Ray Dalio says that prices can prepare us for a large confrontation or war for peers

The investment of the Ray Dalio magnate said that prices are not only a question of tax revenue – they are also a means for countries to prepare their economies for periods of conflict and war.

While the Trump administration announced reciprocal prices on China, the European Union and dozens of other regions on Wednesday, Dalio wrote in a LinkedIn post that import taxes were “necessary in time of an international conflict of Grand Power”.

The reason for the billionaire? They tend to reduce dependence on foreign supply chains.

Dalio, who founded the Hedge Fund Bridgewater Associates, wrote that prices “can reduce imbalances in the current account and capital account”.

“Which, in simple English, means reducing dependencies on foreign production and foreign capital, which is particularly appreciated in the period of world geopolitical conflicts or wars,” added the billionaire.

He wrote that it makes local businesses less effective because global supply chains are stifled but more survivable as long as national consumers can still buy enough their goods.

Dalio’s post did not specifically dissect the Trump administration’s prices, so it does not necessarily say that the White House introduced these taxes pending war.

Rather, he wrote on prices in general, highlighting their typical effects and potential motivations for governments to introduce such measures.

For example, the billionaire wrote that prices tend to bring inflation to countries that introduce them and stagflation to the world.

But Dalio’s point on a potential for “great power conflict” aligns with the regular warnings of the billionaire that the world evolves towards a period of great conflicts and a high risk of war.

The billionaire published a book on this belief in 2021, in which he predicted that American-Chinese competition would bring fundamental and disorderly changes to the way the world is managed.

Anyway, American debt must be addressed, says Dalio

In his article Wednesday on the prices, Dalio recalled another of his usual points on the state of the world: he thinks that the crisis of the debt of the American government must be resolved. The federal GDP debt ratio is around 120%.

“Production, trade and capital imbalances (especially debts) must decrease in one way or another, because they are dangerously unbearable for monetary, economic and geopolitical reasons,” he wrote.

Dalio warned in February that the debt would lead to a “heart attack” for the American financial system if it accumulates.

“You are at high risk of this heart attack, essentially, and now what are you going to do on this subject?” He said.

He said that at the time that, although the Elon Musk government’s Department of Effectiveness would seek to reduce the government’s budget, these efforts would not be enough alone to correct the debt crisis.

Bridgewater Associates and Principles, Dalio’s book brand, did not respond to requests for comments for Dalio sent outside regular work hours by Business Insider.