Ray Dalio has raised concerns — not just regarding a possible recession, but signaling a more significant, systemic collapse of the global economic and political landscape in a recent interview. His worries extend beyond mere market fluctuations; they highlight a more profound structural vulnerability.
In a surprising turn, bitcoin (BTC) has demonstrated robustness amidst the turmoil. The cryptocurrency has ended a three-month downward trend and is nearing $85,000, suggesting it might be taking on the role of an alternative safe haven.
Conflicting signals from the White House regarding tariffs are contributing to the increasing uncertainty in global markets. Consequently, markets remain highly volatile, particularly in the last couple of weeks as the implications of tariff policies unfold.
As the founder of a major investment firm, Dalio is particularly focused on the escalating U.S. debt and deficit, urging Congress to reduce the federal deficit to 3% of GDP. He cautions that the disparity between debt supply and investor appetite could lead to critical dislocations.
This situation is already surfacing in the bond market, where U.S. Treasury yields are on the rise. The yield on the 10-year bond is just below 4.5%, while the 30-year bond is slightly under 5%. These heightened yields are causing disturbances in the markets and may necessitate intervention from the Federal Reserve to restore stability.
Dalio also highlights that tariff unpredictability is contributing to broader macroeconomic instability. The U.S. dollar, as indicated by the DXY index, has dipped below 100 for the first time in years, which may signal a capital exodus from the nation. He advocates for a thorough trade agreement with China and a currency recalibration to bolster the yuan, aiming to bring stability to a system that appears increasingly fragile.
Drawing a sobering parallel, Dalio compares the current risks to those witnessed during the U.S. departure from the gold standard in 1971 and the global financial crisis of 2008 — both pivotal events that reshaped the financial system.
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