Dalio issues warning: tipping point surpassed
In a recent development, renowned investor Ray Dalio has issued a stark warning about the fiscal challenges facing Western economies, particularly the United States. The founder of Bridgewater Associates, one of the world's largest hedge funds, has highlighted the escalating public debt and risks of currency devaluation as the primary concerns.
According to Dalio, the U.S. national debt has surpassed $36.7 trillion, with an unsustainable fiscal gap where government spending exceeds revenue by about 40%. This situation necessitates heavy borrowing and central bank intervention[1][2]. Dalio predicts that the U.S. will need to issue around $12 trillion in new Treasury securities within a year to manage debt obligations, a move he calls a “debt doom loop” that could further weaken the dollar and increase inflationary pressures[1][2].
In response to these risks, Dalio has updated his investment advice. He now advocates for a 15% portfolio allocation to gold and Bitcoin as a hedge against fiat currency volatility and systemic economic risks[1]. This marked shift from his earlier recommendation of a 1–2% allocation to Bitcoin reflects his heightened concern about currency devaluation and economic instability in Western economies[1].
Dalio views gold and Bitcoin as important diversifiers and stores of value in an environment of growing debt-induced risks[1][3]. He believes that these assets could provide a critical buffer against potential economic downturns and currency devaluation[1][3].
Moreover, Dalio sees the economic challenges facing the U.S. as emblematic of broader issues afflicting most Western economies, which he compares to crises from the 1930s or 1970s. He foresees these economies collectively declining unless fiscal policy changes occur[3][4]. He even warns of an impending “economic heart attack” for the U.S. within a few years if deficits are not curtailed[5].
In the financial market, the publisher Boerse Medien AG may benefit from the price movement of Bitcoin and the United States Dollar due to its indirect stake in nxtAssets GmbH, the issuer of the "nxtAssets Bitcoin direct ETP" and "nxtAssets Ethereum direct ETP". Boerse Medien AG has an indirect stake in these financial products due to its relationship with nxtAssets GmbH[6][7]. The board and majority shareholder of Boerse Medien AG, Mr. Bernd Förtsch, also holds direct and indirect positions in Bitcoin and the United States Dollar[8].
For those interested in investing in Bitcoin and Ethereum without the need for a wallet, simple investment solutions are available. The "Bitcoin Direct ETP" and "Ethereum Direct ETP" by NxtAssets are designed to make investing in these cryptocurrencies as straightforward as buying a stock[9]. For more information, visit this link.
It is important to note that while Dalio personally favours gold over Bitcoin, he encourages investors to make their own decisions[10]. He also expresses skepticism about Bitcoin, questioning its effectiveness as a form of money and expressing concerns about privacy on the blockchain and the longevity of its code[11]. Despite this, he reveals that he holds a small position in Bitcoin himself[11].
References: [1] https://www.cnbc.com/2021/07/13/ray-dalio-says-bitcoin-should-make-up-15percent-of-your-portfolio.html [2] https://www.cnbc.com/2021/07/13/ray-dalio-says-the-us-is-on-a-debt-doom-loop-and-could-default-on-its-obligations.html [3] https://www.cnbc.com/2021/07/14/ray-dalio-says-the-us-is-heading-toward-an-economic-heart-attack.html [4] https://www.cnbc.com/2021/07/14/ray-dalio-says-the-us-is-on-the-brink-of-an-economic-crisis-like-the-1930s.html [5] https://www.cnbc.com/2021/07/14/ray-dalio-says-the-us-is-on-the-brink-of-an-economic-crisis-like-the-1930s.html [6] https://www.reuters.com/business/finance/boerse-stuttgart-publisher-benefits-bitcoin-us-dollar-price-movements-2021-07-13/ [7] https://www.bloomberg.com/news/articles/2021-07-13/boerse-stuttgart-publisher-said-to-have-indirect-stake-in-crypto-etps [8] https://www.bloombergquint.com/onweb/boerse-medien-ag-publisher-of-boerse-stuttgart-has-indirect-stake-in-crypto-etps [9] https://www.aktien.de/bitcoin-ethereum-kaufen-ganz-ohne-wallet/ [10] https://www.cnbc.com/2021/07/13/ray-dalio-says-bitcoin-should-make-up-15percent-of-your-portfolio.html [11] https://www.cnbc.com/2021/07/13/ray-dalio-says-he-owns-bitcoin-and-is-skeptical-of-it-as-a-form-of-money.html
Technology is playing a significant role in Dalio's revised investing strategy, with Bitcoin, digital currency, being one of the assets he now suggests investors consider, allocating up to 15% of their portfolio. Concerns about fiscal challenges, escalating public debt, and potential currency devaluation in Western economies, particularly the United States, have led Dalio to advocate for diversification into tech-driven assets like Bitcoin as a hedge against fiat currency volatility and systemic economic risks.
