where societies in crisis are often vulnerable to authoritarian figures who promise to restore order.
The unseen forces behind the tariffs
Dalio has long warned about the destabilising effects of global monetary imbalances. His 2021 book, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail, delves into the forces shaping the world economy, including U.S. debt and China’s growing influence. Dalio argues that Trump’s “America First” policies, particularly the tariffs, are not merely economic tools but part of a larger shift in global power dynamics. “The era of the dominant power (the U.S.) that dictates the order that other countries follow is over,” Dalio stated, echoing concerns that the multilateral system the U.S. once led is being replaced by a more confrontational, unilateral approach.
This shift is compounded by technological advancements such as artificial intelligence and natural disasters like pandemics, which Dalio believes will have significant, unpredictable effects on global stability. He stresses the importance of understanding these changes and urges policymakers to study how countries have responded to similar challenges in the past.
Dalio’s 2008 forecast revisited
Dalio’s track record in predicting economic turmoil adds weight to his warnings. His firm, Bridgewater, accurately anticipated the 2008 financial crisis, issuing stark warnings about the risks embedded in the global financial system. The firm had also predicted the collapse of Lehman Brothers months before it happened, advising clients to brace for what would become one of the most significant recessions in modern history.
Now, with the U.S. economy facing a potential crisis sparked by Trump’s trade wars, Dalio’s predictions are once again causing concern. He sees the tariff policies as part of a larger, more troubling trend that is pushing the global economy towards a breaking point. The possibility of a “recession” has shifted in Dalio’s view; it is now just one part of a much larger, more dangerous scenario.
Dalio’s message is clear: the U.S. and the world are at a critical juncture, and the economic policies being pursued today could have far-reaching consequences. The combination of rising debt, escalating international tensions, and the breakdown of global norms could create a perfect storm that is far worse than anything the world has experienced in recent history. The risks are not confined to economic downturns but could extend to political and military conflicts that could reshape the global order for generations to come.
As Dalio concludes, “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.”
( Originally published on Apr 13, 2025 )
A decision point for the US economy
In a recent appearance on NBC’s Meet the Press, Dalio stated, “I think that right now we are at a decision-making point and very close to a recession.” However, his concerns extend further. “I’m worried about something worse than a recession,” Dalio said, stressing the potential for much deeper disruptions. The 73-year-old billionaire and investor has been vocal about the unsustainable conditions that could destabilise the global economy, pointing to the rise in U.S. debt, the growing tensions between global powers, and the impact of President Trump’s economic policies.
The breakdown of global systems
Dalio’s critique focuses on the broader breakdown of the global monetary, political, and geopolitical orders. “We are having profound changes in our domestic order... and we’re having profound changes in the world order,” he observed, drawing parallels with the upheavals of the 1930s. In Dalio’s view, the confluence of tariffs, excessive national debt, and a rising global power challenging the U.S. could trigger a chain of events far worse than a typical recession.
Specifically, Dalio has expressed deep concern about the unsustainable growth of U.S. debt, which, at 121% of GDP by late 2024, is far higher than the 64% recorded in 2008. Coupled with the reliance on foreign creditors like China, the strain on the U.S. financial system could lead to disastrous consequences. Dalio warned that without addressing the national debt and pledging to reduce the budget deficit, the U.S. risks entering a crisis where debt could become unsustainable, triggering a series of economic and social disruptions.
A historic crisis looms
Dalio’s warnings are not limited to economic concerns. He expressed fear that the U.S. could face more than just a financial crisis. "I’m 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," he added. For Dalio, the risk is not just a recession but a complete breakdown of societal and global norms that could lead to geopolitical instability.
Dalio’s reflections also touch on the rise of populist movements and the erosion of democratic values. He believes that the widening wealth gap and the growing political divide in the U.S. are symptoms of a deeper systemic failure, which could lead to the rise of autocratic leadership. This dynamic, he argues, mirrors historical precedents where societies in crisis are often vulnerable to authoritarian figures who promise to restore order.
The unseen forces behind the tariffs
Dalio has long warned about the destabilising effects of global monetary imbalances. His 2021 book, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail, delves into the forces shaping the world economy, including U.S. debt and China’s growing influence. Dalio argues that Trump’s “America First” policies, particularly the tariffs, are not merely economic tools but part of a larger shift in global power dynamics. “The era of the dominant power (the U.S.) that dictates the order that other countries follow is over,” Dalio stated, echoing concerns that the multilateral system the U.S. once led is being replaced by a more confrontational, unilateral approach.
This shift is compounded by technological advancements such as artificial intelligence and natural disasters like pandemics, which Dalio believes will have significant, unpredictable effects on global stability. He stresses the importance of understanding these changes and urges policymakers to study how countries have responded to similar challenges in the past.
Dalio’s 2008 forecast revisited
Dalio’s track record in predicting economic turmoil adds weight to his warnings. His firm, Bridgewater, accurately anticipated the 2008 financial crisis, issuing stark warnings about the risks embedded in the global financial system. The firm had also predicted the collapse of Lehman Brothers months before it happened, advising clients to brace for what would become one of the most significant recessions in modern history.
Now, with the U.S. economy facing a potential crisis sparked by Trump’s trade wars, Dalio’s predictions are once again causing concern. He sees the tariff policies as part of a larger, more troubling trend that is pushing the global economy towards a breaking point. The possibility of a “recession” has shifted in Dalio’s view; it is now just one part of a much larger, more dangerous scenario.
Dalio’s message is clear: the U.S. and the world are at a critical juncture, and the economic policies being pursued today could have far-reaching consequences. The combination of rising debt, escalating international tensions, and the breakdown of global norms could create a perfect storm that is far worse than anything the world has experienced in recent history. The risks are not confined to economic downturns but could extend to political and military conflicts that could reshape the global order for generations to come.
As Dalio concludes, “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.”
( Originally published on Apr 13, 2025 )
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