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    Why billionaire investor Ray Dalio feels an economic disaster is looming

    Why billionaire investor Ray Dalio feels an economic disaster is looming

    Why billionaire investor Ray Dalio feels an economic disaster is looming
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    By CNBCTV18.com  IST (Published)

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    Ray Dalio's warning is largely based on his apprehension of a potential US-China war. However, his dire predictions have often been off the mark in the past, though he did get the 2008 financial crisis right.

    Ray Dalio, the Co-Chief Investment Officer of the world's largest hedge fund Bridgewater, has stated that a new economic disaster is waiting to happen. The 72-year old billionaire warned that the United States is at risk of war with China and the resulting economic disaster could be terrible.
    “I think we’re at risk of a war with China. Largely due to misunderstandings,” Dalio was quoted as saying by CNBC.
    Dalio has spoken about the potential risk of war between the US and China earlier as well. Dalio had written in his newest book, Principles for Dealing with the Changing World Order, that America’s attempt to change China’s culture to become “more American” could result in potential conflict. The relationship between US and China has been at a multi-decade low in recent years, with tensions escalating into a trade war since 2018.
    The trade war resulted in companies and consumers being affected adversely. A Moody’s analytics study had found that the trade war between the two countries had cost the US at least 300,000 jobs in 2018 alone. The US companies suffered $1.7-trillion losses in market capitalisation, according to a Federal Reserve Bank of New York study.
    Though Dalio was quick to say his predictions were not facts, he has been wrong about other predictions in the past. But Dalio was also accurate in predicting the 2008 financial crisis and the possible consequences of the COVID-19 pandemic on the US economy.
    Analysts, however, point out that the risk of the US being embroiled in a conflict with China remains extremely high. China’s aggressive ‘wolf-warrior’ diplomacy over flashpoint issues like sovereignty of Taiwan, territorial claims in the South and the East China Sea, and border disputes with India can all be potential sources of conflict.
    Dalio had last week stated that China’s difference in human rights practices from the US stems from the mentality of the country’s leadership. “As a top down country what they are doing is -- they behave like a strict parent,” Dalio had told CNBC.
    Dalio had faced a backlash for his comments and then took to social media to clarify that he was not expressing his own opinions.
    “I was attempting to explain what a Chinese leader told me about how they think about governing. I was not expressing my own opinion or endorsing that approach,” Dalio wrote in a LinkedIn post.
     
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