Ray Dalio Provides Insights

Ray Dalio provides insights based on several events that occurred previously in history

“Three things have happened which have not happened in our lifetimes; 

the creation of a lot of money printing to pay for the debts,” he said.  

“We sent out cheques which were five times more than the amount that would have compensated people for their losses. 

The Fed prints the money and they buy the debt. We increased the amount of money by 25% or more,” he added. 

Ray Dalio provides insights into currency debasement inflation 

“The price of anything is equal to the amount of money and credit spent on it divided by the quantity sold, so when you increase buying power through money printing, you get inflation,” said Ray Dalio.  

What are the challenges ahead, Ray Dalio provides insights

“The size of the wealth gap and political polarization is at levels not seen since the 19th century. 

“We are having a form of a civil war,” said Ray Dalio. 

He worries that in the 2024 election, neither side will accept losing. 

“Internal conflict is threatening the rule of law and adherence to the constitution,” he said.

He sees a rise of tribalism and nationalism, with people grouping in challenging times, leading to internal conflicts as political polarity leads to both sides in an ideological struggle.  

“Approximately 30% of the US population is extremely rightwing, with another 10 to 15% thinking that the other side of the political party should die,” he said. Political extremes increase the probability of a civil war. 

Roughly 30% of the electorate would not want their child to marry someone from another political party. 

Moreover, the same percentage thinks the presidential elections were stolen.  

How can a superpower project stability on the global stage when there is so much disharmony within? 

Ray Dalio provides insights into the world order cycle 

He cites the rise of Axis powers competing with the US-centric post-WW2 world order. 

“Post WW2 US was the richest country in the world, owning 80% of the gold, 50% of the world’s economy, and had a monopoly on military power.

The US set the rules, and it is why the UN is in NY and the IMF is in Washington,” he said.  

He warned of the perils of living off the printing press, letting the infrastructure deteriorate. “We are leaving the next generation with huge debts, and we are not educating all children well,” he said. 

He sees a world-order battle underway.  

“Axis power competition is emerging, and there is a trade war, a technology war, a geopolitical influence war, a capital war and a military war,” he said. 

“The only way to do well is to be strong in all those ways,” he added. 

He believes that the conclusion of the war will determine the rules which will lay the foundations for peace and prosperity.

He eventually sees peace when nobody wants to fight the dominant power.

“As the cycle begins in the later stages, the rich are the ones who get into debt,” he said.  

Ray Dalio provides his insights into the debt crisis

“One man’s debt is someone else’s assets. The world is holding a lot of money in money market funds or bond funds with long maturities. 

For 40 years, bonds went higher because inflation was not an issue,” he said. 

“Everyone thinks cash is a safe place to be because of its buying power. The easiest tax is to tax through the printing of money. 100% of the time when the government is spending more than it earns, central banks step in and print the money,” he said. 

Ray Dalio believes that money and financial assets are not wealth. “They are just claims on wealth. It only has real wealth if you sell it and go buy something tangible,” he said.   

“It has value if others think it has value, it is a Ponzi scheme,” he added. 

“In the Old Testament, there is this idea of the Jubilee, which means you always have these financial obligations rising relative to the other. It happens so often, that every 50 years, they’ll wipe it clean.

The key to success is knowing how to deal with what you don’t know then what you know. 

Ray Dalio provides insights into the big questions we don’t have answers to

Who wins in the Russian NATO war? 

Winning for Putin means he controls the eastern part of Ukraine, with the Russian economy having a tolerable downturn. 

He believes suffering is deep in the Russian psyche. 

He notes the 1917 Russian Revolution, WW2, where Russia lost 30 million people. “Then Starlin came to power, and they lost another 30 million, they have communism, breadlines and bankruptcy, and the whole thing collapses in 89,” he said. “If Putin loses, he will escalate, probably taking the threat to nuclear. I don’t think he will go out quietly,· he said. 

“Half the world has taken one side or has decided not to take sides,” he added.