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708 week was a great year because we caught the we anticipated the financial crisis and we did great and then we had seven and so on recently we got we missed the covet coming and then we got hit by the coven coming um and so then we bounced back from from that but uh i think we um we didn't take as much risk as we could because we added we added value but not as much as we should have added so i want you to speak to bridgewater clients now and those with billions lined up considering giving you money what are the new procedures at bridgewater to be more supple in the market given where credit markets are again at the zero balance well i don't think there's new procedures it is the amount of risk that one wants to take at a certain time so if you take our all-weather fund for example i think it's up 10 plus something this year it could have been um more aggressive the question is in this risky environment how much do you want to be aggressive you know so um you know we're always looking at things that we can do better that pandemic uh is something that we've examined and we learn a little bit more but by and large it's uh you know uh it's the same just more of it stephen roach of hill university acclaimed it morgan stanley says it's the single biggest miss he's ever missed was how we came out of the pandemic how do you feel the nation and our fiscal status will come out of the huge debt buildup we have how do you believe america will de-debt well this has all happened over and over again um that's what caught my attention when you hit a zero interest rate and you have too much debt and everybody needs money the way it works is the government sends out the checks but the government can't print money so it has to borrow money from the federal reserve and borrow money from others and they don't have enough money so that they print the money and so the value of cash and the value of bonds has negative real returns significantly negative real returns and so money goes somewhere else it goes into traditionally equities it goes into gold it goes into the property it goes yeah the house over there ray just went up 300 000 when you sat down in the chair continue the but the same thing happened in um 1971 august 1971 same thing happened in march 1933 and that was when they produced a lot more money and that monetization which moves its way through the system mechanistically the way it works a bond the federal reserve comes in and buys a bond it gives it to an investor that investor then in turn puts it into other investments and then it gives it to the public through the government so this is uh that's the way the mechanics is redealio with us at the greenwich economic forum on bloomberg radio and bloomberg television this morning let's go to china now it's so much in the news i wanted to wait but i think we've just got to get to china right now this is a new beijing is it a return to an old beijing that you and i knew when you were buying northeast air or is you do you envision a beijing that's moving to a new territory well you have um daughter and son-in-law in shanghai and you and and so we get living in real time we're living in real time and the more you have contact i think the more you understand it i don't think it's well understood for a long time the the question is how can communism and capitalism coexist that's the riddle you have to answer and he had to answer it a while ago and what do these people want at the top and what they um the answer to that riddle was told also by deng xiaoping when he was asked he said it's glorious to be rich and then they asked about capitalism and he says it doesn't matter if it's a black cat or a white cat just as long as it catches mice and so the idea is producing wealth and so but capitalism but capitalism yes but the redistribution okay so we have four things that are really going on in china if if you understand their intent um uh common prosperity is the word now okay and it has been the objective to raise money and then to to broaden the base of right okay that's common prosperity so if you look at their tax rates they're lower than the united states if you look at the measures of almost capitalism they have as much capitalism or more capitalism much more so than europe for example and then and now they're in a prospect to broaden that so i think there's a tendency and an understandable tendency to think because they are maoist and capital and and communist that they're going to uh go back to that kind of a thing the then they're not um deng xiaoping excuse me shishi ping just for example introduced the newest stock market in beijing he made a point of being the one who introduced the market in beijing to the small and medium-sized enterprises they know that it catches mice and so the issue is that the capitalist is not in control the issue is that there's a system for the whole system and then what they want to do is make sure that um it's not a capitalist driven system so and then there's data control and then and then you have to understand there's micro management it's like the kids there's a there's a top down versus bottom up whether you like it or not it's what it is our listeners and our viewers prosper from their micromanagement of the real estate debt collapse we're beginning to see in china what is the opportunity if we see their dominant investor position domestically go down in price how do you play that well it the mechanics are the same as um the united states went through and everybody else went through so it would be very similar to um our 2008 mechanics right so what we do it's happened over and over again is um the central bank makes a decision a moral hazard you know they never used to have morality do you believe they're there right now after this week that we've seen in the markets oh they knew that this was happening and and there's the preparation for this and they know that there's more and and that's good thing not a bad thing because in the past it used to be that they would guarantee it the banks you five major banks would loan state-owned enterprises and local governments with implied government guarantees and it was bad so the process is the same expect the exact same type of process as we would go through which is to say that um there will be more there will be stung investors will be strong that's how it works and that the system will be protected because it's denominated in their own case i want to get this on the record though ray dalio because every wall street firm is saying this morning this is not a lehman moment what we witnessed yesterday in the lesson in price explain why this is not a lehman moment to ray dalio well because a lehman moment produced pervasive structural damage um through the system that that wasn't rectified until the treasury came across in terms of its borrowing and then the fed came across with quantitative easing but um this is not that kind of a shake-up type of thing this is 300 billion is what they owe and this is all manageable the basic economics is for all countries in all time is that if your debt is in your own currency uh you can deal with it you can work it out you could work it out we've seen it all happen over and over again and it's a good thing that lenders get stung or that the borrowers get stung that's how the system works you
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