Billionaire Investor Ray Dalio Spotlights AI's Transformative Impact, Warns Of US Debt Problems

Billionaire investor and former hedge fund manager Ray Dalio expressed significant enthusiasm about the potential of artificial intelligence Friday while also cautioning about its broader socioeconomic implications.

In an interview on CNBC’s “Squawk On The Street,” Dalio highlighted the extraordinary capabilities of AI, particularly its superiority over human cognition in specific tasks and its lack of emotional bias.

Yet he didn’t shy away from the darker aspects of AI, such as its potential use in warfare and the risk of job displacement.

“I’m very excited about AI,” Dalio said, adding: “but it’s a double-edge sword.”

Widening Wealth Gap: A Social, Economic Concern

The investor expressed concerns about the societal impacts of these technological shifts.

With AI possibly leading to increased job automation, larger segments of the population might become reliant on state subsidies, further widening income inequalities, he said.

Dalio’s commentary aligns with a growing consensus that while AI can drive innovation, it also poses significant challenges to traditional job markets, potentially exacerbating the wealth gap.

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The Washington Outlook: Dalio’s Perspective

Turning to the fiscal and political landscape of the United States, Dalio remarked, “As we look forward, we have a debt problem.”

This statement underscores the challenges facing the U.S. economy, particularly in managing national debt levels. Moreover, he noted that internal political issues are influencing the demand for U.S. bonds, hinting at a complex interplay between domestic politics and financial markets.

Regarding the future actions of the Federal Reserve, Dalio said he anticipates no significant shifts, expecting a relatively flat rate structure.

The iShares U.S. Treasury Bond ETF GOVT, a key market gauge tracking the performance of U.S. Treasuries across all maturities, is down nearly 3% year-to-date. It’s showing positive performance in November following six straight months of losses.

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Ray Dalio photo courtesy of the World Economic Forum.