Nick Lichtenberg

Legendary billionaire investor Ray Dalio has issued a stark warning about the future of the United States and the United Kingdom, stating he is not optimistic about either nation’s trajectory and believes “we’re heading into very, very dark times.” Drawing on his own proprietary study of 500 years of history, the founder of the world’s largest hedge fund, Bridgewater Associates, points to a predictable 80-year cycle that suggests an era of significant global and internal strife is upon us.

Dalio’s framework is built on five major forces that drive history in cycles: a money and debt force, internal conflict, geopolitical conflict, acts of nature, and human inventiveness, particularly technology. He argues that both the U.S. and the U.K. are exhibiting clear symptoms of a cycle nearing a dangerous phase.

“The U.K. has a financial problem, the government has a debt problem,” Dalio explained in an appearance on the “Diary of a CEO” podcast, noting that when debts rise relative to income, it squeezes the economy. This financial strain is connected to the second force: intense internal conflict. With large wealth and opportunity gaps, societies are experiencing deep divisions between the left and right, leading to a loss of trust in the system. Dalio believes the U.K. also lacks the culture of inventiveness and the robust capital markets seen in the U.S., further hindering its prospects.

While that’s arguable, what is not is that productivity in the U.K. has been remarkably flat for roughly 20 years. Diane Coyle, a professor of public policy at the University of Cambridge, talked to NPR’s Planet Money about it in 2022. “We’ve had flatlining productivity since the mid-2000s,” she said. “And while compared to other countries, they’ve had slowdowns, we’ve just had a much worse slowdown than anybody.” The London School of Economics revisited the subject earlier this year, calling it a “productivity puzzle” while concluding that the U.K. had “had the worst contraction in labour productivity after the financial crisis” compared to the U.S., Germany and France.

Problems ahead for America

However, Dalio was equally pessimistic about the United States. While acknowledging its culture of entrepreneurship and innovation, he pointed to severe challenges across the board. The U.S. has a significant debt problem, and its internal political landscape is dangerously polarized by wealth and values gaps, putting democracy itself at risk. Furthermore, he argued that it’s in a “great power conflict” with China and its allies, and the two countries are locked in a technology war that will determine the future world order. “The winner of the technology war is going to win all wars,” Dalio stated, referencing historical precedents like the development of nuclear weapons.

____
https://finance.yahoo.com/news/ray-dalio-warns-heading-very-161147962.html?