Billionaire investor Ray Dalio says this is how a stagflationary financial crisis could unfold in the US

• Ray Dalio sees a challenging path ahead for the US economy.
• The billionaire investor outlined a scenario where excessive money printing triggers a financial crisis.
• Investors should hold 5%-15% of their portfolios in gold to prepare for "really bad times," he said.

Ray Dalio is sounding the alarm on the state of the world economic order.

The Bridgewater Associates founder and billionaire investor said he sees worrying signs that the US economy is headed for a "disorderly" period, one defined by higher deficits, hotter inflation, and waning faith in the US financial empire.

Speaking on a recent episode of the "Interesting Times" podcast this week, he outlined one scenario in which the US could tip into a financial crisis, thanks largely to excessive borrowing and money printing.

"The financial crisis will mean that the capacity to spend will be very limited," Dalio said, speculating that the US would be unable to afford its military and social spending in such a scenario. "You'll be very constrained. And because the demand won't meet up with the supply, you'll have interest rates going up, which will curtail borrowing, will hurt markets, and so on."

Deficits are rising in the US and around the world. The US spent $7 trillion in the last fiscal year, though the government took in $5.2 trillion in revenue, according to data from the Treasury Department.

Higher deficits have historically led to economic "problems," Dalio said, referring to the tendency for governments to print more cash to cover costs, though doing so leads to devalued currencies and hotter inflation.

The end result could be a "stagflation kind of environment," Dalio said, referring to a worst-case scenario for financial markets where inflation is hot but growth is sluggish.

He added that he believes investors should have 5% to 15% of their assets in gold to get through the "really bad times."

"When we look at history, we see that in all such periods, all the fiat currencies go down, and gold goes up," Dalio said.

Dalio has touted the importance of gold as a hedge against economic turmoil for a long time, warning his followers about the debasement trade. The idea is that higher deficits and hotter inflation will weaken currencies, making assets like precious metals more attractive stores of wealth.

At the end of the day, the turmoil facing the global economy could mean that no currency is a stable store of wealth, Dalio said. Last year, he pointed to gold's rapid rally as one sign that fiat currencies were already on the decline.

De-dollarization, one trend where countries shift away from their use of the US dollar, has been discounted by many economists in recent years. Yet, it's possible for the world monetary order to change over time, Dalio said, pointing to how Britain's pound lost its status as the world's reserve currency in the middle of last century.

He pointed to the parallels with the ongoing war with Iran, which risks hurting faith in the US as an economic and political power. Concerns about inflation, in particular, have spiked alongside the move in oil prices.

"We do not know a lot about what the world will look like in three to five years. What we don't know is much greater than anything we know. I think we know that we are in increasingly disorderly times, and these are the greater risks," Dalio said.

Despite more noise about currency debasement in markets, investment flows into the US have accelerated in recent years and demand for US Treasurys has held up, two signs the dollar is still top dog in financial markets.

The US Dollar Index, which measures the greenback against the basket of foreign currencies, appreciated as much as 2% this year as investors priced in higher interest rates, but has cooled amid hope that Iran war will soon come to an end. The dollar gauge traded around the 97.85 mark on Thursday, about flat for the year.