Ray Dalio Warns of Potential U.S. Monetary Collapse

Ray Dalio, the founder of Bridgewater Associates, has issued a stark warning about the potential collapse of the U.S. monetary order. Dalio, renowned for his accurate predictions of the Japanese economic collapse and the 2008 U.S. economic recession, now fears that the current situation could be even more dire. He believes that the existing monetary system is on the brink of collapse, with significant changes occurring both domestically and internationally, reminiscent of the 1930s.

Dalio's concerns stem from multiple factors, including the U.S. government's tariff policies, excessive debt, and the challenges posed by rising global powers. He warns that the way these issues are handled could lead to outcomes worse than a typical recession. In his view, the potential consequences include severe fluctuations in the U.S. dollar exchange rate, domestic conflicts that violate democratic norms, and international conflicts that could disrupt the global economic order, possibly even leading to military confrontations.

Dalio has previously warned about the unsustainable growth of U.S. debt. In his latest interview, he urged Congress to intervene and reduce the federal budget deficit to 3% of GDP. Failure to do so, he argues, could result in a "debt supply-demand problem" that, when combined with other issues, could lead to a situation worse than a standard recession.

Bridgewater Associates, the world's largest hedge fund, gained prominence for its early warnings about the risks of the 2008 financial crisis. In 2007, the firm alerted to significant "internal risks" within the U.S. financial system and predicted that interest rates would rise until the financial system collapsed. A few months later, the U.S. economy entered a recession.

Dalio's warnings highlight the potential for a more severe economic crisis than previously anticipated. The current situation, he argues, is characterized by deep-seated changes in both domestic and international orders, similar to the 1930s. These changes, if not addressed properly, could lead to a collapse of the monetary system and a range of severe economic and political consequences. Dalio's insights underscore the need for proactive measures to mitigate these risks and ensure economic stability.