Kraman Countdown panelists Kenny Polkari and John Stolzfas will analyse how the market responds to major movements.
Ray Dalio, manager of the billionaire hedge fund, warned in an interview on Sunday that he was worried about the economy going through something “worst than a recession” if the trade war caused a collapse of the broader financial system.
“Dario, Bridgewater Associates, co-investment director for the world’s largest hedge fund, has appeared on NBC.”Meet Kristen Welker and the media“President Donald Trump’s tariffs are “very destructive” and “like throwing rocks into the production system.”
Welker asked Dario if Trump’s tariffs are likely to cause a recession, and he said, “Now we’re at the decision point and I think we’re very close to the recession.
Dario is “far deeper” what appears to be happening, as there is a “far more depth” with a “frustration of financial order” involving the dollar, along with a breakdown of the domestic and global order.
The billionaire hedge fund manager seeks a trade deal with China: “win-win’
Billionaire Ray Dalio told NBC that if the current headwinds are not being handled well, the economy could face something “worst than a recession.” (Hollie Adams/Bloomberg via Getty Images)
“That era is very similar to the 1930s,” Dario said.
“I’ve been studying history, and this is repeated over and over again. So, if you take tariffs, if you are taking debt, take away the rising power to challenge existing power, take those factors, the order change, the system is very, very destructive.”
Welker followed up and praised Dario for correctly predicting the 2008 financial crisis, then asked for his predictions as to where the country is heading. Dario noted that the US federal government is at a critical time with the fiscal deficit. This is expected to surge to 7% of GDP if tax and expenditure policies are not reformed.
Billionaire hedge fund manager warns of “economic heart attack” against the US economy
President Donald Trump has announced that he has wiped out tariffs on his US trading partners. (Chip Somodevilla / Getty Images / Getty Images)
“If it cuts to about 3% of GDP and these trade deficits and so on are managed in the right way, all of this can be managed very well,” Dalio explained, adding that he is encouraging members of parliament to cut the deficit to 3% of GDP.
Dario outlined how policymakers can stabilize debt at that level and called on Congress to take on the issue in a bipartisan way, just like in the 1990s, as the federal government last ran the surplus.
He added that if the US does not stabilize its deficit, interest rates on the country’s debts are likely to increase and exacerbate the country’s financial and economic challenges.
CBOs are surged to 156% of GDP to expand the US budget deficit, and citizen debt is rising sharply to 156%.
Duties are taxes on imports paid by importers, often passing those higher costs to consumers at higher prices. (Qian Weizhong/VCG via Getty Images)
“If they don’t, we’ll have these other issues as well as the debt demand/demand issues, and the outcome will be worse than a normal recession,” Dario said.
In another follow-up question, Welker asked Dario what he considers as the worst case scenario in the economic system.
“Very specifically, the value of money, internal conflicts that are not ordinary democracy as we know, and international conflicts that can very much destroy the global economy and become military conflicts like these breakdowns have happened before,” Dario said.
Click here to get your Fox business on the go
