'World Is in A Bubble': Ray Dalio Warns Of A Perfect Storm — Debt, Geopolitics & Tech Colliding

Billionaire investor Ray Dalio, known for his all-weather investment strategy, has sounded an alarm on the global economy, warning that the world is currently going through a 'bubble' and facing a convergence of forces that could create the 'perform storm'.

Speaking to Nikhil Kamath on his WTF podcast, Dalio highlighted the disconnect between perceived wealth and actual money. "In my opinion, we're in a bubble," Dalio stated. "We have right now a very high ratio of wealth to money."

The veteran investor went on to explain that while wealth can be created without money, money remains the critical vehilcle for settling transactions, warning that rising populism and wealth gaps are driving calls for wealth taxes, even though the perceived wealth exists only in the form of valuation. This disparity, according to Dalio, can pop open a bubble.

"If you tax wealth, then people have to sell in order to get the money to pay the taxes, and that creates a dynamic that can pop a bubble," he said.

Dalio went on to talk about the 'five big forces' that drive economies and are on the verge of colliding to create the perfect storm.

The first, according to Dalio, is the debt and money cycle, where excessive debt production is rampant. He linked this to the rapid generation of fiat currencies.

The second is the "internal political force," characterised by conflicts between the rich and poor and a challenge of governance and election results.

The third force is the shifting geopolitical order, marking a move from a US-dominated multilateral world to a "power struggle order" with the rise of China.

"These three major cycles... tend to coincide, and when they coincide, it creates a perfect storm," Dalio warned.

He also pointed to "acts of nature," such as climate change and pandemics, and "man's inventiveness and technology," like AI, as the fourth and fifth forces.

Dalio noted that these patterns are recurring, stating, "It's all just a human story."