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World-renowned investor and billionaire Hatch Fund manager Ray Dalio issued several serious warnings in his recent podcast about the US economy, the strength of the dollar, and rising government debt. Redalio believes the world is slowly moving towards a major economic transformation. According to him, this change will not happen suddenly but in the coming years it can definitely have an impact on the financial system of the entire world.
Rittalio is the editor of the Bridgewater Association, one of the world's largest hedge funds. He started the company in 1975 and it later became one of the most influential investment companies in the world and among the largest companies. Redalio is known for his extensive research on the global economy, as well as on the debt cycle and reserve currency systems.
For years, Radlio has consistently warned about America's growing debt, the dollar situation, and the shifting global balance of power. In his podcast, Radalio said that the most important financial story in the world right now is not just the stock market or interest rates, but the gradual weakening of the global strength of the US dollar.
According to him, a recent incident in the State of Hormus could be a big sign of this change. Redalio said Iran charged ships passing through it transit form US dollars with interest in Chinese yuan . Ridalio claims that this is not just a political event but also a sign of a major change in the global financial system because for the last 50 years the world's oil trade has been mainly conducted in US dollars and this system has been the biggest strength of the US dollar.
If we talk about the 1970s, a big agreement was made between America and Saudi Arabia. Under this agreement, Saudi Arabia will sell oil in US dollars and in return America will provide security to Saudi Arabia. Gradually, OPEC countries also started trading oil in dollars. This meant that every country in the world needed dollars to buy oil.
This system kept the demand for the US dollar consistently high throughout the world. Countries around the world began holding dollars in their foreign exchange reserves, and those dollars were often also invested in US government bonds. That means the entire world was directly supporting the American economy.
The US received several major benefits due to the continued strong demand for the dollar. America was able to borrow massive amounts. The dollar remained strong. America continued to borrow money at low interest rates. The US government continued to increase spending and kept the working power of ordinary Americans strong for a long time.
Simply put, the world wanted the dollar, so the US could easily print money and borrow money because everyone had to trade in US dollars. China has been working tirelessly for the past several years to try to reduce its dependence on the dollar. China has also started trading in fixed currency with many countries.
China has maintained alternative payment systems, strengthened groups like BRICS, and is now trying to increase the use of the yuan in oil trade as well . Look, if the world gradually starts trading in currencies other than the dollar, global demand for the dollar could drop significantly and the US could go into dollar debt.
This could increase America's interest burden even faster. Redalio called it the Dhoom Loop. He says that if there was more debt, more interest would have to be paid. If more interest has to be paid, there will be more loss. Bonds will have to be issued to compensate for the losses and if more bonds are issued then the bond prices will automatically fall.
As the price falls, the yield will increase. If yields rise, more debt will have to be taken to repay them at higher interest rates, and this is the cycle that will harm the dollar. This cycle could accelerate if foreign countries start buying fewer US bonds. In his podcast, Ridalio also cited the Suez Crisis of 1956 and the Germany of the 1920s .
He said that many times in history, the currencies of great powers have gradually weakened. In the beginning everything seemed to be going well. But over time, the real value of people's savings seemed to decline and continued to decline. Although he has clearly stated that he is not predicting immediate hyperinflation in the US.
But he says that throughout history, governments with heavy debt have often tried to manage the crisis by gradually reducing the value of their currency. Redalio also offered some advice for the general public in his podcast. He said that one should not depend on just one country or one currency. In the podcast, he also said that portfolios should be diversified.
Attention should also be paid to real assets such as gold. International investments should be increased and all inflation-proof assets should also be considered. He specifically mentioned gold commodities and international assets. Ridalio says the US dollar isn't going away any time soon. Nor will America suddenly falter economically or retreat.
But according to him, the world is gradually moving towards a multipolar financial system. Where the dollar alone is no longer the center of the entire world. Ridalio believes that this change has been happening for many years or decades and will continue to happen. But those who understand this change quickly will be able to prepare themselves better for the times to come.
But if people ignore this, do n't want to see the danger of this threat and ignore it and start investing in the dollar and start trading it , then in the future you cannot forget this thing at all that just like Ridalio gave two examples above, who knows the US dollar may become a third example. Do you agree with me, please let me know in the comments.
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