Ray Dalio: Trump is leading America towards the 1930s, while Wall Street remains silent out of fear

Rare Warning! Ray Dalio, founder of Bridgewater Associates, claims that Trump is pushing the U.S. towards a governance model reminiscent of the 1930s, while Wall Street remains silent out of fear of retaliation for criticism.

On September 2, it was reported that billionaire hedge fund manager Dalio stated that the current political and social climate is similar to the global situation of the 1930s and 1940s, and Wall Street investors are silent about presidential policies due to fears of retaliation.

Dalio noted that Trump's national intervention in the private sector, including the decision to acquire a 10% stake in Intel, reflects characteristics of "strong authoritarian leadership." He warned that this approach is similar to the political patterns that emerged globally in the 1930s and 1940s, stemming from a "desire to control financial and economic situations."

The seasoned investor also warned that the independence of the Federal Reserve is under threat. Dalio stated that a politicized central bank will "weaken people's confidence in the Federal Reserve's defense of currency value," and international investors have begun to shift from U.S. Treasuries to gold.

As the independence of the Federal Reserve is threatened, Dalio predicts that the U.S. will face a debt crisis in about three years. He pointed out that the enormous fiscal gap will force massive bond issuance, while investors are questioning the value storage function of U.S. Treasuries.

Return of the 1930s Political Model

Dalio draws parallels between the current political and social conditions in the U.S. and the global situation of the 1930s and 1940s. He pointed out that "wealth gap," "value gap," and the collapse of trust are driving the U.S. to adopt "more extreme" policies.

Trump's government's national intervention in the private sector has become a focal point for Dalio. He specifically mentioned Trump's acquisition of a 10% stake in chip manufacturer Intel, believing it reflects "strong authoritarian leadership, stemming from a desire to control financial and economic situations." Dalio described the operational mechanism of this political cycle:

"Traditionally, the exacerbation of wealth and value gaps leads to the rise of left-wing and right-wing populism, creating irreconcilable differences that cannot be resolved through democratic processes. As a result, democratic institutions weaken, and more authoritarian leadership emerges, as a large proportion of the public desires government leaders to control the system to make things work better for them."

It has been reported that despite growing private concerns among Wall Street investors about Trump's policies, few prominent financial figures publicly criticize the president. Dalio explained the reasons behind this phenomenon:

"During such times, most people remain silent because they fear retaliation for criticism."

The founder of Bridgewater Associates emphasized that he is merely "describing the causal relationships driving the current situation." His public statements stand out among Wall Street elites, reflecting the political pressure faced by the financial community.

Threat to Federal Reserve Independence

According to CCTV News, on August 25 local time, U.S. President Trump publicly announced a letter to Federal Reserve Governor Lisa Cook on his social media platform "Truth Social," declaring her immediate dismissalReports indicate that Trump's actions have raised concerns for Ray Dalio regarding the independence of central banks. According to a previous article by Jianwen, Trump nominated his senior economic advisor Stephen Miran to serve as a Federal Reserve governor, aiming to fill the vacancy left by the resignation of governor Adriana Kugler.

Dalio warned that a politically weakened central bank forced to maintain low interest rates "will undermine people's confidence in the Federal Reserve's defense of the currency's value, making dollar-denominated debt assets less attractive, thereby weakening the monetary order as we know it."

He revealed that international investors have begun shifting from U.S. Treasury bonds to gold investments, a trend reflecting market concerns about the stability of the dollar system. The political pressure facing the Federal Reserve may further exacerbate this capital flow.

Debt Crisis Approaching

As the author of "Principles: Life and Work" and "The Changing World Order: Why Nations Succeed and Fail," Dalio has long warned of the debt threats facing Western economies. He likens the U.S. to a circulatory system blocked by blood clots, with debt repayments squeezing out other spending.

Dalio predicts that "the U.S. will face a 'debt-induced heart attack' in about three years, give or take a year or two." The enormous imbalance of Washington's annual spending of about $7 trillion against revenues of only $5 trillion will force the government to issue new debt on a large scale.

However, investors are questioning whether U.S. Treasuries are still a "good store of wealth." Dalio stated, "Debt demand is unlikely to keep pace with supply."

Faced with a situation where the market begins to question the credibility of U.S. finances, the Federal Reserve will face a tough choice: "either allow interest rates to rise and face a debt default crisis, or print money to buy debt that others are unwilling to purchase." Dalio emphasized that both paths will damage the dollar