Ray Dalio, founder of Bridgewater Associates, speaks onstage during The Wall Street Journal’s Future of Everything 2024 Festival at Spring Studios on May 22, 2024 in New York City.
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SINGAPORE — American Billionaire Ray Dalio Name the five leading forces at the front and center of the world economy.
The five factors are interrelated and often cyclical, said the Bridgewater Associates founder, speaking at the Milken Institute Asia Summit in Singapore. Dalio made his comments Wednesday ahead of the U.S. Federal Reserve’s interest rate decision.
1. Debt, money and the economic cycle
Amid continued uncertainty surrounding the Fed’s moves at this week’s meeting, Dalio raised concerns about the country’s debt management.
“We’re going to have a Fed rate change and [what will] What is that whole dynamic? What’s going to happen to all the debt? How is that going to be resolved?” he mused.
The US central bank kept its benchmark interest rate at a 23-year high, prompting the government to allocates $1.049 trillion to debt service — up 30% from a year ago. This is part of a total expected payment of $1.158 trillion for the year.
“What is its value and is it one person’s debt or another person’s asset? How is it a store of wealth? These are important and urgent questions,” he asked the attendees.
2. Order and chaos within
“The second is the issue of internal order and disorder,” Dalio said, referring to US politics ahead of the election.
“There are irreconcilable differences between the right and the left, stemming from huge gaps in wealth and values… and they even raise questions about the orderly transfer of power,” he added.
For the first time in the 2024 election cycle, Vice President Kamala Harris now considered more likely to win than former President Donald Trump, a CNBC Fed survey released Tuesday found.
Last week, candidates debated issues ranging from abortion rights to tariffs and other policy proposals.
Regardless of who occupies the White House, however, the president’s policy agenda has limited impact on the overall health of the US economy.
3. Great Power Conflict
Dalio considers geopolitics his third concern: specifically, the relationship between the United States and China.
The US-China relationship is shaped by a series of ongoing tensions, such as territorial issues in the South China Sea, the political situation of Taiwan and economic tariffs.
“I think there is probably a fear of war getting in the way – mutual destruction for sure. But it’s chaos,” he stressed later, without naming a specific flashpoint.
4. ‘Act of Nature’
Dalio later said that “natural disasters” have historically posed a greater threat to humanity and society than war.
“Natural events, droughts, floods and pandemics have killed more people and caused many domestic orders and international orders to change,” Dalio noted.
And he stressed that the costs of climate change are about to rise. According to the World Economic ForumThe climate crisis costs 12% of global GDP for every 1°C increase in temperature.
5. Technology
The billionaire said technology could “be amazing” if we could adopt and invest in it properly.
“The potential productivity gains are huge,” he said, adding that technology creates unicorns and when that happens, a segment of the population will be better off.
“Whoever wins the technological war will win the military war,” he added.
When evaluating the five factors overall, Dalio concluded that “surprises are more likely to be negative than positive,” he said.
