Billionaire who anticipated the 2008 financial crisis sounds the alarm over Trump’s policies: “these problems won’t go away”

President Donald Trump’s sweeping tariff policy has opened up a can of worms that may already be “too late” to get back under control in a “sensible way” according to Ray Dalio in a lengthy post on social media. The founder of the world’s biggest hedge fund, Bridgewater Associates, who anticipated the 2008 financial crisis says that “whatever happens with tariffs, these problems won’t go away.”

He cites discussions with “a large and growing number of people who are having to deal with” the issues of how to structure the changing order of things that are coming to the forefront. He fears that “the ideal time to be knowledgeable about and properly plan for these big changes in the world order,” is now behind us.

“Unsustainable, bad fundamentals that can be easily seen and measured”

Dalio says that from foreign importers and exporters who trade with the US that he has spoken to, regardless of the outcome of the tariff negotiations, they say that “they have to greatly reduce their dealings with the United States.” What was broadly recognized, a need to minimize US-China interdependence and concerns about a conflict between the two powers, “this view is now becoming more commonly believed,” he says.

Furthermore, “it is also increasingly being realized that the United States’ role as the world’s biggest consumer of manufactured goods and greatest producer of debt assets to finance its over-consumption is unsustainable,” he states. For that reason, Dalio says that it is “naïve thinking” for anyone who sells or lends to the US to assume that they will get paid back with “hard” dollars, i.e. dollars that aren’t devalued, and they should plan accordingly.

“Based on many of my indicators,” Dalio explains, “we are on the brink of the monetary order, the domestic political and the international world orders breaking down due to unsustainable, bad fundamentals that can be easily seen and measured.”

The US “will increasingly be bypassed”

The challenges that the US is creating for those who trade with it, like the Trump administration tariff policies, is increasing the risk that the United States “will increasingly be bypassed by a world of countries that will adapt to these separations from the United States and create new synapses that grow around it,” Dalio says.

In order to “produce the ‘beautiful’ deleveragings and rebalancings that need to take place,” he calls for a “calm, analytical, and coordinated engineering and implementation, with the imbalances and the needs for self-sufficiencies treated as shared challenges.” He points to his book, ‘How Countries Go Broke: The Big Cycle’, to provide some guidance.

Dalio calls on investors, policy makers and other decision makers to stop changing their positions and views in reaction to day-to-day events in the markets and policy announcements. “Instead deal with these big fundamental changes in the world order calmly, intelligently, and, ideally, cooperatively,” he enjoined.

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