Davos WEF
Davos WEF

The greatest threat to Europe is populism, Bridgewater's Ray Dalio says

Ray Dalio speaking at the Delivering Alpha conference in New York on Sept. 13, 2016.
David A. Grogan | CNBC

The great threat to the European Union is populism, according to Ray Dalio, billionaire founder and co-chief investment officer at Bridgewater Associates.

"If you look at Europe as a whole and you're going to say what is the greatest threat to the European Union? It's not the debt crisis. It's not central bank policy. It is the movement of populism," Dalio said Wednesday on CNBC's "Squawk Box."

During the past year, populism has fueled the U.K.'s Brexit vote to pull out of the European Union, Donald Trump's surprise win in the United States and a defeat of Italy's referendum for constitutional changes championed by then-Prime Minister Matteo Renzi.

It's a phenomenon that Dalio thinks people will be hearing more of. For the first time, Dalio thinks politics are more important than central banking in influence.

Dalio, whose hedge fund manages manages about $160 billion in assets, recalled the similarities of today to the populism that existed in the 1930s. He noted that in the later years of that decade, the common man wanted to regain control after the recovery that followed the Great Depression. On the left, populism manifested itself as communism and socialism while on the right it led to fascism.

"That phenomenon partially is due to a wealth gap, but it's also partially due to the sense of inefficiency and (desire to) make the place work on time for the common man," he said in the interview at the World Economic Forum in Davos, Switzerland.