Ray Dalio warned that investors are too narrowly fixated on tariffs and not paying enough attention to the bigger “once-in-a-lifetime” breakdown occurring in major monetary, political and geopolitical orders.
Failing to heed those underlying conditions may blindside investors to the biggest disruptions that are still to come, the billionaire founder of Bridgewater Associates wrote in a post on X, formerly known as Twitter.
His comments come amid a tumultuous period for global markets as US President Donald Trump’s tariffs threatened to upend the global economy.
Among the drivers of Trump’s tariff policies is too much existing debt and the rapid rate at which new borrowing is added, Dalio wrote. He said the US is hooked on using debt to finance excessive spending, while creditor countries like China are addicted to selling goods to borrower countries like the US.
“There are big pressures for these imbalances to be corrected one way or another and doing so will change the monetary order in major ways,” Dalio added.
“It is obviously incongruous to have both large trade imbalances and large capital imbalances in a deglobalising world in which the major players can’t trust that the other major players won’t cut them off from the items they need (which is an American worry) or pay them the money they are owed (which is a Chinese worry),” he wrote.
Gaps in people’s education, opportunity, productivity levels as well as income, wealth and values are manifesting in a breakdown of the democratic system and the rise of autocratic leaders, according to Dalio.
In the geopolitical arena, the multilateral, cooperative world order led by US, the sole dominant power, is being replaced by a unilateral, “America first” approach, he added.
