‘We are now in a world war’: Chilling prediction by billionaire US hedge fund founder Ray Dalio – and the cycle of events that has put us ‘two steps from conflict between major global powers’

A billionaire investor has issued a stark warning that the globe is already sliding into a world war, arguing that we are close to a full-blown conflict between major superpowers.

Ray Dalio, an author and founder of one of the world’s largest hedge funds, Bridgewater Associates, said that the current conflicts are not isolated crises and paint a larger picture of an escalating struggle between major superpowers.

He argued that most of the public is distracted by immediate events, such as tensions with Iran, and fail to grasp the broader implications.

‘For today, that is most importantly that the US-Israel-Iran war is just part of a world war that we are in and that isn’t going to end anytime soon,’ Dalio said.

The author of The Changing World Order, which examines the rise and fall of major empires over the last 500 years, argued that the modern conflict resembles previous world wars not through a single defining moment but through a web of overlapping wars and rivalries.

Alongside these are what he described as ‘non-shooting wars’ involving trade, technology, capital and geopolitical influence. 

Together, they form what he calls a ‘very classic world war’ dynamic.

Dalio’s warning lies in how global alliances are forming, with a clear alignment emerging. He says China, Russia, Iran, North Korea and Cuba are broadly opposed to a bloc led by the United States and its allies including European countries, Israel, Japan and Australia.

He pointed to United Nations voting patterns, treaties and economic ties as evidence of this division, suggesting these alignments are already influencing outcomes.

The billionaire argued that China and Russia appear to be ‘the relative economic and geopolitical winners from this war,’ while the United States remains advantaged in energy due to its position as an exporter. 

Dalio pointed to what he calls the big cycle of global order in his analysis, a recurring historical pattern that leads from stability to conflict, as observed in the lead up to past wars. 

According to the author, the world has already progressed to step nine in this cycle, bringing it just two away from direct confrontation between major powers. 

The steps he outlined in his analysis are as follows:

1. The decline of dominant powers relative to rising ones 
2. Escalating economic wars such as sanctions and trade blockages 
3. The formation of economic, military and ideological alliances 
4. An increase in proxy wars 
5. Financial stress, deficits and debts increase, especially for the leading powers that are most overextended financially.
6. Government control increases over critical industries and supply chains 
7. The weaponisation of trade chokepoints 
8. Powerful new technologies for war are built rapidly
9. Multi-theatre conflicts increasingly happen simultaneously
10. Suppression of internal dissent, as loyal support for the country’s leadership is demanded and opposition to the war and other policies is squashed
11. Direct military combat between major powers takes place
12. There are big increases in taxes, debt issuance, money creation, FX controls, capital controls and financial repression to finance the wars. In some cases, markets are shut down
13. Eventually, one side beats the other and gains indisputable control of the new order, which is designed by the winning side

While wars between Russia and Ukraine, Israel and Hamas, and the US and Israel’s conflict with Iran dominate the headlines, the picture is further complicated by other conflicts, such as the ongoing civil wars in Sudan and Yemen, as well as the volatile clashes between Afghanistan and Pakistan.

Recent weeks have witnessed several escalations, including Iran’s closure of the Strait of Hormuz and the subsequent threats from the US, which can be classified as stage seven of the big cycle.

Driven by fears of long-term supply shortages, oil prices experienced their fastest surge of any recent conflict, with Brent crude breaching US$100 a barrel on March 8 for the first time in four years before peaking at US$126.

The closure of the strait is being hailed as the most significant energy supply disruption since the 1970s and the largest in global oil market history.

Meanwhile, stage eight has been quietly observed over the past several years as Russia and Iran exchange drone technology and production tips to expand capacity.

And stage ten is already visible in Iran, where the regime’s brutal crackdown on dissent – threatening and killing those who speak out – makes a popular uprising virtually impossible.

Dalio compared the current moment to the periods just before the First and Second World Wars, stressing that wars rarely begin with a single defining event.

Instead, they are preceded by warning signs such as rising military stockpiles, increasing debt and money printing, as well as nations testing each other’s strengths and weaknesses.

The First World War, for example, was sparked by the assassination of an Austrian crown prince by a Serbian anarchist on a bridge in Sarajevo. 

Within days, a global war had begun due to a complex system of alliances that compelled other nations to join the fight.

In 1939, Adolf Hitler’s invasion of Poland was the trigger for Britain, France and the Anglosphere outside the US to enter the Second World War.

Japan had also invaded China in 1937. As time went on, other global superpowers including Russia and the US found themselves sucked into the conflict – and the whole planet was aflame by 1941.

One worrying aspect is a major vulnerability in the US, one of the world’s largest superpowers. 

Dalio pointed to the country’s global military footprint, with ‘750-800 military bases in 70-80 countries,’ as evidence of overextension. 

‘It is also obvious that overextended powers cannot successfully fight wars on two or more fronts,’ he added.

This raises doubts about America’s ability to respond to simultaneous crises in regions such as Asia and Europe while already engaged in the Middle East, which should concern allies who will rely on Washington for support.

He suggested that while the US remains the most powerful country, it may be less capable of sustaining prolonged hardship compared to its rivals. 

‘As history has shown, the most reliable indicator of which country is likely to win is not which is most powerful; it is which can endure the most pain the longest.’

Writing in the Daily Mail last month, Sir Richard Shirreff came to a similar conclusion, saying: ‘I cannot remember a more perilous moment in geopolitics in my lifetime – and I am now 70.’ 

He argued that Western attention being focused on protecting allies in the Gulf and countering Iran’s response, Vladimir Putin would double down on his four-year campaign to seize Ukraine as a result of American missiles being needed elsewhere. 

Sir Richard added: ‘Estonia, Latvia and Lithuania have all been held by Russia at various times in their history, but are now NATO as well as EU members. Putin is 73 and widely suspected to be in poor health. He may feel he has one last opportunity to secure his place in history and restore the glories of the motherland by expanding its western frontiers.’

Any such invasion, he said, would further destabilise the transatlantic alliance, which is already weakened by Trump and NATO’s struggling relationship.

The former deputy supreme allied commander of NATO in Europe further predicted that Chinese president Xi Jinping will seize the opportunity to launch his longed–for invasion of Taiwan, perhaps as soon as 2027. 

He added: ‘Trump has preferred to maintain America’s longstanding position of ‘strategic ambiguity’ towards the island: that is, not promising any military response if China invades, while simultaneously seeking to deter any such incursion. But his predecessor Joe Biden might have been more honest when, once asked whether America would defend Taiwan, he replied simply: “Yes.”‘

Dalio warned that other countries are watching closely and adjusting their strategies accordingly, as alliances become fragile.

The outcome of the US-Iran conflict, he said, will influence decisions by leaders around the world, potentially reshaping the global order.

Sir Richard continued: ‘The world order has changed from a multilateral rules-based world order led by the dominant US power and its allies to a might-is-right world order with no single dominant power enforcing order.’

This shift, he argued, makes further conflict more likely, as there is no longer a clear authority capable of maintaining global stability.

He warned that at this stage in the cycle, conflicts typically intensify rather than fade.

‘Circumstances like the inability to resolve irreconcilable disputes with compromises typically drive one stage in the cycle unavoidably to the next until there is a violent resolution,’ he added.