Billionaire Ray Dalio expressed concerns about rising debt levels in major economies, warning that a looming debt crisis could undermine the stability of various currencies.
This week, global investors flocked to Abu Dhabi for a series of finance and cryptocurrency conferences. Against this high-stakes backdrop, billionaire investor Ray Dalio, founder of Bridgewater Associates, shared a thought-provoking investment strategy: prioritize “hard money” assets like gold and bitcoin over debt assets.
Dalio expressed deep concerns about rising indebtedness in major economies, including the United States and China. Speaking at the Abu Dhabi conference on Tuesday, he stated:
“I believe that there would likely be a pending debt money problem. I want to steer away from debt assets like bonds and debt, and have some hard money like gold and bitcoin.”
Notably, Dalio personally owns “a little bit” of bitcoin, which he described in a 2021 MarketWatch interview as “almost a younger generation’s alternative to gold.” Despite being a cautious supporter of bitcoin, Dalio underscored gold’s status as the “well-established blue-chip alternative to fiat money.”
Gold and Bitcoin Hit Record Highs
Gold and bitcoin are attracting significant attention, with both trading near record highs. Investors increasingly regard these assets as dependable hedges against economic volatility, geopolitical conflicts, and shifting monetary policies. Last week, bitcoin surged past $100,000 for the first time, driven by optimistic statements from influential figures, including Donald Trump.
Assets tied to physical commodities or controlled supply systems, often termed hard money, appear more attractive amid soaring global debt levels. Ray Dalio stressed that rising debt in the United States, China, and other major economies, apart from Germany, has reached unsustainable levels. He warned of an unavoidable debt crisis that could undermine the various currencies’ stability.
Dalio identified five major forces shaping the future: debt, monetary systems, and economic stability stand out as key factors. Additionally, rising wealth inequality fuels domestic political divisions, while international conflicts, such as US-China tensions, intensify geopolitical instability.
Dalio Warns of Currency Threats
In a 2023 interview with CNBC’s Squawk Box, he warned of a looming threat to traditional currency systems. Excessive money printing, a global phenomenon beyond the United States, undermines financial stability. Dalio said:
“We are in a world where money as we know it is in jeopardy. We are printing too much, and it’s not just the United States.”
Following the 2008 financial crisis and during Bitcoin’s early phase, Dalio began analyzing the rise and decline of the three latest global reserve currencies: the Dutch guilder, British pound, and US dollar. Dalio identifies three concurrent cycles shaping currency dominance: the generation of debt and financial assets, internal conflicts fueled by wealth, and the emergence of a new power challenging the reigning currency.
A currency’s ability to endure these cycles hinges on the economic strength supporting the reserve status. Currently, the US dollar navigates the initial cycle, where debt and credit fuel purchasing power. Dalio’s acknowledgment of Bitcoin as an “alternative to gold” reflects its growing significance in investment circles.
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