Billionaire investor and financial historian Ray Dalio is growing very concerned about a new world order as economies battle through high levels of inflation, bloated debt positions and various geopolitical tensions.
"We are approaching a challenging of the world order," the Bridgewater Associates founder and co-chief investment officer said on a new episode of Yahoo Finance Presents. Dalio added there is an "increased likelihood of some kind of war."
"There are five kinds of wars. There's a trade war, a technology war, a geopolitical influence war, a capital war, which we're in the midst of, and then there's a military war. Those things drive countries to be self- sufficient and independent. And as a result, globalization diminishes and nationalization nationalism increases," Dalio explained.
Dalio's comments come as a new post on YouTube titled "Principles for Dealing with the Changing World Order" (based on his latest book) is nearing an impressive 10 million views (perhaps underscoring the concerns many folks have about the global economy at this juncture).
Pick your poison as to the potential drivers of Dalio's new world order.
Inflation in advanced economies such as the United States continues to run red-hot, ditto for emerging markets. The Federal Reserve is lifting interest rates, driving up the cost of capital on businesses. And the Russia-Ukraine crisis has caused increased tensions between the West and superpowers Russia and China.
Dalio is concerned on the impact these variables have on the value of money.
"When you run very large deficits you have to spend a lot on social programs, you have to spend a lot on defense, you have to spend a lot on environmental programs, and so on. And so when you spend a lot more money than you earn, then you have to print money to make up that difference to make the purchases, and then that devalues money," Dalio added. "So as money goes into other assets, it produces more inflation and you start to enter a certain type of environment. And the environment that we're in is beginning to be very much like that of the 1970s."
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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