Well before the 2008 financial crisis, billionaire and hedge fund manager Ray Dalio predicted that the fallout was coming. As the Columbia Business School points out in a reflective piece, "It was his understanding of the mechanisms leading up to the Great Depression that allowed him to anticipate the 2008 recession."
Now, Dalio has another prediction for the American economy, and it's a scary one. Speaking on NBC's Meet the Press on April 13, Dalio voiced his concerns over a situation worse than a recession looming for the United States.
In the interview, the founder of hedge fund Bridgewater Associates said he is "worried about something worse than a recession" if the current administration is not able to properly handle tariffs and additional economic concerns.
"I think that right now, we are at a decision-making point and very close to a recession," Dalio said. "And I'm worried about something worse than a recession, if this isn't handled well."
Dalio said that the U.S. is experiencing "a breaking down of the monetary order," which he also posted about recently on social media.
"We are having profound changes in our domestic order... and we're having profound changes in the world order, such times are very much like the 1930s," Dalio said. "I've studied history, and this repeats over and over again."
Dalio talked about the mix of crippling tariffs, large U.S. debt and a "rising power challenging the existing power."
Dalio also has concerns about the large growth of U.S. debt and creditors in other countries having too much of it. The good news is that he says something that could help manage the situation would be Congress reducing the budget deficit to 3% of the gross domestic product.
"If they don't," he said, "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."
His worst-case scenario isn't pretty. When asked about it, he said it could involve the "value of money, 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."
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