• Expert: Five factors influence the current global economy
• Ray Dalio concerned about upcoming Fed interest rate decision
• Focus on great power conflicts
Billionaire and Bridgewater Associates founder Ray Dalio names five factors that, according to him, are currently having a significant impact on the global economy. These forces are closely related and often cyclical in nature, as Dalio emphasized to the World Economic Forum.
Debt, Money and the Economic Cycle
Dalio expresses his concerns about the handling of rising US debt, particularly with regard to the Fed’s decision on interest rates. Because: With interest rates at their highest in the past 23 years, the US government has allocated $1.049 trillion to service the debt, an increase of 30 percent compared to the previous year. This brings the projected total for the current year to $1.158 trillion, according to Dalio. In this context, the expert raises the question of how these debts, which are also other people’s assets, can act as a store of wealth and what impact this will have on the economy.
Dalio is also worried about the political unrest in the USA, which is increasing due to increasing tensions between the political camps. The differences between right and left would become ever greater, coupled with significant differences in income and values.
Great power conflicts
Dalio further points to the ongoing geopolitical tensions, particularly the difficult relationship between the USA and China. The differences would range from territorial disputes in the South China Sea to trade conflicts and the question of the status of Taiwan. Despite fears of a potential confrontation, uncertainty remains about the long-term stability of these relationships, Dalio said. In addition, there are natural disasters such as droughts, floods and pandemics, which, according to Dalio, historically represent a greater threat to humanity than wars. Climate change would further exacerbate this threat. In this context, Dalio points to data from the World Economic Forum showing that global warming of 1°C could lead to a loss of 12 percent of global GDP.
Although technological innovations certainly bring production advantages, only those who are able to use them correctly will benefit from them, explains Dalio. In this context, he emphasizes that those who would gain the military upper hand in the long term would also win the race for modern technologies. The expert suspects that the surprises that the coming years have in store will be largely negative. It is therefore clear to Dalio: There are currently risks.
Editorial team finanzen.ch
