Billionaire investor Ray Dalio is worried about 'something worse than recession’: Full interview

Welcome to Meet the Press with Ray Dalio

Introduction of Ray Dalio

• Ray Dalio, founder of Bridgewater Associates, the world's largest hedge fund, discusses his new book "How Countries Go Broke," set to release in June.

• The host expresses gratitude for Dalio's presence on the show.

Financial Imbalances and Greater Problems

• Dalio identifies a financial problem as a symptom of larger issues, emphasizing that tariffs are indicative of deeper economic imbalances.

• He outlines five historical forces driving these problems: money, credit, debt cycles, internal conflict (wealth and value disparities), and global power dynamics.

Forces Shaping Economic and Political Orders

• The first force is monetary order changes; the second involves political conflicts between differing ideologies.

• A shift from multilateralism (an American-centric world order) to unilateralism is noted as a significant change in global relations.

Impact of External Factors

• Natural disasters and pandemics are highlighted as historical factors influencing economic stability alongside technological advancements.

Tariffs and Their Implications

• When asked about President Trump's tariffs, Dalio suggests their effectiveness depends on how they are managed—whether through practical or chaotic means can significantly impact outcomes.

Current State of Tariffs

• He describes current tariff implementations as disruptive rather than constructive, comparing them to throwing rocks into a production system which could lead to inefficiencies globally.

Predictions for the Future: Economic Concerns

Discussion on Recession and Economic Stability

• The speaker expresses concern about a potential recession in the United States, attributing it to President Trump's tariffs and current economic conditions.

• A recession is defined as two consecutive quarters of negative GDP growth; however, the speaker warns of more profound issues beyond just a recession, including a breakdown of the monetary order.

• Historical parallels are drawn to the 1930s, suggesting that current economic factors such as tariffs and rising debt could lead to significant disruptions in global systems.

• The handling of these economic changes is crucial; poor management could result in consequences worse than a typical recession.

• The speaker emphasizes the importance of reducing budget deficits to 3% of GDP to avoid severe supply/demand problems related to debt.

Budget Deficits and Economic Predictions

• If Congress can effectively manage trade deficits and reduce budget deficits, there is potential for positive economic management moving forward.

• Failure to address these financial issues may lead to outcomes worse than a normal recession, with specific concerns about the value of money being at risk.

• The concept of wealth storage through bonds is discussed; if too much supply exists without demand, it could jeopardize financial stability leading to inflationary pressures.

What's the Worst-Case Scenario?

Breakdown of Global Order

• The speaker warns about a potential worst-case scenario involving the internal value of money and conflicts that deviate from traditional democratic norms.

• Concerns are raised regarding international conflict, which could disrupt the world economy and potentially escalate into military confrontations, similar to historical breakdowns.

• The speaker emphasizes that the current geopolitical and monetary order, established in 1945, is cyclical and may face significant challenges if not addressed properly.

Solutions to Economic Challenges

• A key solution proposed is reducing the deficit to 3% of GDP, achievable through bipartisan efforts reminiscent of cooperation seen between 1991 and 1998.