Ray Dalio Foresees Economic Crisis Worse Than Recession: ‘I’m worried About Something Worse Than A Recession, If This Isn’t Handled Well’

In a Sunday interview, Ray Dalio, the founder of Bridgewater Associates, expressed his apprehension about a possible economic crisis that could surpass a recession if the current economic policies are not managed effectively.

What Happened: Dalio shared his concerns on Sunday on NBC’s Meet The Press. He warned that the U.S. is on the brink of a recession and a severe economic downturn could be on the horizon if the situation is not controlled properly.

Dalio, who had previously accurately predicted the 2008 financial crisis, drew attention to the collapse of the monetary order and significant changes in the domestic and global order. He drew parallels between the current times and the 1930s, referring to the disruptive mix of tariffs, excessive debt, and a rising power challenging the existing power.

“I think that right now we are at a decision-making point and very close to a recession,” Dalio told NBC. “And I’m worried about something worse than a recession, if this isn’t handled well.”

He specifically highlighted the unsustainable growth of U.S. debt, the decline in U.S. manufacturing, and the country’s increasing dependence on other nations for essential items. Dalio called on Congress members to commit to reducing the budget deficit to 3% of the GDP, cautioning of a supply-demand problem for debt if this is not achieved.

Also Read: Ray Dalio’s Timeless Stock Market Advice: ‘Don’t Try to Time the Market Yourself Because You’ll Probably Lose’

“If they don’t, we’re going to have a supply-demand problem for debt at the same time as we have these other problems, and the results of that will be worse than a normal recession,” he added.

In Dalio’s worst-case scenario, the world economy could face disruption, potential military conflict could arise, and internal conflict could lead to a deviation from the known democratic norms.

Why It Matters: Dalio’s predictions are significant given his track record of accurately forecasting the 2008 financial crisis. His concerns about the current economic policies and the potential for a severe economic downturn highlight the importance of effective management and policy reform.

The comparison to the 1930s serves as a stark reminder of the potential consequences of economic mismanagement and could serve as a wake-up call for policymakers.

The specific issues Dalio points out, such as the unsustainable growth of U.S. debt and the decline in U.S. manufacturing, are critical areas that need to be addressed to prevent a potential crisis.