Ray Dalio reflections on the 4th of July, a special day for Americans when Thomas Jefferson, third president of the US, signed a declaration of independence in 1776 from British colonial rule, makes an interesting read.
Ray Dalio, founder of Bridgewater Associates, one of the world’s largest hedge funds with approximately $154 billion US dollars under management is a legendary macro investor.
Could Ray Dalio be viewed as a modern-day Nostradamus with a mind’s eye into the future and able to monetize his forecasts using financial instruments?
“could Ray Dalio be viewed as a modern-day Nostradamus with a mind’s eye into the future”
WEALTH TRAINING COMPANY
Grandmasters of the game have a rare combination of two abilities that they exceed in; a lucid brain that can analyze data and forecast the future with a high probability of accuracy and a humble character that knows how to manage risk.
Ray Dalio reflections center around events during macrocycles which he outlined in his works, Principles for Dealing with the Changing World Order.
Ray Dalio focuses on three main forces
“1) the large debt and money creations and the effects they produce (e.g., stagflation), 2) the internal order shifts and conflicts that we are seeing within countries, especially in the United States, and 3) the world order shifts and the conflicts they are causing between the great powers and their emerging allies and enemies,” wrote Ray Dalio in his latest piece post on his Linked In page.
“Grandmasters of the game have a rare combination of two abilities that they exceed in; a lucid brain that can analyze data and forecast the future with a high probability of accuracy and a humble character that knows how to manage risk”
WEALTH TRAINING COMPANY
The longevity of the system that fostered internal stability is part of Ray Dalio reflections in his latest piece
“To build out this constitution, the founding fathers naturally drew upon existing rules of governance (which were European, primarily English) and adapted them to their beliefs and circumstances,” wrote Ray Dalio.
The government held legitimacy for so long because rules were clearly understood, practical and the independence of the Supreme court remained on standby to interpret them in times of disputes.
So the separation of powers in a democracy, the legislative, executive, and judicial branches were clearly defined, according to Ray Dalio.
“As a result of this well-designed system/order and the long history of it working well, most Americans now take for granted that it will continue to work well forever, “ said Ray Dalio.
Domestic harmony and internal political stability reduce the risk of investing in a country.
Civil war, where an investor has a high risk of losing their capital, is the worst-case scenario for investors.
“With the increasing conflict between populists of the right and populists of the left, growing numbers of people are inclined to fight for what they want and what they believe is right rather than work themselves through the rules-based system of consensus and compromise that our founding fathers designed,” wrote Ray Dalio.
“One of the principles I learned from studying history is when the causes that people are behind are more important to them than the system, the system is in jeopardy, which is increasingly the case” – Ray Dalio
Ray Dalio believes the system is under stress
“One of the principles I learned from studying history is when the causes that people are behind are more important to them than the system, the system is in jeopardy, which is increasingly the case,” added Ray Dalio.
So Ray Dalio’s reflections on political polarity are whether it has fragmented society to such an extent that could be impacting social cohesion and the economy.
“So naturally, I wonder whether the principles that bind Americans together are now stronger or weaker than those that divide them,” wrote Ray Dalio.
But a divided society leads to conflict and lower levels of productivity.
Ray Dalio reflections on Russian sanctions go against the mainstream view.
The Powers and Cost of American-led Sanctions Another question I had before and still have to a lesser degree is a) would US-led sanctions inflict intolerable harm on Russia and cause it to abandon its goals (the answer appears to be no) and b) how costly would it be to the US, NATO countries, and the rest of world due to disruptions in markets (like oil, gas, other commodities, shipping, etc.) that the sanctions would create?
Indeed, these sanctions are helping two of the world’s most populated countries India and China acquire Russian energy at a discount. In other words, Russian sanctions could be detrimental to US hegemony as it fuels the New Silk Road with discounted Russian energy, while the US and its allies burden the consequences of higher energy.
“Rising above the king dollar is the Russian Ruble as we forecasted these sanctions would lead Russia to quote its vast commodity wealth in Rubles, which would strengthen the currency” – Wealth Training Company
Russian sanctions could also be destabilizing the western financial system as cost-push inflation due to higher energy feeds into higher core inflation figures. Russia now also controls one-quarter of the world’s agricultural commodities and fertilizes.
So further Fed hikes could lead to systemic risk, bearing in mind that 60 trillion US dollars of global debt need to be refinanced every year. Forty billion euros of European corporate bonds are in distress, and US mortgage lenders are going bankrupt. First Guaranty Mortgage files for chapter 11 bankruptcy, and Loan Depo fourth-largest lender in the US, which made 137 billion US dollars of loans, is circling the drain. Moreover, Australian bank Volt has collapsed and has urged 6,000 customers to withdraw their funds.
The major currencies are in free fall against the king dollar.
Why is the west shooting itself in the foot?
Rising above the king dollar is the Russian Ruble as we forecasted these sanctions would lead Russia to quote its vast commodity wealth in Rubles, which would strengthen the currency.
Russian sanctions have backfired, they have not converted the Ruble to rubble.
The Russian ruble is the strongest currency in the world this year.
So Russia’s Putin could potentially fracture the European Union and NATO. Come winter when Europe will be cold and hungry, will the Europeans fight or side with Putin’s Russia?
If you believe that foreign policy isn’t moral but strategic, then you have the answer.
Ray Dalio reflections are timely in a period of perhaps the most significant geopolitical event of the century, the beginning of a multi-polar world
