Billionaire investor Ray Dalio has warned that the United States is heading toward a “1930s-style autocracy.” He suggested that this political shift could lead to a surge in US long-term bond yields, a weaker dollar, and a rise in gold prices.
Indeed, US long-term bond yields soared today. Market participants are now watching to see if this shift could trigger a rally in Bitcoin.
Trump’s Fed Takeover a ‘Serious Risk’
Dalio made his claims in an interview with the Financial Times. He defines “1930s-style autocracy” as an increase in the Trump administration’s intervention in the market economy. The US government recently sparked controversy with its decision to acquire a 10% stake in Intel, a company struggling financially.
In the interview, Dalio also focused on the growing wealth gap in the US, arguing that the widening divide is causing a breakdown in social trust and a significant divergence in values among ordinary Americans. He warned that this erosion of trust is leading to more extreme policies.
President Trump’s recent attempts to control the Federal Reserve, including the recent dismissal of board member Lisa Cook, are a prime example. Dalio stated that if the central bank succumbs to political pressure and keeps interest rates low, it would “undermine confidence in the Fed’s ability to defend the value of money and diminish the attractiveness of holding dollar-denominated debt assets.”
Dalio is not the first to raise these concerns. On Monday, ECB President Christine Lagarde voiced her worries about the US economy. She cautioned that if Trump were to influence the Fed’s interest rate decisions, it would pose a “very serious risk” to both the US and global economies.
Gold Soars as Long-Term Yields Surge
Dalio predicts that if the Trump administration’s unilateral actions continue, US long-term bond yields will spike, the dollar will weaken, and gold prices will climb. He noted that international investors have shifted their holdings from Treasury bonds to gold.
On September 2, the US 30-year Treasury bond yield surged to 4.982%. Gold futures closed the day at a record high of $3,604 per ounce. While short-term bond yields have been falling due to growing expectations of interest rate cuts, long-term yields continue to rise.
Market participants are keenly watching to see if these changes will fuel a Bitcoin price rise. Bitcoin’s price rallied alongside gold in late April when long-term bond yields surged during a US tariff war.
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