Ray Dalio's Latest Interview: Many Phenomena Today Are Strikingly Similar to the 1930s
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Ray Dalio's Latest Interview: Many Phenomena Today Are Strikingly Similar to the 1930s
Only when you are in a sufficiently secure financial position can you truly build a diversified portfolio tailored to your needs, and cash may not be the best choice.
Navigating Web3 tides with focused insightsCompiled by: Smart Investor
"Systemic order collapses happen only once in a lifetime. Yet historically, they have never failed to occur."
"I do agree that 'not producing things is a big problem,' but the real question is: do we actually have the capacity to produce?"
Ray Dalio, founder of Bridgewater Associates, published an article on LinkedIn on April 7 discussing tariffs.
He stated that we are currently witnessing a classic collapse of monetary, political, and geopolitical orders. This type of systemic breakdown occurs roughly once in a lifetime, yet whenever unsustainable conditions have existed in history, such collapses have inevitably followed.
On April 8 Eastern Time, Ray Dalio appeared on CNBC for a 15-minute interview, reiterating his views. Facing sharp questions from three top anchors, Dalio responded with candid clarity.
He offered no buzzwords, nor did he issue doom-and-gloom predictions. Instead, he acted like a seasoned mechanic—opening up the system, inspecting its structure, disassembling the pressures—to address one fundamental question: Can our current operating model continue?
In this interview, Dalio applied his signature analytical framework to explain the essential context behind today's tariff debates: three major global orders are unraveling, while five enduring forces throughout human history continue to shape events. "Tariffs are essentially a response to global imbalances," he said.
Dalio acknowledged he fully agrees that "not producing things is a big problem" and supports the goal of reshoring manufacturing. However, he added, "But do we actually have the production capacity? That’s a deeper structural issue."
Dalio stands out for his clear-eyed analysis—he dissected America’s demographic realities and concluded that feasibility is extremely low.
"Our demographic structure looks like this: about 1% of people are exceptionally intelligent—they attend top schools and go on to create 'unicorn' companies (roughly half of whom are foreigners); another 10% also perform well; but 60% of the population reads below a sixth-grade level, making it difficult for them to be productive participants in modern manufacturing."
He further warned that many phenomena today bear striking similarities to the 1930s.
Facing such immense market uncertainty, Dalio concluded by sharing practical advice he personally follows as an investor.
He emphasized that only when you’re in a sufficiently secure financial position can you truly build a personalized, diversified portfolio. And cash may not be the safe haven it seems—after all, the true goal of investing “must be preserving your purchasing power after inflation.”
Question 1: Ray, frankly, we're all trying to make sense of what comes next. So if you could offer a historical perspective—or at least a historical reference frame—that would be incredibly helpful. How should we understand the current situation?
Ray Dalio:
I believe the reason we fail to understand the current cycle is because it happens only once in a lifetime. But there *is* an “order” to it—a whole system exists. These systems break down due to specific causes, leading to cyclical shifts.
For example, there’s a monetary system, and then there’s a debt cycle.
The current situation is this: one person’s debt is another person’s asset.
When the entire system accumulates to an unsustainable degree, debt problems arise—and we are now facing exactly such a debt crisis.
Of course, this is part of the monetary cycle.
There’s also the domestic political order cycle, marked by transitions from one political regime to another, typically accompanied by intense polarization and turmoil between left and right.
Especially in democracies, where lack of order fuels ongoing conflict. Democratic systems require cooperation and compromise—mechanisms that are now gradually breaking down.
We are experiencing precisely such a transformation in political order.
Beyond that, there’s an even larger system—the international order.
This international order began in 1945, after World War II. The war’s victors—the dominant powers—established the rules.
They created a series of multilateral institutions: the United Nations, the World Trade Organization, the World Bank, and so on.
But now, multilateralism is disintegrating and being replaced by unilateralism.
The reason is the same: structural flaws within the system have made it unsustainable.
Thus, we see three major orders currently collapsing:
First, the monetary and debt order (excessive debt—because debt is money);
Second, internal political order (how our institutions function—who controls what issues);
Third, shifts in the international order (the breakdown of interdependence).
Besides these, five other powerful forces throughout human history continue to operate: climate change and natural disasters; innovation and new technologies, etc. It’s the interaction among these forces that constitutes the full backdrop of our present moment.
Returning to tariffs: tariffs are essentially a tool to address global imbalances. Imbalance here refers to capital imbalance and trade imbalance—both of which are unsustainable.
At the same time, international conflicts come into play. For instance: how can the U.S. ensure national security without manufacturing anything? We depend on imports from China. Conversely, how can China ensure its own security while heavily reliant on American capital? This interdependence is now breaking apart.
This is the fundamental context underlying our current discussions.
Question 2: As you’ve described, from a historical standpoint, are these policies politically appealing? Are they popular in the U.S. or elsewhere? What about economically? Markets rebounded today, but many investors have already lost 10% of their wealth. Mechanistically, what does this mean?
Ray Dalio:
Mechanistically, this means: costs rise, corporate revenues decline, and access to capital becomes harder.
What does this mean for businesses? Higher operating costs, lower earnings, and more difficulty securing financing.
And simultaneously, we’re attempting to rebuild manufacturing.
I completely agree that “not producing things is a big problem,” and I support this objective. But do we actually have the capacity to produce? That’s a deeper structural challenge.
Our demographic structure is as follows:
About 1% of people are exceptionally smart—they attend elite schools and launch “unicorn” companies (about half of whom are foreign-born); another 10% also do well; but 60% of the population reads below sixth-grade level, making them unlikely to become productive workers in modern manufacturing.
We agree on the core problem—too much debt. The Treasury Secretary and others acknowledge we should keep budget deficits under 3% of GDP.
But the key question is: how do we achieve that? When? And how can we realistically attain self-sufficiency under these conditions?
From a practical standpoint, rebuilding manufacturing in the U.S.—given our current demographics, education levels, cost of capital, and technological trajectory—is extremely difficult. Yet it remains critically necessary.
Question 3: So are you supporting the President’s policies or opposing them? I want to understand your actual conclusion—what stance are you taking?
Ray Dalio:
I agree with the identification of the problem itself. But I’m deeply concerned about the proposed solutions—specifically, their feasibility.
In other words, I believe these policies will generate a series of side effects—like those I mentioned earlier: rising costs, falling incomes, financing difficulties, and disruptions to capital markets.
Moreover, I think they introduce sand into the gears of the global production system—disrupting supply chains and reducing global productivity.
At the same time, I recognize the reality of global interdependence, declining global efficiency, and America’s lack of competitiveness. These are long-term, structural challenges that will inevitably lead to political consequences.
This is the nature of cycles. And now, all of this unfolds during a period of exceptionally poor fiscal health.
Our budget deficit problem is severe in itself. Looking ahead just a few months, we must bring the deficit down to around 3% of GDP.
Yet at the same time, we’re advancing policies that significantly increase costs and generate multiple adverse side effects. These contradictions aren’t easy to resolve.
I’m worried because the deeper issues—ongoing debt accumulation, overspending, lack of competitiveness—won’t vanish just because of policy rhetoric.
These patterns repeat throughout history, and we are now entering a phase remarkably similar to the 1930s.
Question 4: But right now, we genuinely don’t know how to ultimately resolve these issues with China?
Ray Dalio:
I’m not ideologically driven. I’m more like a mechanic—I do system diagnostics.
So when discussing these issues, I approach them from a “systems perspective.”
For example, I fully agree with your point: China’s current manufacturing scale already exceeds the combined output of the U.S., Germany, and Japan. It has become the world’s most competitive manufacturing powerhouse.
Meanwhile, the U.S. has lost its manufacturing capacity and become the world’s largest consumer nation.
We rely heavily on debt to fund consumption, placing us in an extremely difficult position.
Question 5: Under these circumstances, what does foreign investment in U.S. Treasuries really mean? What’s your view on short-term supply and demand for funding?
Ray Dalio:
Foreign investors, overall, are already overweight in debt assets within their portfolios.
The volume of U.S. debt we now need to sell them amounts to 6.5% of GDP—an amount they are unwilling to absorb further.
Partly because they already hold too much; partly because today’s world is filled with uncertainty—especially fears over sanctions.
You see, this exact scenario played out in the 1930s.
The conflict between the U.S. and Japan, asset freezes, sanctions—all these historical dynamics are replaying now.
The current situation is one of supply-demand imbalance.
We have too much debt, yet insufficient willingness to buy it—resulting in bond market disequilibrium.
Question 6: Do you think this could push interest rates higher? Because it appears some plans within the Trump administration aim to lower rates, to reduce debt servicing costs—last year alone, interest payments approached $1 trillion. Do you think we can achieve that goal?
Ray Dalio:
You’re absolutely right. But we must understand there are two ways to lower interest rates:
The first is through improving supply-demand balance—a healthy method.
The second is forcing rates down via money printing.
Interest rate movements fundamentally depend on the balance among three elements: spending, taxation, and interest costs.
If the government achieves greater fiscal balance—regardless of how (a political choice)—and genuinely improves bond market supply-demand dynamics, then rates can fall in a healthy, sustainable way.
This would also help us reach the target of bringing deficits down to 3% of GDP.
But you cannot sustainably force rates down through money printing—that’s an unhealthy, unsustainable path.
Question 7: Let me ask directly: looking at the market now, what are you thinking? Would you say the market is overvalued? Fairly valued? Undervalued? Is this a 'catching a falling knife' scenario, or a 'golden opportunity to buy'? How should ordinary investors think about today’s market environment?
Ray Dalio:
Some things are certain to happen; others are merely possible. I won’t say “now is the time to buy” or “now is the time to sell.” I never do that, and I never give market timing advice.
What I want to tell the general public is: you need a well-structured, balanced, diversified portfolio, along with a long-term investment plan you can stick to.
In my decades as an investor, I’ve lived through 9/11, the 2008 financial crisis… many shocks.
The most important thing is to have a robust, diversified portfolio capable of weathering various environments.
I won’t dive into specifics.
But if you ask me, “How should I diversify?”—then first, understand this: know what you don’t know.
Once you realize you can’t accurately time the market, you’ll see that relying on timing alone leads nowhere—only emotional reactions.
When I first started with little capital, here’s what I did:
I asked myself: “How much savings do I have? If I had zero income starting tomorrow, how long could I survive on this?”
I calculated first in months, then in years.
Then I asked: “If my assets dropped 50%, how long could I still survive?”
Only when you’re in a sufficiently secure financial position can you truly build a personalized, diversified portfolio.
But here’s a common misconception: don’t assume cash is safe.
In the long run, holding cash may be the worst investment decision you can make.
You must focus on whether your purchasing power is preserved—your inflation-adjusted purchasing power.
For instance, when the Fed cuts rates and starts printing money, the “price” of cash falls—you lose purchasing power.
This has already happened in recent years, and people should feel it firsthand.
So let me summarize: maintain a diversified, multi-asset portfolio—and pay close attention to our nation’s debt problem.
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