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DAVOS, SWITZERLAND — Billionaire investor Ray Dalio thinks the bloated US debt position could end up devaluing the dollar (DX=F) as a store of value.
So it’s time to think about wider acceptance of alternative money such as crypto.
“We have a situation where we have too much debt and we’re producing it at a fast pace. So yes, we have to think about alternative monies,” the Bridgewater Associates founder said on Yahoo Finance’s Opening Bid podcast at the World Economic Forum in Davos, Switzerland (video above; listen below).
Dalio added, “And by the way, this is not individuals who are just thinking about it. These are countries and central bankers who are thinking about it. The changing and the holdings of bonds and debt as an asset, and the buying of gold and other assets in terms of the mix is a reality.”
Bitcoin prices have boomed 165% in the past year, climbing over $100,000 per coin after Donald Trump won his re-election in November. The new administration is widely expected to be more friendly to the crypto world. Trump and his wife, Melania Trump, have even released their own meme coins.
Dalio stepped down as CEO of Bridgewater Associates in 2017 and handed over control of the firm in October 2022. His current role with the firm includes mentoring the committee that has oversight over the company’s investment strategies.
The investment veteran, with an estimated net worth of $14 billion, is no stranger to making against-the-grain market and economic calls. Some have panned out; others haven’t yet — if at all.
In an April 2022 interview, Dalio warned me about a period of stagflation — or slow growth and high inflation. That didn’t exactly pan out from a growth standpoint as the world recovered from the COVID-19 pandemic. However, global economies continue to grapple with elevated levels of inflation that are crimping consumer purchasing power.
More recently, Dalio has been calling attention to the country’s burdensome deficit, which hit a staggering $1.8 trillion in fiscal year 2024. He shares more of his debt concerns in a new online book called “How Countries Go Broke.”
Worst-case scenarios on the US debt (such as a major inflation outbreak) haven’t occurred. But the markets are not ignoring the issue, with the Trump administration likely adding to debt levels by extending his signature tax cuts.
Dalio thinks the 10-year Treasury yield now hovering near 5% is just the start of its ascent, which could weigh on stocks and support a greater rotation into areas like crypto.
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