In an interview with “Sunday Morning Futures” host Maria Bartiromo, Bridgewater Associates Founder Ray Dalio warned of a potential capital war if the United States government bans investment in China or withholds its bond payments to the country.
“If you say, by law, don’t invest in China or even possibly withholding the payment of bonds that the United States owes payment on in China, these things are possibilities and they have big implications such as for the value of the dollar because investors, premarket investors, are not used to having those things dictated by the government,” Dalio said. “So these are difficult questions that have to be well-addressed at this time”
Dalio said that we are in an “ideological civil war” with the Chinese and that when you combine that with “an economic downturn in which there is the printing of money and the creation of money out of thin air,” it creates larger issues for the U.S. economy.
The biggest issue Dalio is worried about is “the soundness of our money.”
“You can’t continue to run deficits, sell debt or print money rather than be productive and sustain that over a period of time,” Dalio said.
He warned that if we do not work together to make more sound decisions about our money, the economy will decline.
“If we don’t work together to do the sound things, to be productive, to earn more than we spend, to build the stability of our currency and build a good balance sheet, we are going to decline. We are declining because of those things,” Dalio said. “And so it’s basically in those fundamentals that are the most important things that we deal with. We are our own worst enemy, so how we deal with each other soundly and productively in a way that most people in the country believe is fair is going to determine our future.”