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things are going to get worse in the economy there's a financial issue at the same time as you have this internal conflict so I think that that's going to make for um a risky situation Ray Deo is a prominent American billionaire investor he founded Bridgewater Associates out of his two-bedroom Manhattan apartment in 1975 and grew it into the world's largest hedge fund with over $235 billion in total assets under management Dao is also popular for his uncanny ability to predict Global economics markets and geopolitical Trends in this video we'll explore his latest warning and what it could mean for you the current economic landscape a seasoned macro investor Ray de Leo has over 50 years of experience in the global economic space he's been through all sorts of devastating crises and Cycles these experiences have driven him to study historical patterns and cause effect effect relationships to anticipate future events and make informed decisions in global markets in the process he's become a pro in studying history and offering insights into the current and the future and what better way to predict the future than by comparing the present and the past a quick look at the current global economic landscape reveals a slower growth than expected the broadest sense is um um be out of cash be um and um have uh little or no participation in interest rates particularly if they're close to zero interest rates because if they go if the economy goes down they will offer very little protection to your portfolio because they won't go up much because they're close to zero interest rates the international monetary fund IMF forecasts a decline in growth from 3.4% in 2022 to 2.8% in 2023 and 3% in 2024 amid financial sector turmoil resistent inflationary pressures and the ongoing effects of Russia's invasion of Ukraine Global growth is projected to weaken further and lead to Financial dislocations in the most vulnerable emerging markets and developing economies emdes many nations continue to face huge economic challenges concerns about inflation escalating debt levels and aging population technological disruptions and the widening income gap inequality abound that's even without mentioning that the world is recovering from the covid-19 pandemic 3 years later some Nations have implemented policy measures to counter these challenges nevertheless others still face uncertainties about the current economic model sustainability in the long term looking back in history Deo notes five big things he calls them five big forces that hadn't occurred at a substantial magnitude in his lifetime but had occurred in the 1930 to 1945 period these are one the financial economic Force public debts have hit the roof debt growth rates near record highs and the central bank is engaged in printing money and buying debt debt monetization like never before two the domestic order Force internal conflicts conflicts within countries are at an all-time high due to the ever widening Gap in wealth and value and the greatest rise in populism the three big things that are happening to us is the first the financial that's happening at a macro level which is the creation of a lot of debt and the printing of a lot of money and that's producing the stagflation that we have the second big influence is the amount of internal conflict that is existing it's particularly a problem when you have the first problem because the first problem produces financial problems which produces stress and antagonism three the international World Order Force Major Global Powers more notably the US and China no longer see eye to eye and the world order is rapidly changing four acts of nature pandemics floods and droughts collectively known as climate change five technology technological disruptions including the first and second Industrial Revolution ution Computing and the internet and AI Revolution Ray deo's last warning the collapse has begun according to Ray these five forces now occur at the most enormous magnitude since 1930 to 45 more importantly each Force transpires at the same scale just as before historical breakdowns and seismic shifts in domestic and World orders and reinforces each other to create what he calls the big cycle here are his predictions and warnings of what's coming one the big cycle debt crisis will get worse in my opinion we are at the beginning of a very classic late big cycle debt crisis when the supply demand Gap when you're producing too much debt and have a shortage of buyers Deo notes in a Bloomberg interview things are going to get worse for the economy he adds according to him America is in the middle of the short-term debt cycle historically this phase lasts 7 years plus or minus about 3 years the US has been through 12 and A2 short-term debt Cycles since the formation of the new monetary World Order in 1945 that means we're now halfway through the 13th cycle it's at this this point of the cycle when the Central Bank tightens monetary policies to fight inflation that precedes the periods of debt accumulation and economic contraction Deo says that's what's happening now he's built his argument around the most recent debt sealing bill approved by Congress and President Joe Biden the treasury Department announced plans to release $1.6 trillion in t bills this year until the end of 2023 to bolster its cash reserves Dao is on the contrary opinion arguing that raising the debt ceiling wasn't enough unless there was a plan on out of control spending raising the debt limit the way Congress and the presidents have repeatedly done will ultimately lead to a disastrous Financial collapse he added Deo also states that America is in the late and risk-laden phase of the long-term debt cycle debt assets and debt liability levels have risen so high that it has become difficult to provide lender creditors an interest rate that sufficiently offsets inflation to make them want to hold this debt as an asset doing so without imposing interest rates high enough to hurt the borrower debt or unacceptability is proving impossible um we are at the in my opinion we are at the beginning of a very classic late cycle late big cycle debt crisis when the supply demand Gap when you're producing too too much debt and you have also a shortage of buyers what's happening now is we have to sell all this uh debt is we then have do have enough buyers there are changes now in terms of the quantities in the world that are being held by um large investors around the world that have lost money in these treasury bonds and so on the unsustainable debt growth suggests we're approaching a pivotal turning point that will reshape the financial landscape in other words we're on the brink of a significant debt Financial economic shakeup that will necessitate massive changes to the financial order meanwhile the US Treasury will have to sell a sizable amount of debt due to large deficits but there's insufficient demand for that government debt if this persists the FED will raise interest rates even higher or resort to extensive money Printing and bond purchases devaluing the currency given these conditions the debt and financial landscape May worsen over the next year or two two the rise of populist leaders could lead to Civil War democracy works best when the ruling political parties and factions accept the powers transient and that voters are only conditionally loyal to parties unfortunately the number of populist leaders and part is in power today is almost five-fold compared to the period after the Cold War worse the number has tripled since the start of the 21st century there has been growing populist extremism across many countries particularly in the US and shrinking bipartisan moderates throughout history populism and internal conflicts have repeatedly occurred when large gaps in wealth and values existed simultaneously with bad economic conditions at such times most voters elect populist political leaders who will fight and win for them and reject those who will will compromise in his book principles for dealing with a changing World Order Dao describes the current state of the us as stage five when there are bad financial conditions and intense conflict of the internal order cycle he details it on pages 167 to 83 that's the state the US is in right now as for what's coming next year will be a big election year in the US many populist candidates will fight over 33 Senate seats the presidency and control of the house the elections will likely happen amid bad Economic Times so chances are the fights will be vicious and there will be a real test of democracy which requires rule following and compromising to work considering populists commitment to winning at all costs and reluctance to compromise this election won't go as smoothly as expected you can see this playing out even now in Donald Trump and his followers Waging War against the justice system so no matter how you view it the Democrats and Republicans will fight tooth and nail for victories and neither side will be willing to compromise for that reason Deo predicts a 30% chance the US will break out into Civil War in the next decade due to political polarization and we see extremism in both of the political parties okay we see that split a populace is an individual or a leader or a political person who will win at all cost that the rules of the game don't as much matter and so we're in a uh the the January 6th type of incident and so on is very interesting the political system in terms of primaries and and the parties tends to create that sort of polarity three China's Growing Power will pose a challenge to the us as far as the international World Order Force goes China's meteoric rise over the last two decades has reshaped global politics since joining the World Trade Organization in 2001 China has begun acting like a global power it has transformed Global Supply chains and partnered with emerging economics across Africa Asia and Latin America in the process Beijing has threatened the us-led global order increasing tensions with Washington the US and China are already fighting over many issues and are closer to some form of War whether an economic war or worse a military one from issues with Taiwan and chips to dealing with Russia and sanctioning Investments the conflict between the two is closer to the brink Ray Deo predicts the conflicts between the US and China will intensify in the electioneering round that is because in the US almost everyone is anti-china so those running for office will want to outdo each other with China bashing four acts of nature hedge fund Titan Ray Deo isn't only concerned about the economy like many of us he's also worried about climate change and committed to positively influencing the fight against global warming it worries me it's almost like I worry for man Deo told CNBC make it Deo said history has shown him that natural disasters are often catalysts in speeding the end of a long-term cycle and their increased intensity makes them a clear risk at present acts of nature are of course more of a wild card they're harder to predict accurately but Deo stated natural disasters appear to worsen and are likely to be more costly and damaging over the next 5 5 to 10 years he's also cautioned that the world will soon start feeling the climate change impact as it enters an El Nino phase over the next year five technology the fifth Mega Trend technology human inventiveness will likely be a major disruptor but like acts of nature it's hard to tell exactly what we can expect there are arguments over the potential level of disruptions AI will bring that makes sense given that AI is still in early development several elements of AI have added to the general uncertainty including the development speed and potential costs associated with deployment but one thing for sure is that generative Ai and other technological advances can cause massive productivity and destruction job losses the future is different than the past and you don't have understanding AI is dangerous if the F if the future is similar to the past so you can look at things if you're doing a surgery you can have robots do a surgery because that same cutting that same action is going to happen the same same way you don't have any problems that's going to be great so the power of machine learning to make AI is great okay but when you give up the understanding and the M the future is different from the past it's it's a different story the markets are different difficult that way because if something is learned it's not valuable preparing for what's coming whether or not you believe Dao's warning of a great collapse is less important than recognizing Global markets are dealing with Incredible levels of uncertain cty that realization should make you prepare for anything that may come your way so how should you the investor prepare for what's coming follow these steps to protect your finances if raise warnings come to pass one diversify your portfolio diversifying your Investments across different asset classes Industries and geographical regions can help mitigate risk doing so reduces the impact of a downturn in any single area as other Investments might perform better during such times two regularly assess your risk and rebalance your portfolio regularly assessing your risk Toler tolerance and adjusting your Investment Portfolio accordingly is vital as economic conditions change so do the prospects of various assets stay informed and make necessary adjustments to ensure your portfolio aligns with your risk appetite three build an emergency fund establishing and maintaining an emergency fund is a fundamental step to reducing risk this cash Reserve can provide a safety net during unforeseen events preventing you from tapping into your Investments at unfavorable times four manage your debt given the uncertain times ahead managing your debt is crucial highin debts can erode your financial stability quickly prioritize paying down debts and consider refinancing options if they align with your financial strategy five continuously educate yourself staying informed is essential continuously educate yourself about market trends and economic developments additionally seek advice from Financial professionals to get valuable insights tailored to your circumstances thank you for joining us today remember the future might be uncertain but our preparedness doesn't have to be if you enjoyed this video please show us love by liking sharing or commenting if you haven't already please subscribe to our Channel and before you go remember to click on the thumbnail for the following video we've got more thrilling episodes lined up for you
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