Ray Dalio argues that current global challenges, including tariffs, are symptoms of deeper, cyclical forces affecting monetary, political, and world orders, which could lead to severe disruptions akin to the 1930s if not managed effectively.
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Welcome back. And joining me now is Ray
Dalio, the founder of the world's
largest hedge fund, Bridgewater
Associates. He is also the author of the
new book, How Countries Go Broke. It's
out in June. Mr. Dalio, welcome to Meet
the Press. Thank you. Good to be here.
Just call me Ray. Okay. Well, Rey, I'll
take you up on that. Thank you so much
for being here. Uh we really appreciate
your perspective. As I just said, you
did found the world's largest hedge
fund. Uh you have been in this field for
more than 50 years. It's worth pointing
out to our viewers, I think it's
important to note, you consider yourself
to be apolitical. And you say that the
tariff problem is a symptom of a much
greater problem. What do you mean by that?
that?
There's uh a financial problem. There's
an imbalance problem. There are
basically five big forces through
history that drive everything.
First, there's the money, credit,
debt, economic cycle in which there's a
building up of debt in a cyclical way
that becomes too large and we're going
to have problems. We're going to have a
government debt problem. Maybe we can
get into this. The second big force
through time is the um internal conflict
force. the left and the right,
differences in wealth and values causing
a conflict that we're seeing it changing
our political order. So the first is
changing our monetary order. The second
is changing our political order
internally. And then the third is the
great world order. The how countries
deal with each other. when there's a
rising power challenging existing power
and now we are going from
multilateralism which is largely an
American world order type of thing to a
unilateral world order in which there's
great conflict and the other two factors
all through history have been acts of
nature droughts floods and pandemics and
number four is technology technology
changing and how they are coming
together are the main forces behind this
for example there can't be imbalances
anymore in that environment do you think
that President Trump's tariffs are
exacerbating what you are describing
this complicated mix of challenges that
the world is facing uh I think it's just
a function of how well they're handled
you know it's a reality that it's a
desire to bring in tax revenue from that
it's a reality that we would like to
build manufacturing and jobs here. This
is a reality. That's how that's done.
Whether that's done in a practical way,
whether that's done in a stable way,
whether that's done with quality
negotiations in which that's a mutual
problem, or whether that's done in a
chaotic and disruptive way that produces
great conflict makes all the difference
in the world. Based on what you're
seeing right now, do you think that
these tariffs are being carried out in a
practical way or a chaotic way? I think
we'll we'll see. So far, very
disruptive. So far, very disruptive.
Right. And and so we don't know what the
numbers are, but that could be part of a
process, right? It depends where we are
at the end of the 90 days because what
was put there is like throwing rocks
into the production system and those
impacts are going would be enormous in
terms of the efficiency of the whole
world. Great cost. I want to ask you
about something that's on a lot of
people's minds. Your predictions for the
future. And I want to start with the
Rword. I know you think this is just a
piece of it. Of course, I'm talking
about a recession. Do you think it is
likely that the United States will dip
into a recession because of President
Trump's tariffs? I I think that um right
now we are at a decision makingaking
point and very close to a recession and
I'm worried about something worse than a
recession if this isn't handled well. A
recession is two negative quarters of
GDP and whether it goes slightly there.
We always have those things. We have
something that's much more profound. We
have a breaking down of the monetary
order. We are going to change the
monetary order because we cannot spend
the amounts of money. So we have that
problem. And when we talk about the
dollar and we talk about tariffs, we
have that. We are having a profound
changes in our domestic order, how
ruling is existing and we're having
profound changes in the world order.
Such times are very much like the 1930s.
I've studied history and this repeats
over and over again. So if you take
tariffs, if you take debt, if you take
the rising power challenging existing
power, if you take those factors and
look at the PA factors that those
changes in the orders, the systems are
very very disruptive. How that's handled
could produce something that is much
worse than a recession or it could be
handled well. Let's take the debt
situation. Yeah, I'm sorry. Go ahead.
Well, very very quickly because I want
to be very specific about what you mean.
You're saying worse than recession.
You're saying this is reminiscent of the
1930s. We should tell our viewers you
correctly predicted the 2008 financial
crisis. What is your prediction for
where the country is headed right now?
Right now we're at a juncture. Let's
take the
budget. It the budget deficit can be
reduced to 3% of GDP. It's about it will
be about 7% if things are not changed.
If it could be reduced to about 3% of
GDP and these trade deficits and so on
are managed in the right way. This could
all be managed very well. I believe that
members of Congress should take the
pledge what I call the 3% pledge that in
one way or another that they will get
that budget deficit down to that number.
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. So,
can and just to follow up on that point,
worse than a recession. You're talking
about the 1930s. What specifically are
you warning of? Are you saying that it
could be as bad as a depression? What's
your biggest fear?
The value of money. What is a storehold
of wealth? That is a bond. In other
words, one man's debt is another man's
assets, bond holders. And so, we're
going to be in a situation where if that
storehold of wealth is in jeopardy
because there's too much supply and
demand and so on, and we have a monetary
inflation, we will have great
disruptions. And that that could be like
the breakdown of monetary system 71. It
could be like 2008. It's going to be
very severe. I think it could be more
severe than those if these other matters
simultaneously occur. Imagine if we have
a downturn politically and and and
international conflict. What's worstc
case scenario that you're warning of? To
be very specific to to be very specific
the value the value of money
uh internal conflict that is not the
normal democracy as we know it. an
international conflict in a way that is
highly disruptive to the world economy
and could even be a military
conflict just as these breakdowns have
occurred before. You know, we have a new
order that began in 1945, a new monetary
order and a new geopolitical order. And
these go in cycles that can be measured.
And I worry about the breakdown of that
kind of an order particularly since it
doesn't need to happen because there are
certain things that could be done in
which this is better a better
restructuring of these debts and actions
taken. So that takes me to my next
question. You have this book how
countries go broke the big cycle. What
is the solution here? Well there are a
series of solutions but let's let's take
the most important and we have one
minute. One minute. Okay. 3% of GDP.
Bring that deficit down. It can be done
in a bipartisan way the way it was done
between 1991 and 98. I explain how that
could be done. Doing things together for
the greater good. and then
internationally on all of these issues
to um use American strength, but to
negotiate well to lay out ways in which
bad conflict and inefficient policies
don't create great disruptions but get
us through this in an orderly way. All
right, Ray Dalio, thank you so much.
Your book, How Countries Go Broke: The
Big Cycle. We really appreciate it.
Thank you so much for being here. We
really appreciate it. Thanks for
watching. Stay updated about breaking
news and top stories on the NBC News app
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