Ray Dalio is raising urgent concerns — not only regarding a possible recession but also regarding a more profound, systemic collapse of the global economic and political structure during an interview with CNBC on Sunday. His worries extend beyond mere market turbulence; they highlight a more extensive underlying vulnerability.
Notably, bitcoin (BTC) is displaying durability amid the turmoil. The cryptocurrency has ended a three-month downtrend and is nearing $85,000, suggesting it might be taking on a role as a potential alternative safe haven.
Conflicting messages are still emerging from the White House concerning tariffs, which adds to the increasing uncertainty impacting global markets. Consequently, market fluctuations continue to be highly volatile, especially over the last fortnight as Trump’s tariff policies begin to take effect.
Dalio, who founded the investment powerhouse Bridgewater, is particularly concerned about the rising U.S. debt and deficit. He asserts that Congress must reduce the federal deficit to 3% of GDP, cautioning that the disparity between debt supply and investor demand could lead to significant disruptions, as reported by CNBC.
This situation is already evident in the bond market, where U.S. Treasury yields are rising. The 10-year yield is just below 4.5%, while the 30-year yield hovers around 5%. These heightened yields are unsettling markets and may compel the Federal Reserve to intervene to stabilize the situation.
Dalio also emphasizes that uncertainty surrounding tariffs is contributing to broader macroeconomic instability. The U.S. dollar, represented by the DXY index, has now dropped below 100 for the first time in years — a possible indicator of capital flight from the nation. He advocates for a comprehensive trade agreement with China and a currency realignment to bolster the yuan, aiming to stabilize a system that appears increasingly fragile, according to the report.
In a sobering analogy, Dalio compares the current risks to those encountered during the U.S. departure from the gold standard in 1971 and the global financial crisis of 2008. Both were pivotal moments that transformed the financial landscape.
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