'The Empire Survives or Falls' – Billionaire Ray Dalio Says Iran War Threatens U.S. Dollar Dominance as People 'Naturally Run From The Losers'

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Warnings of a broader vigor crunch are increasing louder and lipid is pushing to caller highs arsenic the captious Strait of Hormuz stays shut. But billionaire investor Ray Dalio says the existent hazard goes beyond oil.

If the Hormuz situation isn't resolved from a presumption of spot by the U.S., it could commencement to erode assurance successful American powerfulness and the dominance of the U.S. dollar, Dalio wrote successful a station connected X connected March 16. With the satellite watching closely, U.S. credibility is astatine hazard if it can't task powerfulness and execute its goals successful the conflict, Dalio said.

"When the world’s ascendant powerfulness that has the world’s reserve currency is overextended financially, ticker retired for allies and creditors losing confidence, the nonaccomplishment of its reserve currency status, the selling of its indebtedness assets, and the weakening of its currency, particularly comparative to gold," Dalio wrote.

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The Strait of Hormuz situation has lone worsened since Dalio's comments. The closure is the biggest daze to the planetary lipid strategy successful history, with losses of astir 13 cardinal barrels per time successful exports, according to the International Energy Agency. The disruption has sharply reduced planetary proviso and forced countries to trust connected exigency stockpiles.

Blocking captious commercialized routes to unit a large powerfulness is simply a signifier that has played retired passim history, Dalio said. In those moments, the stronger federation moves to unit the way open, tensions escalate, and the satellite watches closely. Such conflicts go decisive moments that tin find "whether the empire survives oregon falls," helium said successful his post.

‘Their Money Goes Based On What Happens'

Dalio drew parallels to the Suez Canal Crisis of 1956, describing it arsenic portion of a repeating signifier wherever starring powers suffer power aft setbacks tied to commercialized routes, wars, and fiscal strain.

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"These countries and wherever their wealth goes based connected what happens," Dalio said. "People and fiscal flows rapidly and people tally from the losers. These shifts impact markets, particularly the debt, currency, and golden markets, and geopolitical power."

‘It Will Greatly Bolster Confidence'

If the U.S. shows it tin unafraid the strait and support lipid flowing, it would boost its credibility arsenic a planetary powerfulness and marque countries much consenting to clasp its indebtedness and currency, Dalio said. He pointed to the Iran–Iraq War successful the 1980s, erstwhile President Ronald Reagan ordered the U.S. Navy to escort lipid tankers successful the Gulf.