Ray Dalio shares his vista on a range of hot button topics in his latest interview, where he discusses the mechanics of monetary policy, China investing, and Bitcoin.
Ray Dalio is a self-made billionaire investor and founder of Bridgewater with 140B USD of assets under management.
The interview starts on a light note with Ray Dalio sharing his boyhood life story. He noted his boredom with school life.
“School did not interest me when they cram things down your throat. Markets and girls interested me,” said Ray Dalio
“Everything revolves around sexuality,” said Sigma Freud.
“School did not interest me when they cram things down your throat. Markets and girls interested me”
The lighthearted conversation soon ended as Ray Dalio shared his vista on the perils of endless monetary easing
Ray Dalio highlighted the current financial landscape of high debts, zero interest rates, and political pressure to increase public spending and provide households with financial aid, stimulus cheques.
“But government can’t print money, so it has to borrow money from the Federal Reserve and other, and they don’t have enough money, so they print money,” said Ray Dalio.
Ray Dalio notes that the value of bonds has negative real returns, which causes capital to flow elsewhere. “Traditionally, it goes into equities, gold, and property,” said Ray Dalio.
“Same thing happened August 1971, the same thing happened March 1933 when the Fed created more money, and that monetization moved its way through the system,” he added.
In a few words, Ray Dalio shares his vista on the mechanics of monetary easing through currency creation
“Mechanistically Fed buys a bond it gives it to an investor, which puts in other investments and it gives it to the public through the government,” he said.
“But government can’t print money, so it has to borrow money from the Federal Reserve and other, and they don’t have enough money, so they print money”
Ray Dalio shares his vista on the evolving US-China relations and their impact on investors
Ray Dalio raises the following question, “How can communism and capitalism coexist, and what do these people want at the top?” he asked.
The answer was given by Deng Xiaoping who said to get rich is glorious,” said Ray Dalio. When they asked him about capitalism he said it doesn’t matter if it is a black cat or a white cat so long as the cat catches mice,” he added.
“So the idea is to produce wealth,” said Ray Dalio.
“China has more capitalism than Europe, and they are in the process of broadening that” – Ray Dalio
Ray Dalio noted that sustainable capitalism is about common prosperity, so tax rates in China are lower than in the US. “China has more capitalism than Europe, and they are in the process of broadening that,” he said.
A new Beijing Stock Exchange was announced by Xi Jinping at the Global Trade In Services Summit in Beijing in September 2021. “They know that it (capitalism) catches mice,”
Ray Dalio noted that China is about Micro control top-down control.
It is the parental state versus American individualism. He wishes Americans could understand the Chinese better and vice versa.
Ray Dalio then shares his vista on Bitcoin
Bitcoin has an inputted value as opposed to an intrinsic value. It is a tremendous accomplishment to have done that program and not have it hacked. It will have the perceived value that it is given not by the marketplace.
Bitcoin is worth a little less than one trillion dollars. All gold, excluding the central banks, is worth about 5 trillion. So it is about 20% of that market. If it is successful, he thinks it is not going to be worth a lot more than that, and there is a risk government will outlaw it.