Ray Dalio, founder of the largest US hedge fund, Bridgewater Associates, said in an interview with The New York Times that he expects Republicans to lose the midterm elections, followed by a further escalation of political instability in the United States.
According to the billionaire investor, the Republican Party is likely to lose control of the House of Representatives, after which the country could face a sharp intensification of domestic tensions.
“I believe we are facing serious problems—financial, domestic political, and social internally, as well as international geopolitical problems. If you look at the calendar, the midterm elections are approaching, and I think Republicans will most likely lose control of the House of Representatives. I think from that point onward you will witness an escalation of political and social conflict during this period, especially between those elections and the 2028 presidential election,” Dalio said.
He warned that divisions within American society could become “irreconcilable” and noted that there are “more guns than people” in the country.
Dalio links the potential turmoil to several factors simultaneously: a large budget deficit, widening wealth inequality, political polarization, shifts in the global geopolitical order, and the development of artificial intelligence.
In his view, a potential financial crisis in the United States would severely constrain the government’s ability to fund both military and social spending.
The billionaire also warned that an imbalance between supply and demand in the debt market could push interest rates higher, driving up borrowing costs and hitting financial markets. In response, he believes central banks could once again resort to large-scale money creation, creating conditions for stagflation.