Sign Up

Ray Dalio Warns Of 'Abrupt, Unconventional Changes' In Markets: Here's How The 'Tariff Machine' Affects Currency, Monetary And Fiscal Policies

Billionaire investor and the founder of Bridgewater Associates, Ray Dalio, has issued a warning about the economic ripples of escalating tariffs. In a recent analysis, Dalio dissects the “tariff machine,” revealing its impact on global markets and highlighting the potential for “abrupt, unconventional changes.”

What Happened: Dalio’s analysis highlights the “first-order” effects of tariffs but goes on to explain how the “second-order” effects are where the true market volatility lies. However, he conveys that despite "abrupt, unconventional changes" in the global markets and economies, the production, trade, and capital imbalances will ultimately come down.

He emphasizes that the U.S. dollar’s reserve currency status, while advantageous, will contribute to these imbalances, adding another layer of complexity. However, the long-term stability of markets will depend on trust in debt quality, national productivity, and sound political systems.

Overall, he explains that "non-market, non-economic adjustments would have unique and challenging impacts on the countries they apply to."

See Also: Trump Tariffs Could Cost $30 Trillion Or About $300,000 Per Family, Says Former Treasury Secretary Larry Summers: ‘Most Expensive And Masochistic’

Why It Matters: The first order effects of tariffs, which he describes as "taxes," lead to;

Revenue Generation: Tariffs create tax revenue for the imposing country, paid by both foreign producers ...

https://www.benzinga.com/25/04/44623855/billionaire-investor-ray-dalio-warns-of-abrupt-unconventional-changes-in-markets-heres-how-the-tariff-machine-aff