Ray Dalio, founder of Bridgewater Associates, has raised a serious economic alarm. During an interview, he criticized US President Donald Trump’s tariff policies. According to him, these decisions have weakened the U.S. economy.

“I think that right now we are at a decision-making point and very close to a recession,” Dalio said. “And I’m worried about something worse than a recession if this isn’t handled well.”

Since Dalio had accurately predicted the 2008 financial crisis, his latest warning has drawn major attention.

He Says the Damage Can’t Be Undone

In addition to the interview, Dalio also posted his concerns on social media. There, he claimed that it is “too late” to reverse the damage caused by the trade policies. Furthermore, he warned that the global system, once led by the U.S., is now falling apart.

He pointed out that growing debt, trade tensions, and global power shifts are fueling instability. “We are having profound changes in our domestic order … and we’re having profound changes in the world order. Such times are very much like the 1930s,” he said. “I’ve studied history, and this repeats over and over again.”

Dalio Offers a Way Forward

Despite the gloomy outlook, Dalio believes the crisis can be managed. He urged U.S. lawmakers to take action quickly. Specifically, he suggested that the federal deficit be reduced to 3% of GDP.

“If they don’t, we’re going to have a supply-demand problem for debt at the same time as we have these other problems, and the results of that will be worse than a normal recession,” he warned.

Moreover, when asked about the worst-case scenario, Dalio described a disturbing picture. He fears a steep fall in the value of money, rising domestic unrest, and even international conflict. “The value of money, internal conflict that is not the normal democracy as we know it, an international conflict in a way that is highly disruptive to the world economy and could even be a military conflict,” he said.

He Warns of a Global System Collapse

Separately, Dalio published another post online. In that, he claimed the global economic and political systems are near collapse. “Based on many of my indicators,” he wrote, “it appears that we are on the brink of the monetary order, the domestic political and the international world orders breaking down due to unsustainable, bad fundamentals.”

Additionally, he pointed out that many U.S. trading partners are already preparing for reduced ties. “Whatever happens with tariffs … radically reduced interdependencies with the U.S. is a reality that has to be planned for,” he said.

Dalio also stressed that U.S. overspending is no longer sustainable. “It is also increasingly being realised 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 added.

His Past Warnings Came True

Back in 2007, Dalio had warned about growing risks in the financial system. That same year, his firm predicted rising interest rates would eventually lead to a crash. Just months later, the 2008 recession began.

Although some now label him a pessimist, his earlier warnings proved correct. Last year, he admitted he was wrong about a 2023 debt crisis. Still, he insists that most people are missing the bigger picture.

“The far bigger, far more important thing to keep in mind is that we are seeing a classic breakdown of the major monetary, political, and geopolitical orders,” he wrote. “This sort of breakdown occurs only about once in a lifetime, but they have happened many times in history when similar unsustainable conditions were in place.”