Ray Dalio issues stark warning about U.S. dollar’s future as global reserve currency


The dollar’s decades-long position as the global reserve currency is in jeopardy because of steps the U.S. has taken to support its economy during the COVID-19 pandemic, according to Ray Dalio, founder of hedge fund giant Bridgewater Associates.

While equities and gold benefited from the trillions of dollars in fiscal spending and monetary injections, those efforts are debasing the currency and have raised the possibility that the U.S. will go too far in testing the limits of government stimulus, Dalio said Tuesday in an interview with Bloomberg Television.

“There is so much debt production and debt monetization,” Dalio said.

Subscribe to Bull Sheet for no-nonsense daily analysis on what’s happening in the markets, delivered free to your inbox.

The Bloomberg Dollar Spot Index has dropped 10% from its peak in late March as investors responded to the pandemic and efforts by central bank and government officials to contain the economic fallout. All of the world’s major developed currencies have gained against the dollar as have precious metals such as gold, silver and platinum.

Dalio said in July that investors should favor stocks and gold over bonds and cash because the latter offer a negative rate of return and central banks will print more money. Bridgewater has been moving into gold and inflation-linked bonds in its All Weather portfolio, diversifying the countries it invests in and finding more stocks with stable cash flow.

Bridgewater’s flagship Pure Alpha II hedge fund has had a tough year, tumbling 18.6% through August, amid the market turmoil fueled by the pandemic. The firm took a hit at “the worst possible moment” because its portfolios were positioned at the start of the year to benefit from rising markets, Dalio told clients in mid-March.

The Westport, Connecticut-based firm manages about $148 billion, down from roughly $160 billion at the start of the year.

More must-read finance coverage from Fortune:

  • A blockbuster IPO briefly made a bottled water entrepreneur China’s richest man
  • Book recommendations from Fortune’s 40 under 40 in finance
  • Commentary: Why the Democratic Party must make a clean break with Wall Street
  • ADP, the biggest U.S. payroll service, won’t implement Trump’s “tax holiday” for some clients
  • Fortune’s 2020 40 Under 40

Latest articles

We Are Begging You to Stop Injecting Yourselves With Homebrewed COVID Vaccines

In a new paper in the journal Science, a team of scientists has a blunt request: please stop injecting yourselves with homebrewed COVID...

Prize crossword No 28,243

Continue reading...

Trump’s TikTok Circus Will Have Lasting Consequences

It’s been one hell of a week for TikTok. The company is scrambling to get the White House to approve a deal it...

Ransomware attack on a hospital may be first ever to cause a death

Our mission to help you navigate the new normal is fueled by subscribers. To enjoy unlimited access to our journalism, subscribe today. German authorities have...

Related articles

Leave a reply

Please enter your comment!
Please enter your name here