Cash is Trash

Ray Dalio says government spending will soon erode the value of the U.S. dollar

 

Dalio Echos: FibMarketWatch’s Post ‘Breaking the Illusion’.

Topline: Ray Dalio believes we are hitting a depression similar to that of the 1930s, which will take years of financial and economic reconfiguration and human ingenuity to recover from, as he discussed in a Wednesday Ted Connects talk.

  • “We’re not going to go back the way it was,” said Bridgewater Associates founder Ray Dalio in the virtual TED talk. “We’re going to restructure our economy and restructure our financial system” over the next couple of years in order to recover.
  • Ray Dalio’s Bridgewater Associates has $160 billion in assets under management, making Dalio the 46th richest person in the world with an $18 billion net worth.
  • Dalio’s biggest worry is that restructuring will not be done in a civil bipartisan way to “both increase the size of the pie and divide it well,” warning of partisan politics preventing effective solutions, “damaging”—rather than repairing—the economy.
  • The key to success as an individual investor is to “know how to diversify well and in a balanced way,” he said. “The greatest mistake of all investors is to think that what has done well lately is a better investment; cash is almost always the worst investment.”
  • He also thanked the Chinese for their work on coronavirus, noting that doing so was political: “The Chinese, in many ways, are helping with things that are needed to manage this crisis.”
  • Dalio flagged the opportunity for entrepreneurship as the catalyst for recovery: “The greatest force through time is human inventiveness. The greatest force of that is reinventiveness.”

Crucial quote: “This is not a recession; this is a breakdown. You’re seeing the same thing that happened in the 1930s.”

Credit: https://www.marketwatch.com/story/founder-of-worlds-largest-hedge-fund-doubles-down-on-cash-is-trash-argument-warning-of-debt-fueled-inflation-2020-04-08?mod=MW_article_top_stories

Chart: Consumer Price Index for All Urban Consumers: Purchasing Power of the Consumer Dollar in U.S. City Average

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