American billionaire Ray Dalio explained that a new scene is opening where there will be five great forces This will completely dominate the center of the global economy. Speaking at the Milken Institute Asia Summit in Singapore, the founder of Bridgewater Associates explained that these factors, which are old acquaintances, will now emerge stronger than ever to dominate the scene. These are often cyclical and closely related themes.
Dalio gives this view just hours before the Federal Reserve announces its interest rate decision. Markets are giving a 100% probability to the option of a fall in the “price of money” for the first time since 2020, opening a new era. The ECB already took this decision in June.
The debt
In this sense, Dalio stressed that debt will play a key role. Given that there is still some uncertainty about the extent of the rate cut, this will be a key factor. “We are going to have a change in interest rates from the Federal Reserve, and What will all this dynamic generate? What will happen to all the debt? How will it be resolved? he pondered.
The US central bank has kept interest rates at their highest level in 23 years (between 5.25% and 5.5%), which has led the government to allocate $1.049 trillion just to pay interest on the debt. a 30% increase compared to the previous year. This figure is part of a total projected cost of $1.158 billion for the whole year. “What is its value as one man’s debt or as another man’s wealth? What is its value as a store of wealth? These are important and urgent questions,” he asked the participants.
Internal and political order
The second question will arise in November, when it is decided who will occupy the White House.”Internal order and disorder will be the keyFor the businessman, “there are irreconcilable differences between the right and the left, driven by large gaps in wealth and values… and they call into question even the orderly transition of power,” he added.
For the first time in the 2024 election cycle, Vice President Kamala Harris is considered more likely to win than former President Donald Trump, according to the latest polls from economists and federal funds. The latest CNN poll puts a close call with the Democrat leading by just three points and with 48% of the votes.
Last week, candidates debated issues ranging from abortion rights to tariffs and other policy proposals. Still, No matter who occupies the White House, The president’s policy agenda has limited impact on the overall health of the U.S. economy.
Geopolitical conflicts
Dalio cited geopolitics as a third concern: particularly the relationship between the United States and China. The relationship between the two powers has been defined by a series of ongoing tensions, such as territorial issues in the South China Sea, the political status of Taiwan and economic tariffs. “I think the fear of war will probably be an obstacle, mutually assured destruction. But what is happening is disorder,” he said later, without evoking a specific boiling point.
nature
Dalio later stated that “acts of nature” historically posed a greater threat to humanity and society than war. “Natural phenomena, droughts, floods and pandemics they killed more people and we have been responsible for bringing more changes in the internal order and in the international order,” Dalio said.
And the cost of climate change is set to rise, he said. According to the World Economic Forum, the climate crisis is causing a loss of 12% of GDP global for every 1°C increase in temperature. This is why climate problems and the measures taken by global economies to adapt to them will be at the centre of the debate.
Technology
The technology will be “fantastic” if it can be adopted and invest correctlysaid the billionaire. “The potential productivity benefits are enormous,” he said, explaining that technology produces unicorn companies and that when they do, a small portion of the population is better off. “Whoever wins the technology war will win the military war,” he added. Evaluating the five factors as a whole, Dalio concluded that “the surprises are more negative than positive,” he said.
