Ray Dalio Trashes Cash as Store of Value, Avoids Questions on Bitcoin
Members of the crypto community who have long had a dream of asking a billionaire about investments and economics finally got their chance on Tuesday as Ray Dalio, Co-Chief Investment Officer and Co-Chairman of major investment firm Bridgewater Associates, hosted an online ask-me-anything (AMA) session on Reddit.
The session covered questions from the public on everything from COVID-19 and its effect on the economy, to which asset classes Dalio believed would do well, and the future of both the US dollar, bitcoin and gold in the light of the massive government stimulus programs being rolled out.
To the disappointment to members of Reddit’s crypto community, however, Dalio avoided all questions concerning bitcoin (BTC), and whether we could see it emerge as a widely used form of money. Earlier this year, he said that BTC is too volatile to act as a proper store of value.
Asked about his view on how the “unprecedented amount of money injection” into the economy will impact the future of the US dollar, however, Dalio explained that the US dollar is still performing well for now because it is the world’s reserve currency:
“[…] the world desperately needs dollars and, as a result, there is a global shortage of them, which supports the dollar,” the famous investor said, although he added that this is a status that will not last forever.
“[The dollar will] weaken when those who are holding dollar-denominated debt no longer want to hold that debt because interest rates are inadequate and so much dollar-denominated debt and money is being created that its value is undermined,” Dalio explained.
Answering a similar question on why cash is now favored by investors, despite it being printed in massive quantities by central banks, Dalio clarified by saying:
“So I still think that cash is trash relative to other alternatives, particularly those that will retain their value or increase their value during reflationary periods (e.g., some gold and some stocks).”
Finally, Dalio was also asked about his view on the current market environment around the world, and what differences exist between countries. To this, Dalio explained that the US is in a better position than many other countries because it essentially controls the world’s reserve currency.
“The US government (including the central government and the central bank) is in the unique position of being able provide the money and credit that the world needs because the US dollar is the world's dominant reserve currency,” he said, before adding a word of caution:
“I believe that increasingly there will be questions by bondholders who are receiving negative real and nominal interest rates while there is a lot of printing of money about whether the debt assets they are holding are good storeholds of wealth.”
“I believe that cash, which is non-interest-bearing money, will not be the safest asset to hold,” the investor added.
In fact, Tuesday’s AMA is not the first time Dalio has taken part in such sessions with the public.
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