Ray Dalio, founder of Bridgewater Associates LP, said in an interview on the sidelines of the Milken Institute Asia Summit in Singapore on Wednesday,
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SINGAPORE – US billionaire Ray Dalio names the top five forces front and center in the world economy.
Speaking at the Milken Institute’s Asia Summit in Singapore, the founder of Bridgewater Associates said the five factors are interrelated and often cyclical. Dalio made the remarks Wednesday ahead of the U.S. Federal Reserve’s interest rate decision.
1. Debt, money and the economic cycle
With uncertainty still surrounding what the Fed will do at its meeting this week, Dalio raised concerns about how the nation’s debt will be managed.
“We’re going to have Fed interest rate changes, and (what will happen to) all of those dynamics? What’s going to happen to all the debt? How will that be handled?” he mused.
The U.S. central bank kept its benchmark rate at its highest level in 23 years, prompting the government to provide $1.049 trillion in debt service – a 30% increase compared to a year ago. This is part of the total anticipated payments of $1.158 trillion for the entire year.
“What is the value and is one person’s debt or another person’s asset? How is it a storehold of wealth? This is an important question that is an important question,” he threw the question to the audience.
2. Internal order and disorder
“The second is the problem of internal order and disorder,” Dalio said, referring to US politics before the election.
“There is an irreconcilable difference between the right and the left, fueled by great wealth and a gap in values…
For the first time in the 2024 election cycle, Vice President Kamala Harris is now considered more likely to win than former President Donald Trump, a CNBC Fed Survey released Tuesday showed.
Last week, the candidates debated issues from abortion rights to tariffs and other policy proposals.
Still, no matter who occupies the White House, the president’s policy agenda has a limited impact on the health of the U.S. economy.
3. Great power conflict
Dalio cited geopolitics as a third concern: namely, the relationship between the US and China.
US-China relations have been defined by a number of ongoing tensions, such as territorial issues in the South China Sea, Taiwan’s political status and economic tariffs.
“I think, probably, there is a fear of war that will stand in the way – mutual destruction guaranteed. But disorder,” he emphasized later, without naming a specific point of contact.
4. ‘Act of Nature’
Dalio went on to say that “acts of nature” have historically posed a greater threat to humans and society than war.
“Natural acts, droughts, floods and pandemics have killed more people and are responsible for the changing domestic order and international order,” Dalio said.
And the costs of climate change will increase, he stressed. According to the World Economic Forum, the climate crisis causes a loss of global GDP of 12% for every 1°C increase in temperature.
5. Technology
Technology will “be fantastic” if people can use it and invest in it properly, the billionaire said.
“The potential productivity benefits are huge,” he said, explaining that technology produces unicorn companies, and when that happens – a slice of the population is better off.
“Whoever wins the technological war will win the military war,” he reiterated.
When he evaluated the five factors as a whole, Dalio concluded that “the shock was lower than the upside,” he said.
