'Worried about something worse than 2008 recession': Billionaire Dalio warns of potential US financial crisis

Billionaire Ray Dalio, the founder of Bridgewater Associates, has expressed deep concerns about the US economy's trajectory, warning of an impending financial crisis that could surpass the severity of the 2008 recession. "I think that right now we are at a decision-making point and very close to a recession," Dalio stated on NBC's 'Meet the Press'. 

"And I’m worried about something worse than [the 2008] recession if this isn’t handled well." His remarks reflect growing unease among economic experts.

According to Dalio, the "breaking down of the monetary order" is partly due to President Donald Trump's aggressive trade policies, particularly tariffs of up to 145% on Chinese exports to the US. "We are seeing a classic breakdown of the major monetary, political, and geopolitical orders," he commented. This situation is deemed a rare event that significantly disrupts financial stability.

Furthermore, the ICE US Dollar Index has seen a marked decline, a reflection of dwindling confidence in the dollar. As these trade tensions mount, bitcoin prices have shown volatility, although some analysts at Bitfinex suggest that economic catalysts might lead to gains for the cryptocurrency.

Dalio suggests that whether these tariffs are enforced in a "stable" manner or a "chaotic and disruptive way" is crucial. The current approach, according to Dalio, is "very disruptive," likening it to "throwing rocks into the production system," and urges for a more considered strategy to mitigate potential fallout.

The US debt, now exceeding $35 trillion, compounds the issue, further straining the economy. Although not noted in Dalio’s discussion, this debt level has risen partly due to previous Covid-related stimulus measures, fuelling inflationary pressures.

Dalio's concerns are mirrored by other analysts, with some suggesting that geopolitical tensions and a possible breakdown in the bond market could herald challenges more severe than those experienced in previous crises. Bitcoin’s price resilience amidst these fears indicates a possible hedge against conventional economic instability.

Dalio emphasises the importance of navigating these tumultuous times by fostering international cooperation, especially with China, to avoid exacerbating economic woes. His cautionary stance highlights the urgent need for strategic policy decisions to avert a deeper crisis.