Investing.com - While the Russian attack on Ukraine has surprised more than a few geopolitical experts, many are concerned about the major trends and forces that will rule the world in the coming decades.
Famed billionaire investor Ray Dalio addressed this topic yesterday, saying he is increasingly concerned about a new world order as economies struggle with high levels of inflation, inflated debts and various geopolitical tensions.
Challenging the World Order
"We are approaching a challenge to the world order," he said on a Yahoo Finance show. Dalio added that there is an "increased likelihood of some type of war," and explaining:
"There are five types of wars. There is a trade war, a technology war, a geopolitical influence war, a capital war, which we are in the middle of, and finally a military war. These elements push countries to be self-sufficient and independent. And as a result, globalization is decreasing and nationalism is increasing."
Dalio also addressed the issue of rising inflation and currency devaluation induced by the situation, comparing the current situation in the U.S. to that of the 1970s.
"When you have very large deficits, you have to spend a lot on social programs, you have to spend a lot on defense, you have to spend a lot on environmental programs, and so on. And so when you spend a lot more money than you make, then you have to print money to make up that difference to make the purchases, and then that devalues the money," he said.
"So when money goes into other assets, it produces more inflation and you start to get into a certain type of environment. And the environment we're in is starting to look a lot like the 1970s," Dalio concluded.
3 forces will shape the World in the coming decades
Another famous investor, Jamie Dimon, CEO and chairman of JP Morgan, addressed similar topics in his annual letter to shareholders.
According to Dimon, three forces are likely to shape the world over the next few decades:
- A U.S. economy that rebounds from Covid's pandemic
- High inflation that will usher in an era of rising rates
- Russia's invasion of Ukraine and the resulting humanitarian crisis that is currently unfolding.
"Each of these three factors is unique: The dramatic stimulus-fueled recovery from the Covid-19 pandemic, the likely need for a rapid rate hike and necessary reversal of quantitative easing, and the war in Ukraine and sanctions against Russia," Dimon writes.
"They present completely different circumstances than we have seen in the past - and their confluence can significantly increase the risks ahead," he wrote. "While it is possible, and hopeful, that all of these events will have a peaceful resolution, we must be prepared for potential negative outcomes."
"America must be prepared for the possibility of a prolonged war in Ukraine with unpredictable results. ... We must view this as a wake-up call. We must pursue both short- and long-term strategies with the goal of not only resolving the current crisis but also maintaining the long-term unity of newly strengthened democratic alliances. We must make this a permanent and sustainable stand for democratic ideals and against all forms of evil."
"Russian aggression has another dramatic and important result: It coalitions the democratic and Western world - across Europe and the North Atlantic Treaty Organization (NATO) countries to Australia, Japan and Korea. [The outcome of these two issues will transcend Russia and likely affect geopolitics for decades to come, potentially leading to a realignment of alliances and a restructuring of global trade. How the West behaves, and whether the West can maintain its unity, will likely determine the future world order and shape America's (and its allies') important relationship with China."