Has the US economy been paralyzed? This veteran warned of a ‘civil war’ that could impact India.

Billionaire investor Ray Dalio has issued a serious warning. He says that America is heading toward a kind of “civil war.” This war will not be fueled by weapons, but by deep internal divisions arising from rising debt, inequality, and political turmoil. Dalio believes that political and economic instability is growing in America. This could lead to a modern civil war. This civil war would mean the breakdown of national consensus. Ray Dalio predicted the 2008 financial crisis.

In an interview with Bloomberg, Ray Dalio said, “A kind of civil war is going on in America and elsewhere, where there are differences that cannot be resolved.” He cited rising government debt and the growing gap between rich and poor as the main reasons for this situation. Dalio compared the current situation to the 1930s, when America was facing economic hardship and worldwide unrest.

Compared rising debt to clogged arteries

According to the Congressional Budget Office, America’s public debt was 99% of GDP in 2024. By 2034, it is projected to reach 116%, a historic high. Ray Dalio compared this rising debt to “plaque in the arteries.” In other words, it is paralyzing the economy. It could hinder future spending. He also emphasized the gap between rich and poor. The top 10% of Americans own more than two-thirds of the country’s wealth, while the bottom half own less than 4%. Dalio said, “When there is a large gap in wealth and values, conflicts also grow.”

Political polarization hinders solving problems

Dalio clarified that he was not talking about a global war. He stated that economic, technological, and geopolitical pressures are creating regional conflicts that will test the strength of each side. He emphasized, “These conflicts will be a test of strength for each side.” He warned, “If we don’t worry about these things, the risks will only increase.”

Ray Dalio’s warning isn’t new. In May 2024, he stated that growing political polarization is a major obstacle to solving problems. A month earlier, he had predicted an economic recession, partly attributing this to Trump-era tariffs. Dalio said, “If you look at tariffs, if you look at debt, if you look at rising power challenging existing power… these systemic changes are very, very disruptive.”

What will be the impact on India if the warning comes true?

Ray Dalio’s warning of US debt and a “non-violent civil war” could have profound and multifaceted impacts on India. On the economic front, growing political instability in the US and the collapse of national consensus will create panic among global investors. This could lead to a sharp decline in the Indian stock market. Foreign institutional investors (FIIs) could withdraw capital on a large scale. Since the US is India’s largest trading partner, a slowdown in the US economy would significantly reduce demand for Indian exports. From a strategic and geopolitical perspective, a weak and divided US could prove to be an ineffective ally against rivals like China. This could increase China’s dominance in the Asia-Pacific region, posing a serious threat to India’s national security.