Hedge fund billionaire Ray Dalio warns that political and wealth gaps in the US could lead to conflict - and even 'a form of civil war'

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·4 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Ray Dalio
Ray Dalio. Eoin Noonan/Web Summit/Getty Images
  • Hedge fund billionaire Ray Dalio is warning that political and wealth gaps in the US could lead to conflict — and even a form of civil war. 

  • During an interview Tuesday with CNN's Poppy Harlow, the Bridgewater Associates cofounder said that by studying history, he's found cycles where "large wealth gaps with large values gaps at the same time that there's a lot of debt and there's an economic downturn produces conflict and vulnerability."

  • Dalio blamed unemployment and a lack of productivity for the looming threat of conflict, but also called out political polarization as a driving force, calling the recent exodus of high-profile executives from cities like San Francisco and New York a form of civil war.

  • "People are leaving to go from one place to another, partially for taxes, but also partially for other reasons," he said. "The worst alternative is that one side or another says, 'This isn't my country anymore. This isn't my population.'"

  • Dalio has been warning for months of severe outcomes like revolution or civil war as a range of crises affect the US economy.

  • Visit Business Insider's homepage for more stories.

Hedge fund billionaire Ray Dalio is warning that the political and wealth gaps in the US could lead to conflict - and even what he describes as a civil war.

Dalio discussed the state of the US economy during an interview released Tuesday with CNN's Poppy Harlow. The interview was filmed last week, prior to his son's death last Thursday

The Bridgewater Associates cofounder described what he sees as three major forces underway: a wealth gap, a values gap, and a political gap, forces that he said have not existed to these degrees since the 1930s. 

"History has taught us these things," he said. "I've studied the last 500 years of history and cycles: large wealth gaps with large values gaps at the same time that there's a lot of debt and there's an economic downturn produces conflict and vulnerability and that will be with us unless the economy is good for most people - most people could be productive and effective and benefit."

The issues, he said, stem from a lack of employment and productivity, and he said that growing unemployment and jobs being permanently lost to the coronavirus pandemic will result in "a continuation of the worsening." 

But he also blamed increasing polarity and a lack of political moderates as a force behind the looming threat of conflict in the US. 

"If you look at the map, the election map, you see red and blue, but you also don't see how red the red is and how blue the blue is," Dalio said, adding that people are more "intransigent" in their views than ever before.

Read more: Billionaire investor Ray Dalio breaks down how US debt and money-printing binges have formed a 'classic toxic mix' that could set it on a downward spiral towards revolution and civil war

Dalio touched on the recent exodus of executives and even entire companies from major cities like San Francisco and New York to places like Texas and Florida. In the last several months, billionaires like Oracle founder Larry Ellison, Dropbox CEO Drew Houston, and Tesla and SpaceX CEO Elon Musk have decamped from Silicon Valley, and Oracle and HP have both moved their company headquarters to Texas. Venture capitalist Keith Rabois moved to Miami after denouncing San Francisco's taxes.

Dalio likened this migration to a "civil war" of sorts.

"We're seeing a form of civil war: people are leaving to go from one place to another, partially for taxes, but also partially for other reasons," he said. "The worst alternative is that one side or another says, 'This isn't my country anymore. This isn't my population.'"

He added: "When the cause that people are behind is more important than the means of resolving their disagreements, that's a threatening situation."

Dalio has been warning for months of severe outcomes like revolution or civil war as a range of crises impact the US: the pandemic, a weakened economy, government debt, political divides, and income inequality. In an interview with Khan Academy founder Sal Khan earlier this year, Dalio said that the American dream "does not exist" right now, which could lead to a collapse of capitalism. He described income inequality as a "national emergency."

"If you don't have a situation where people have opportunity, you're not only failing to tap all the potential that exists, which is uneconomic, you're threatening the existence of the system," he said. "I think that's coming to home very clearly with the downturn in the economy with this virus."

Read the original article on Business Insider