Multi-billionaire and founder of the world’s largest hedge fund, Ray Dalio, believes that we may be facing a new economic catastrophe, and the catalyst is not a virus.
He foresaw the coming of the 2008 financial crisis, and at the beginning of the pandemic, predicted that we would be dealing with effects for years even after it had come and gone.
Now, he says our next major threat is China.
In a recent interview with CNBC, Dailo stated, “I think we’re at risk of a war with China. Largely due to misunderstandings.”
Dalio made it clear that his predictions are not facts, just observations. However, he also pointed out that, “future catastrophes are inevitable, according to historical patterns over the last 500 years.”
Essentially, the hedge fund billionaire is saying that if it is not China tanking the US economy, something else will.
It’s undoubtedly a gutsy statement to make; yet, it’s also one that should warrant some thought.
Perhaps the main supporting factor for Dalio’s hypothesis is a worsening U.S-China trade war.
In his book, “Principles for Dealing with the Changing World Order,” he stated that America’s attempt to make China’s culture “more American” could backfire and spark a major conflict.
The trade war has led to companies cutting wages while raising consumer prices and still experiencing lower profit margins.
According to a Moody’s Analytics study, the trade war cost us over 300,000 jobs in its first year alone.
In 2020, a Federal Reserve Bank of New York study discovered that the trade war cost American companies over $1.7 trillion in market capitalization.
Unfortunately, even all the money printing and then some wouldn’t be enough to financially dig us out of this one, as Dalio sheds light on that:
“You can’t raise living standards by raising the amount of money in credit in the system because that’s just more money chasing the same amount of goods.
It will affect financial markets in the ways we’ve seen, and it will affect the inflation rate. It won’t raise living standards in an important way. As inflation then begins to bite, it has political consequences.”
Only time will tell whether the self-made multi-billionaire is spot on or not.
In the meantime, planning and preparing for the unknown is perhaps one of the wisest decisions one could make.
Do you need help creating a plan? Call American Hartford Gold at 800-462-0071.