The billionaire investor who built the world’s largest hedge fund paints a dire scenario in his new book.

“No empire lasts forever,” says Ray Dalio. Humble words for a man who’s built the world’s largest hedge fund, with assets in excess of $150 billion. But the billionaire founder of Bridgewater Associates, 72, isn’t talking about the empire he created and stepped down from managing as CEO in 2017. (Dalio remains Co-Chairman and Co-CIO.) Instead, the empire that worries Dalio is the one in which he resides: the United States.

“Right now, money and credit and how it’s behaving are affecting the financial markets, it’s affecting inflation,” says Dalio in an interview with Forbes as U.S. inflation has spiked to its highest rate in over 30 years. 

America’s domestic issues and decline as the world’s leading superpower are more than simply a matter for debate to Dalio. They underpin the core thesis of his latest book, Principles for Dealing with the Changing World Order: How and Why Nations Succeed and Fail, that comes out on November 30. In it, he builds the case that the confluence of rising U.S. debt and income disparities, along with America’s diminished influence, has put the country at risk of not just economic hardship but war.  Specifically, he points to growing debt and near-zero interest rates that have led to a massive printing of money ($16 trillion of debt at negative interest rates this year, by Dalio’s estimates), increased conflict and polarization due to widening wealth gaps and China’s increased ability to challenge U.S. hegemony on the world stage.

Dalio believes there’s a 30% chance that the U.S. will enter into a major “civil-war-type” conflict within the next five years. While other countries face similar challenges, America looks especially vulnerable. “It’s very important that we deal with this now,” he says. “We can have a type of civil war or international war based on how we are behaving with each other and our financial conditions.” What’s more, the U.S. is not alone in facing this dire scenario. 

“It’s very important that we deal with this now. We can have a type of civil war or international war based on how we are behaving with each other and our financial conditions.”

Dalio has built his business and net worth, which Forbes estimates at roughly $20 billion, on figuring out where the world is going and designing investment strategies to profit from it.  Former U.S. Treasury Secretary Hank Paulson describes him as a “big thinker and brilliant academic disguised as an investment manager.”  Moreover, Paulson adds, Dalio’s assessment of macroeconomic risks and strategies is often right.  He famously made money during the 1987 stock market crash and predicted the 2008 financial crisis, which enabled his fund to outperform during that crash, too. 

What’s different now is not just the scope of the problem but Dalio’s ability to amplify it. Instead of writing up his views on the global business landscape for an audience of clients who’ve bought into his fund and stand to profit from his investment strategy, Dalio is sharing them with the wider world. Thanks to his bestselling 2017 book Principles, Dalio  has become something of a celebrity and cult hero to the millions of readers drawn to his leadership philosophy of “radical transparency.”  As a result, Dalio’s new book could attract an audience far bigger than the usual fans of his macroeconomic missives. 

“[He’s] a big thinker and brilliant academic disguised as an investment manager.”

Those readers may find The Changing World Order to be both eye-opening and potentially frustrating—it is more an academic study versus investment playbook. While Dalio inspired readers with his life story and leadership philosophy in Principles, his new book raises alarm bells about problems for which there are no clear solutions. If Dalio has a clear strategy for how to invest and hedge risk in this environment, he’s not going to explain it here. After all, creating strategies to build wealth amid seismic global shifts is why companies like Bridgewater exist. Rather, Dalio’s modus operandi typically is to establish an economic framework (usually in the context of cycles or “the economic machine”) and then provide key broader principles on how best to navigate the path forward. Anyone who has read Dalio’s writing on the rise of populism in 2017 or his two-part missive on why capitalism needs to be reformed two years later will be familiar with this approach. If they’re hedge fund investors, they’re used to reading pieces that explain how a manager sees the investment landscape.

In this new book, Dalio offers a deeper analysis and some new tools to measure and navigate the risks. Dalio says he felt compelled to write a book because of how swifty the economic climate has changed. As co-chief investment officer at Bridgewater, he explains, “I need to make decisions now.”  There’s also an altruistic instinct to educate people about what’s around the corner. Says Dalio: “I'm at a stage in my life where I'm passing along the most important things I've learned, so I decided to put it out as a book for that reason.”

Dalio has created a “Health Index” in the book that rates around a dozen nations on 18 different factors ranging from debt burdens and economic output to military strength and innovation. It’s the kind of tool that readers can use themselves to assess risks and form strategies. He plans to create a website for people to assess objective data in real-time, much like doctors do when evaluating patients.  

Dalio is as much a student of history as science.  As the title suggests, his assessment of the current threats to economic health comes from years of studying the rise and fall of great empires.  The U.S. is not the first nation to experience rising debt levels and income inequality while facing diminished power and influence on the world stage. “The last time those three things happened was in the 1930 to 1945 period,” says Dalio. “When they happen together, it’s a very telling story.” 

To a boy born in Brooklyn during the post-war baby boom that followed America’s success in World War II, the threat of devastating consequences isn’t simply a compelling investment scenario. It’s a call to action. Through his writing and conversations with leaders like former U.S. Secretary of State Henry Kissinger and JPMorgan Chase CEO Jamie Dimon, Dalio hopes astute leaders and citizens can take action to stave off the worst outcome. The issues, after all, have been percolating for years. “It's high time we actually look at these things and take the warnings and deal with it,” he says.

As he has done for decades in writing about macroeconomic risk, Dalio is careful to clarify that the exact scope and timing of the risks he sees remain unclear. Much like a hurricane, he explains in the book, knowing the conditions for an economic storm and the signals that one is coming makes it easier to prepare and get out of harm’s way.  “I’m not interested in making any more money,” he says. “I’m just trying to pass along now the things that have been valuable to me and to help others.” 

One piece of advice on the safest hedge against what’s coming? “Not cash!,” he exclaims. In early 2020, Dalio caused a stir in Davos by saying “cash is trash” as people were pulling out of markets amid concerns that included a then-new coronavirus. Dalio’s argument then, as now, was to diversify across different asset classes, currencies and markets. Betting big on one or two things is rarely a winning strategy.

 “I worry, too many Bitcoin holders, they better be right that it’s Bitcoin and it’s not something else,” he says. “What you’re seeing is in all assets, you’re seeing it in real estate, stocks, gold, silver, Bitcoin, and so on. From all of that [economic] stimulation they have all gone up,” he says. In his view, many investors overweight U.S. assets at the expense  of attractive alternatives. “If I were to give it in a nutshell, I’d pick countries [to invest in] that are earning more than they are spending so that they have a good income statement and balance sheet.”

“What you’re seeing is in all assets, you’re seeing it in real estate, stocks, gold, silver, Bitcoin, and so on. From all of that [economic] stimulation they have all gone up.”

And if you want to know more, well buy the book. Dalio says it’s likely to be his second-last, as he plans to write one more book about economic and investment principles. “Once I get past that, I won’t have anything to say and I’ll be quiet,” says Dalio. Maybe so, but that doesn’t mean he’ll abandon his day job anytime soon. “I love the game I play—the markets.” While he wants to help improve the odds for continued growth in the U.S., Dalio knows there’s money to be made when you know how to play what comes next.