Ray Dalio, founder of Bridgewater Associates, speaks onstage during the Wall Street Journal's 2024 The Future Of Everything Festival at Spring Studios on May 22, 2024 in New York City
Dia Dipasupil | Getty Images Entertainment | Getty Images
SINGAPORE – US billionaire Ray Dalio has named the five most important forces at the heart of the global economy.
Speaking at the Milken Institute's Asia Summit in Singapore, the Bridgewater Associates founder said the five factors are interrelated and often cyclical. Dalio made the comments on Wednesday ahead of the US Federal Reserve's interest rate decision.
1. Debt, money and the economic cycle
As uncertainty remains about what the Fed will do at its meeting this week, Dalio raised concerns about how to handle the country's debt.
“We will see an interest rate change by the Fed, and [what will] “What is causing all this dynamic? What is happening with all the debt? How is it being dealt with?” he wondered.
The Federal Reserve left interest rates at their highest level in 23 years, prompting the government to set aside $1.049 trillion to service the debt – a 30 percent increase from last year. This is part of an expected total of $1.158 trillion in payments for the entire year.
“What value do they have as debts for one or as assets for another? To what extent are they suitable as a store of wealth? These are important and pressing questions,” he asked those present.
2. Inner order and disorder
“The second is the question of internal order and disorder,” said Dalio, referring to US politics in the run-up to the election.
“There are irreconcilable differences between right and left caused by major differences in wealth and values… and they even challenge the orderly transfer of power,” he added.
According to a CNBC poll on the U.S. Federal Reserve published on Tuesday, Vice President Kamala Harris and current President Donald Trump are considered to have higher chances of winning for the first time in the 2024 election cycle.
Last week, candidates debated issues ranging from abortion rights to tariffs and other policy proposals.
But no matter who is in the White House, the president's policy agenda has only limited impact on the overall health of the U.S. economy.
3. Conflicts between the great powers
Dalio’s third concern was geopolitics, namely the relationship between the US and China.
Relations between the United States and China are characterized by a number of ongoing tensions, including territorial issues in the South China Sea, the political status of Taiwan, and economic tariffs.
“I think there is probably the fear of war that stands in the way of this – of mutual destruction. But it is disorder,” he later stressed, without naming a specific trigger.
4. “Natural disasters”
Dalio further said that in the past, “natural disasters” have posed a greater threat to humanity and society than wars.
“Natural disasters, droughts, floods and pandemics have killed more people and caused more changes in the national and international order,” Dalio noted.
And the costs of climate change will continue to rise, he stressed. According to the World Economic Forum, the climate crisis leads to a 12% decline in global GDP for every 1°C increase in temperature.
5. Technology
The technology will be “fantastic” if we are able to embrace and invest in it appropriately, the billionaire said.
“The potential productivity benefits of this are enormous,” he said, adding that technology creates unicorn companies, and when that happens, a small portion of the population becomes better off.
“Whoever wins the technological war will also win the military war,” he continued.
When assessing all five factors as a whole, Dalio concluded that “there are more surprises on the negative side than on the positive side,” he said.
Comments are closed.