AI-Summary – News For Tomorrow
Ray Dalio warns escalating U.S. friction could lead to power struggles with severe consequences. He fears geopolitical tensions, citing the Ukraine and Israel-Hamas conflicts, have increased the risk of a third world war, a warning reminiscent of his accurate 2007 prediction of the 2008 financial crisis. Dalio’s concerns are partly fueled by rising national debt, a “debt bomb” that could cripple spending. He emphasizes the importance of understanding historical patterns to mitigate the impact of such crises, advising proactive worry to prevent negative outcomes. Dalio’s insights are timely as leaders prepare for the Fortune Global Forum in Riyadh in 2025.
News summary provided by Gemini AI.
Should friction in the U.S. continue, the hedge fund founder warned individuals’ ability to “hurt each other” has never been higher.
Society may “rise above it and realize that our common good is going to necessitate us dealing with it so that what works for most people is going to work.” Unfortunately, this belief may prove “a little bit idealistic.”
“I have to be a practical person,” he continued. “I think that these conflicts will become tests of power by each side.”
Indeed, many investors will be familiar with Dalio’s warnings—the billionaire has long said that geopolitical tensions could spill into another global conflict. Back in 2023, Dalio warned the likelihood of a third world war had increased to 50% following Russia’s invasion of Ukraine, and the Israel-Hamas conflict.
While naysayers may argue Dalio is the boy who cried wolf, his caution has paid off in the past. In 2007, Bridgewater began to warn of large risks embedded “in the system”—by 2008, a financial crisis had hit.
Moreover, while Dalio’s warning sounds alarming, it is also somewhat inevitable: “In history we have to recognize that all orders have come to an end, and then there’s a new order, and there’s a challenge. I have a principle, if you worry, you don’t have to worry. And if you don’t worry, you need to worry—if you worry then you will take care of what you’re worrying about and [prevent it] from happening.”
National debt fears
One of Dalio’s top fears—and indeed one of the factors he cites for a potential global war—is national debt. Like many of his peers (Jamie Dimon and Jerome Powell to name a few) Dalio is worried that one day America’s need to sell debt will outweigh the market’s appetite to buy it.
This imbalance, what Dalio calls the “debt bomb”, is an economic heart attack waiting to happen he argues: “When debt and debt service rise relative to your income it’s like plaque in the arteries that then begins to squeeze out the spending.”
The Bridgewater founder added this tension isn’t anything new, saying these issues cycle repeatedly through time—what’s needed to mitigate its impact is understanding the “cause and effect” dynamic.
“Whenever things are coming along that I had not seen before, I really needed to understand if they happened in history so I can understand the mechanics, which is why study history,” he added.
