Billionaire Ray Dalio Compares US-China Tensions to Years Before WWII

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Billionaire investor Ray Dalio stated that rising US-China tensions could turn into a "shooting war."

Billionaire investor Ray Dalio stated that rising US-China tensions could turn into a "shooting war," according to Business Insider.

Dalio believes that the current situation resembles conditions before World War I and World War II. On Thursday, Dalio posted these statements and citing that he was "no great historian."

"Because the United States and China are now in an economic war that could conceivably evolve into a shooting war, and I've never experienced an economic war, I studied a number of past ones to learn what they are like," he said. "Comparisons between the 1930s leading to World War II and today, especially with regard to economic sanctions, are especially interesting and helpful in considering what might be ahead."

Dalio continued acknowledging that tariffs contribute to greater economic weakness, but they "benefit those entities protected by the tariffs and can create political support for the leader who is imposing" them.

The coronavirus crisis has only exacerbated the conflict. "Severe economic downturns with large wealth gaps, large debts, and ineffective monetary policies make a combustible combination that typically leads to significant conflicts and revolutionary changes within countries," he said. "During periods of great conflict there is a strong tendency to move to more autocratic leadership to bring order to the chaos."

"Smart leaders typically only go into hot wars if there is no choice because the other side pushes them into the position of either fighting or losing by backing down," he said. "That is how World War II began."

Earlier this week, China imposed sanctions on US politicians Senators Ted Cruz and Marco Rubio after they condemned Beijing's treatment of Uighur Muslims and other minorities.

The conflict between the two economic powers had stalled during the coronavirus crisis. However, China recently imposed a new security law on Hong Kong that did not sit well with the US. In response, the US suspended its special trade measures with Hong Kong.

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