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Billionaire investor Ray Dalio predicted a new global order that has China ascending and the United States diminishing.
Dalio appeared on the New York Times’ “Sway” podcast on Monday to discuss his new book, “The Changing World Order.” During the discussion, he said debt, inflation, internal strife, and a rising China pose grave threats to American prosperity.
“Dalio made his fortune betting on, or against the future,” host Kara Swisher introduced her guest. “Now it seems like Dalio is betting that world power is shifting with China on the rise and U.S. dominance on the decline.”
Ray Dalio, founder of Bridgewater Associates LP, speaks during a panel discussion at the Bloomberg New Economy Forum in Beijing, China. (Takaaki Iwabu/Bloomberg via Getty Images)
“I think [China’s] going to be competitive… They have all the data. They have AI they are putting there. So, it’s going to be a place where a lot of that’s going to happen. I expect the United States will be a place where a lot of that happens,” he said.
The billionaire has been criticized for his financial exposure to the Chinese government. In 2021, Dalio equated human rights abuses in China to racism in America, and rhetorically asked whether or not he should still be investing in the United States.
“My experiences have been in helping them build their financial system and having interactions that have nothing to do with politics,” Dalio said about his work in China. He said criticism that he is “in China’s pocket” is a form of “McCarthyism.”
Dalio also raised concerns about inflation and America’s debt, noting that the now over $30 trillion national debt reflects poorly on its financial condition.
“One man’s debts are another man’s assets,” he said, adding that the “creation of enormous amounts of debt and the monetizing of that [printing money]” often precedes the decline of empires.
“When you don’t have enough money and you want to have more buying power, all countries, through history, create this debt and they monetize it. And that has an impact. It has an inflationary impact, that we’re experiencing now. It has an impact on the value of money,” he said.
The hedge fund manager also rejected the left-wing “modern monetary theory,” a proposal that the government can spend money infinitely so long as it borrows and prints money in its own currency.
“As New York Magazine put it, the U.S. can’t run out of dollars because it can print them,” Swisher said.
“If you print it and you have lower buying power, you don’t want to hold your wealth in that,” he responded. “People think that their money is safe if it’s in cash, but last year they lost over 7% in buying power. And they’re losing buying power at a very fast rate.”
Dalio continued, “As they wake up to that, and they are now waking up to that, then they sell that debt. And what that means, mechanistically, is the central bank then either comes in and prints more money, because they have to make up for those people who are leaving, which creates more inflation, or they don’t print the money. And when they don’t print the money, then you have a debt crisis.”
Dalio also addressed what he describes as internal strife within the country, saying that America’s differences have become “irreconcilable”.
“We have the largest wealth gap. We have the largest income gap. And we are having the largest political gaps since 1900,” he said. “And so, democracy is not working for us in the way it did. And what we’re having is populism of the Right and populism of the Left. And irreconcilable differences in ways that never existed in my lifetime, but happened many times before.”