Ray Dalio advocates revolutionary change, alternatively the US could be on the verge of a “terrible civil war” he believes.
Ray Dalio is the billionaire founder of the world’s largest hedge fund Bridgewater Associates. His latest tweet warning of a “terrible civil war” comes as no surprise in the wake of protestors besieging the White House, which left four people dead early in January.
“I believe we are on the brink of a terrible civil war (as I described in The Changing World Order series), where we are at an inflection point between entering a type of hell of fighting or pulling back to work together for peace and prosperity that addresses the big wealth, values, and opportunity gaps we’re now seeing” tweeted Ray Dalio on January 24.
“I believe we are on the brink of a terrible civil war ”
RAY DALIO
Ray Dalio advocates revolutionary change and he appears to think that the new Democrat President Biden administration is better tuned in to implement policy changes required to address the wealth and opportunity gap
“For that reason, I was thrilled to hear what President Biden said at his inauguration. It is consistent with the direction history has shown the country needs to move in,” wrote Ray Dalio in his tweet.
Ray Dalio advocates revolutionary change, which requires bipartisan consensus leading to policy implementation, more than that all too familiar political talk
“Now the question is whether the president and both parties will bring that about. Good words and spirit aren’t enough. People will have to agree on both how to grow the pie and how to divide it well. That will require revolutionary change” wrote Ray Dalio.
“Good words and spirit aren’t enough. People will have to agree on both how to grow the pie and how to divide it well”
RAY DALIO
But tackling the wealth opportunity divide is going to be challenging in an environment where there is an oversupply of money bidding up asset prices beyond the reach of many. Moreover, there is an oversupply of labor. So real wages in this dynamic could head lower, which is likely to accelerate the wealth divide even further, bearing in mind the dwindling middle class live off their productive wages, unlike the wealthy who derive most of their income from capital appreciation and rent. The fourth revolution, digitalization, robotization, and developments in artificial intelligence continue to displace humans from the productive economy at an increasing rate.
A Hong Kong-based robotics company plans to mass-produce humanoid robots to replace workers across industries such as healthcare and education.
The technology genie is out of the bottle and competition means that the private sector has no choice but to adopt the latest cost-cutting job cutting technologies. The public sector is also competing for international finance on the bond market to finance its public spending. Sovereign bond investors will avoid governments that look like they could default. So, the public sector will also need to streamline with the latest cost-cutting technologies.
“If we do have an economic downturn, we worry we will be at each other’s throats” – Ray Dalio
Ray Dalio advocates revolutionary change to address the inequalities fueled by the ballooning money supply and falling worker participation rates
Both dynamics are leading to an ultra-wealthy class with the vast majority sliding into poverty.
Is Ray Dalio suggesting that the Biden administration should tax the very people like himself, the billionaires?
Ray Dalio believes that Capitol Hill needs to agree on how to grow the economy and how to divide it well, which he believes will require “revolutionary change”.
“Doing it peacefully requires both bipartisanship and skill” said Ray Dalio.
Ray Dalio advocates revolutionary change and it is not the first time that he has warned about civil unrest
In fact, in January 2018 I wrote in a piece entitled, Ray Dalio is worried that an economic recession could trigger unrest.
Since then, we have witnessed the rise and fall of a polarized president, which ended with protestors besieging the White House.
Ray Dalio forecasted correctly the unrest.
“If we do have an economic downturn, we worry we will be at each other’s throats” said Ray Dalio back in 2018.
“wealth and income skews are so great that average statistics no longer reflect the conditions of the average man” – Ray Dalio
“Wealth and income skews are so great that average statistics no longer reflect the conditions of the average man” added Ray Dalio.
Two years on and more than 20 trillion US dollars of global liquidity provided by the central banks, and the wealth-income divided has worsened
Moreover, the pandemic’s great lockdowns have made a bad situation even worse.
Ray Dalio advocates revolutionary change, which is in lockstep with the IMF’s recommendation for a Great Reset, an opportunity to build back better
What then is the next chapter? Will it be about inclusive capitalism, a global ideology that encourages the public and private sector to invest in ways that extend the opportunities and benefits of an economic system to everyone. Ray Dalio plugs for inclusive capitalism. Corporate leaders need to declare wealth inequality a national crisis, and policymakers and business leaders need to come together to find solutions,” wrote Ray Dalio in June 2020.
But how will this work when the technology genie is already out of the bottle. Robotization and AI are displacing workers from the economy, which is a trend that has accelerated with the pandemic.
Ray Dalio is not advocating Universal Basic Income, giving everyone a small slice of the pie so that they can survive.
Ray Dalio advocates revolutionary change, and he recommends inclusive capitalism, business leaders coming together, and bipartisan agreement
But we are struggling to find the meaning behind the words.
Biden’s public spending plan varies from 1.9 trillion US dollars to 0.9 trillion US dollars, depending on the day. Moreover, technology continues displacing humans from the economy, and the central bank keeps printing, despite admitting that it could be creating a wealth divide.
So is the world’s super power on the verge of a “terrible civil war”.
What do you think?
