'Hedge Fund Pioneer' Dalio Warns of Situation More Serious Than US Recession

"Collapse of Monetary Order and Military Conflict Possible"

Ray Dalio, founder of the world's largest hedge fund Bridgewater Associates and known as the "godfather of hedge funds," expressed concern that if U.S. President Donald Trump does not properly handle economic policies including tariffs, a situation more severe than a recession could occur.

On the 13th (local time), Dalio appeared on NBC's "Meet The Press" and said, "President Trump's tariff policies and the increase in U.S. debt are creating a new unilateral world order," adding, "If this issue is not properly addressed, a situation more serious than a recession could arise."

Ray Dalio, founder of Bridgewater Associates. Photo by Reuters and Yonhap News

Dalio pointed to the combination of import tariffs, excessive national debt, and "emerging powers challenging the existing powers," calling it a "very destructive change." He especially noted the unsustainable recent increase in U.S. debt and urged reducing the fiscal deficit to around 3% of the Gross Domestic Product (GDP). He warned, "Otherwise, alongside other problems, we will face supply and demand issues related to debt, and the outcome will be more severe than a typical recession."

Dalio has previously warned that due to the unsustainable rise in U.S. debt and the decline of U.S. manufacturing, the United States will become dependent on other countries for the production of essential goods.

When asked to explain his concerns about the worst-case scenario, he responded that he fears "a collapse of the monetary order, internal conflicts that deviate from the normal democratic processes we know, international disputes causing major disruptions to the global economy, and even situations that could lead to military conflicts."

According to NBC, Bridgewater predicted the 2008 financial crisis. Before the crisis hit, in 2007, Bridgewater warned that "the risks inherent in the system are quite large," and later stated, "interest rates are expected to rise until cracks appear in the financial system." A few months later, the recession began.

Dalio warned that after President Trump announced reciprocal tariffs by country, investors on social media platform X (formerly Twitter) were too narrowly focused on tariffs and were not paying enough attention to the once-in-a-lifetime collapse occurring in major currencies, politics, and the geopolitical order.