Investor Ray Dalio Estimates The Corporate Losses In The US From Coronavirus Will Top $4 Trillion

Investor Ray Dalio told CNBC on Thursday the coronavirus outbreak will cost U.S. corporations up to $4 trillion, and "a lot of people are going to be broke."

"What's happening has not happened in our lifetime before ... What we have is a crisis," Dalio said in a "Squawk Box" interview. "There will also be individuals who have very big losses. ... There's a need for the government to spend more money, a lot more money."

The total U.S. GDP at the end of 2019 was more than $21 trillion. The founder of the Bridgewater Associates hedge fund also estimated the global corporate losses will amount to $12 trillion due to the pandemic.

Dalio said the fiscal stimulus package should be $1.5 trillion to $2 trillion at a minimum, depending on the form of the financial relief such as loan guarantees and credits.

The White House is proposing a stimulus package worth anywhere from $850 billion to more than $1 trillion to fight the impact of COVID-19 and to help soften the blow of a sudden recession. The package will include direct payments or tax cuts and small business assistance.

On the monetary front, the Federal Reserve announced plans to pump an additional $1 trillion into the U.S. economy through asset purchases and to cut interest rates to zero. Global central banks have also taken steps to keep borrowing costs in check as countries get ready to ramp up spending to offset coronavirus impact.

However, Dalio said there's an "inability of central banks to stimulate in a way that's normal," adding they have less capacity to ease monetary policies when interest rates have already hit the floor.

"We are now at a point where there will have to be a debt restructuring and a monetization of that," Dalio said. "We're living in a different world, like the 1930s in which 1930s, 1932, you have a devaluation of the dollar. You have the printing of money."

Bridgewater, the world's biggest hedge fund, has lost as much as 20% during the coronavirus-triggered sell-off, Dalio said.

"We're down ... somewhere in the vicinity of 10% to 20% kind of decline," Dalio said. "We missed that, you know, we're kicking ourselves for missing that move. ... What happened was it didn't come from the usual places, it came from not the usual ways that downturns come."

The markets have been in a tailspin amid the coronavirus pandemic as investors dumped stocks on fears that governmental response to the outbreak won't be sufficient to prevent the economy from tipping into a recession. The S&P 500 was now nearly 30% below a record set last month.

Bridgewater has about $160 billion assets under management, according to its website.

Dalio didn't disclose specifically what his hedge fund is invested in during the crisis but said "the mechanics" in which the global central banks lost their power are influencing his investing decisions.

— CNBC's Kevin Stankiewicz and Michael Sheetz contributed to this report.

Correction: The total U.S. GDP was more than $21 trillion at the end of 2019. An earlier version misstated the year. 

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