Ray Dalio: "AI Is Eating Everything - and It Might Eat Itself"

Ray Dalio, welcome back to the All In Podcast. Third time's the charm. Thanks for being here. It's always a blast to be here.

Thank you for having me. The last conversation we had was so

popular, and it was so timely because it was just

a few days actually after the inauguration of

President Trump, and you had provided some

very kind of prescient outlooks for the administration that I think we all thought would be very helpful to get

On the record, at the time, you had highlighted,

and as you have been for some time, this

great debt cycle we're in, the fiscal

and monetary policy issues that are driving that

debt cycle, and provided some

input that if we were able to cut our deficit to GDP to roughly 3%, we may have a shot at a smoother transition here.

Today, the CBO estimates that the 2026 deficit to GDP is about 6%.

If

you were building a global financial system from first principles today, you wouldn't build it on 50-year-old legacy rails. You'd build Airwallex.

It's the single platform for global accounts, cards, and payments that treats the entire world like a local market.

Stop paying the legacy tax and start building the future at airwallex.com slash all in airwallex build the future.

So the first question I have for you, looking back on the past year of the administration and the actions of Congress and the economy, are we on a good path?

Are we on no different a path than we were, say, a year ago? Are we moving too slowly?

I've studied these big cycles in history going

back 500 years, and there are five big forces that are intertwined to determine the answer to your question, which is there's the debt money one, and I'll take you into that in a minute.

There is the domestic

gaps, the wealth and values

gaps that are causing irreconcilable differences between the left and the right that is affecting how taxes, democracy and everything works.

There's the international great power conflict, the classic rising of a great power, challenging existing great power, and changing the international world order.

Then there's technology all through these cycles. There have been technology.

And then there's acts of nature, droughts, floods, and pandemics.

So and when we think of orders, we're talking about there's always a monetary order and all monetary orders have broken down for the same reasons.

All political orders, domestic political orders, they all always change in the United States.

Less so. We have 250 years here, but they always change. There was one civil war in there.

And then they but internationally, they always change. all orders change.

And the international geopolitical order going from a multilateral to a unilateral world order is changing, and certainly technology is changing.

Okay. So getting that fact that they're all on there, now I'll go down to explain the government's finances and answer your question.

The economics of a country are basically the same as the economics of a company or an individual, except the government has a ability to print money.

Look at it like a company or like your own. Basically, it's projected to spend about $7 trillion, take in about $5 trillion.

So it's running a 40% deficit, 40% of its spending. It's been running deficits for a long time.

So it has a debt that is 600%, six times the amount of money that it takes in.

And we can project that number. The problem with debt cycles, and you can see them transpire, they're

almost like the circulatory system of the body.

The capital markets bring credit to different parts of the economy.

And if that credit is used to be productive and produces an income that pays for the debt service, it's a healthy process.

But what happens is that if the

debt service grows relative to the income because it's not paying for it, it's like a plaque in the system

growing up and it squeezes out spending. And so we now have that $2 trillion deficit.