Yahoo Finance Ray Dalio: 'The system is in jeopardy' after events like Jan. 6
The legendary hedge fund manager Ray Dalio became a billionaire by picking up on patterns in the stock market. More recently, he has turned his attention to trends throughout world history.
In a new book, "Principles for Dealing with the Changing World Order," Dalio wrote that wealth inequality often leads to the rise of populism and division. Yahoo Finance's editor-in-chief, Andy Serwer, asked Dalio in a new interview just how bad America's divisiveness has gotten and who's to blame for it.
"Well, I think people around us, we all see it. Jan. 6, was just a symbol," said Dalio referring to the day when a mob of supporters of then-President Donald Trump attacked the Capitol to contest the election results. "But history has shown when the causes that people are behind are more important to them than the system, the system is in jeopardy."
In the interview Monday for Yahoo Finance's Influencers with Andy Serwer, Dalio painted a picture of an America in decline. He cited three factors that, when combined, have toppled empires throughout history: unsustainable debt and the overprinting of money; major internal political and social conflicts; and a strong outside challenger on the world stage.
“If trends continue, China will be stronger than the United States in the most important ways that an empire becomes dominant," said Dalio, founder of Bridgewater Associates, the largest hedge fund in the world, which manages $154 billion in assets. "Or at the very least, it will be a worthy competitor."
‘I just take measurements’
During this week’s conversation, Dalio blamed recent unrest on polarization between political parties, citing a 2017 survey that found between 15% and 20% of respondents on both sides think the country would be better off if large numbers of the opposing party in the public today “just died.”
Dalio was pressed on whether he was drawing a false equivalence between figures on the left like Elizabeth Warren, who wants higher taxes and more regulation, and Trump, who made a concerted effort to overturn the election that Joe Biden won by over 7 million votes.
“I'm very much a mechanic; I'm not an ideologue ... I just take measurements," Dalio said, noting that polarization is one such measurement. "... If you look at the voting records of Republicans ... it's the most conservative that it has been. If you look at the voting records and policies, Democrats, it's the most left that it has been."
In light of this level of conflict between parties, Dalio said “there's a question of even how rules will be followed” in upcoming elections. "And I think it's not an exaggeration to say that you could see in the 2024 elections," he added, "that no side will lose that accepts loss."
In his book, Dalio calculates a series of the “red flags” that spell trouble for a country. The U.S., he said, has 60%-80% of these indicators — meaning there's a "one in six chance of severe internal conflict.”
Speaking to Yahoo Finance, Dalio clarified what that conflict could look like: "What I mean, is that fighting over the rules, it doesn't mean necessarily shooting each other — although you could see much more violence. It means that the rules of the system, that democracy by rule of law, and the deferring to what the rules are, for example, to settle elections, or settle issues, I think that that could be largely lost."
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.
These 2 things are going to bring down inflation in the coming months: Biden aide
Texas Republican and California Democrat have a plan to end debt limit drama
Even Trump-aligned lawmakers are resisting his advice on the debt ceiling
Read the latest financial and business news from Yahoo Finance
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit.
