Ray Dalio warns that the global order is facing a once-in-a-century collapse: a storm of debt, currency, politics, and tariffs intertwining.

As the global market is embroiled in endless debates over a new wave of tariff policies, Ray Dalio, the founder of Bridgewater Associates, posted a thought-provoking comment on LinkedIn. He believes that rather than focusing on the effects of a single policy, we should pay more attention to a larger historical cycle that is unfolding, a massive transformation of order spanning finance, politics, and geopolitics.

(Ray Dalio focuses on the US-China tariff war: China may allow the yuan to appreciate, should the Taiwan dollar follow suit?)

A once-in-a-century order transition is happening.

According to Dalio, we are at a critical moment of collapse of the global major currency and political order. Such a level of transformation may only occur once in a lifetime, but has happened multiple times in history, such as the transition from the gold standard to the Bretton Woods system. He emphasizes that when certain systems (such as the debt system or monetary policy) become unsustainable due to excessive accumulation, the system will naturally collapse, thereby driving the overall order transformation.

The contradiction between debt and assets has reached a critical point.

Dalio pointed out that in the current debt cycle, debt can no longer continue to expand—this is the main reason for the pressure on capital markets. He stated: "The debt we have is someone else's asset, and when this model can no longer continue, it will lead to a crisis." This situation has already appeared in multiple countries around the world, including the budget deficit in the United States and the difficulties in corporate financing.

The world order that began in 1945 has been shaken.

He reflects on history, believing that the current international order began in 1945 — that is, the US-led system after World War II, which includes the United Nations, the World Trade Organization, and the dollar-based international financial structure. However, this framework is now facing challenges, including the rise of China, the trend of deglobalization, and the destructive impacts brought by "historical events" such as climate change and pandemics.

Imbalance is a breeding ground for systemic risk.

In addition to political and military factors, Dalio also pointed out that the extreme imbalance in global trade and capital is the core reason for the crisis. He believes that the long-term trade deficit and shortfall have led to structural problems, and these issues can no longer be resolved by short-term tariffs.

Tariffs are just a superficial issue; behind them lies a deeper problem.

When discussing the latest wave of tariff policies, Dalio believes that what is actually reflected behind this is structural economic weakness and domestic political pressure. He warned: "These measures may have political appeal in the short term, but economically, they will increase costs, reduce profits, and make capital harder to obtain."

He further described this situation of asset shrinkage as akin to a "wealth tax without receiving money" for investors — the reality for many capitalists today is that their portfolios have evaporated 10% in value overnight.

The dual challenge of productivity and competitiveness

Facing the pressure of transformation in the domestic manufacturing industry, Dalio admitted that the United States currently faces significant challenges in human resources. He pointed out that only 1% of the U.S. population possesses top-notch innovative abilities, while over 60% have reading skills below the sixth-grade level. Such structural issues make the path for the U.S. to rebuild its competitiveness and productivity filled with challenges.

The dilemma of fiscal deficits and policy choices

When it comes to fiscal issues, Dalio emphasized that budget deficits must be kept below 3% of GDP; otherwise, it will have a significant impact on economic confidence and international credit. However, such policy tightening is often difficult to promote politically, especially in election years or during times of heightened populist sentiment.

The nature of the cycle, is a storm coming?

Ultimately, Dalio did not explicitly state whether he supports the government's specific tariff policies, but he repeatedly emphasized one point: we are in a period of systemic transition. From debt and currency to political and productivity issues, these challenges cannot be solved by a single policy.

He expects that these issues will further ferment in the coming months, potentially bringing about dual political and economic consequences. "This is not a short-term event, but the beginning of a deep transformation," he summarized.

This article warns that the global order, as stated by Ray Dalio, is facing a once-in-a-century collapse: a storm of debt, currency, politics, and tariffs intertwined. It first appeared in Chain News ABMedia.