The next financial crisis will be harder to manage, says billionaire Dalio

"I think it will be more serious in terms of social and political problems. And I think it will be more difficult to manage … It will not be the same with the large-scale debt crisis. It is an increasingly slow and increasingly constrained debt crisis that I believe will have greater social implications and greater international implications. "

Bill Daly, the founder of the world's largest hedge fund, Bridgewater Associates, explained what the next financial crisis would look like, which he sees as inevitable.

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In an interview with CNBC, Dalio said he thought the current business cycle was in the seventh inning, which he extrapolated to say he probably has another two years to go.

Now is the time, however, to start thinking about the next recession, he said. To this end, Dalio published Monday a book entitled "A Model for Understanding Debt Crises", available in free PDF format.

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In the interview, Dalio compared the current context to 1935-1940, while the crisis period of 2008-2009 echoed the beginning of the Great Depression in 1929-1932. Just as the beginning of the depression, the financial crisis has not left other choice to monetary policy makers than to print money and buy financial assets, making climb the prices of these assets and exacerbating the wealth gap.

This has fueled populist sentiment around the world, impacting any fiscal policy response to future crises, while quantitative easing and ultra-low rates have already been largely maximized. This highlights the need to develop a 3.0 monetary policy aimed at encouraging individuals to buy assets.

Meanwhile, investors should be on their guard, he said.

"I would be more defensive than aggressive," said Dalio, warning that the risk will increase over the next two years, as much of the put-away cash has been deployed and the benefits of tax cuts on Companies signed law at the end of last year are already taken into account.

In January, Dalio warned investors that "if you hold cash, you will feel pretty stupid." Shares collapsed in late January and early February, with the S & P 500

SPX, + 0.47%

and Dow's industrialists

DJIA, + 0.53%

fall into the territory of correction. The S & P 500 returned to record territory last month, while the Dow remains close to its highest level since the end of January.

Dalio then said that the sale had shown that the cycle was a little more advanced than expected.