- Legendary hedge fund manager Ray Dalio said that the stability of the US dollar is under threat as tensions between Beijing and Washington could lead to a "capital war."
- In an interview with Fox Business, Dalio said if the US government bans investments in China or withholds bond payments on Chinese debt, that could lead to big declines for the US economy.
- "There's a trade war, there's a technology war, there is a geopolitical war and there could be a capital war," he said.
- On Monday, the dollar index fell to a multi-year low, dropping 0.5% to its lowest level since 2018.
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Billionaire investor Ray Dalio has warned that escalating tensions between the US and China could lead to a "capital war" with major repercussions for the value of the dollar.
Dalio, the founder of investment management firm Bridgewater Associates, said on Fox's "Sunday Morning Futures" that both countries are currently in an "ideological civil war" and if they didn't work together, the US economy would decline.
"We are in conflict with China. You can call it a war," Dalio said. "There's a trade war, there's a technology war, there is a geopolitical war and there could be a capital war."
He went on to say that if the US government bans investments in China or withholds bond payments on Chinese debt, it would become more problematic for the US economy.
"If you say, by law, don't invest in China or even possibly withholding the payment of bonds that the United States owes payment on in China, these things are possibilities and they have big implications such as for the value of the dollar because investors, premarket investors, are not used to having those things dictated by the government," he said.
He said he is most worried about the "soundness" of US money because it is currently its own worst enemy.
"We are our own worst enemy, so how we deal with each other soundly and productively in a way that most people in the country believe is fair is going to determine our future."
Dalio recently warned of armed conflict between the two global powers, as he drew comparisons between the current economic tensions and the years before World War II.
In the most recent geopolitical offensive, China ordered the closure of a US consulate in the city of Chengdu, just days after US ordered the closure of a Chinese consulate in Houston.
On Monday, the dollar fell to a multi-year low and analysts expect it to weaken further against major currencies.
The dollar index, a measure relative to other foreign currencies, fell as much as 0.5% to its lowest level since 2018.
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source https://markets.businessinsider.com/news/stocks/us-dollar-ray-dalio-warns-capital-war-between-us-china-2020-7-1029432633
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