Billionaire Ray Dalio warns tariffs could cause breakdown in financial system

In an interview on Sunday, the billionaire hedge fund manager warned that he was concerned about the economy that suffers from something “worse than stagnation” if the trade war raises the details of the wider financial system.

“The tariff of President Donald Trump was” a very tariff “and” like dumping rocks in the production system “.

Wilker Dalio asked if Trump’s tariff is likely to stagnate, and he replied: “I think we are now at the decision -making point and very close to the recession. I am concerned about something worse than stagnation if this is not treated well.”

Dalio said that although the recession occurred regularly, what appears to be “deeper” as there is “the crash of the monetary system” that includes the dollar, along with the collapse of the local system and the global order.

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“Such times are very similar to the thirties of the twentieth century,” Dalio said.

“I studied history, and this is repeated again and again. So if you take a customs tariff, if you take debts, if you take the increasing strength that challenges the current power, if you take these factors, those changes in orders, and systems are very exposed.”

Wilker continued and asked him about his prediction of the country’s direction, after Dalio was correctly predicted in the 2008 financial crisis. Dalio indicated that the US federal government is in a critical turn with its budget deficit, which was expected to rise to 7 % of GDP (GDP) if tax and spending policies were not repaired.

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President Donald Trump has declared an experimental tariff for commercial partners in the United States. (Chip Somodevilla / Getty Images / Getty Images)

“If it can be reduced to about 3 % of GDP, this trade deficit, etc., is managed in the right way, it can be managed very well,” Dalio explained, adding that it encourages congress members to reduce the deficit to 3 % of GDP.

Dalio identified ways for policy makers to achieve stability in debt at this level and called on Congress to take this issue in a way of two parties as in the 1990s, when the federal government was the last surplus.

He added that if the United States does not settle on the deficit, this is likely to cause interest rates on the national debt and exacerbate the financial and economic challenges of the country.

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Definitions are taxes on imported goods paid by the importer, which often passes these high costs of consumers through high prices. (Qian Weizhong / VCG via Getty Images / Getty Images)

“If they do not do that, he will face a problem with the debt/demand for debt at the same time that we face these other problems. The results of this will be worse than the natural recession,” Dalio said.

Welker Dalio asked about the follow -up question of what he considers the scenario of the worst cases of the economic system.

Dalio said: “To be very specific, the value of money, the internal conflict that is not normal democracy as we know, and the international conflict in a large -scale tariff in a global economy and can be a military conflict just as these collapses occurred before.”

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