Quantcast

Cash Is TRASH: Founder of World’s Largest Hedge Fund Warns of Debt-fueled Inflation

(MarketWatch) “I believe that increasingly there will be questions by bondholders who are receiving negative real and nominal interest rates, while there is a lot of printing of money, about whether the debt assets they are holding are good storeholds of wealth. I believe that cash, which is non-interest-bearing money, will not be the safest asset to hold.”

That’s billionaire investor Ray Dalio making the case that U.S. dollars, perhaps, any currency, will prove a losing bet in this new era of COVID-19.

During a question-and-answer session on social-media platform Reddit, the founder of hedge fund Bridgewater Associates underscored a point that he’s made in the past, but one that has more resonance as the infectious disease that was first identified in Wuhan, China in December wreaks havoc on global economies and forces central banks and governments to unfurl an array of unprecedented fiscal and monetary stimulus efforts.

Those measures are intended to help limit the severity of an economic downturn that looks certainly to amount to a world-wide recession.

Back in late January, in an interview with CNBC, Dalio made a similar call, saying “cash is trash. Those comments were the subject of widespread scorn as stocks tumbled and recent reports said that his flagship fund — the Pure Alpha Fund II — was down 20% on the year.

But Dalio defended his skepticism toward cash by pointing to history.

“Now, like in the 1930-1945 period, interest rates have hit 0% and printing money and buying financial assets doesn’t get the money and credit to go where policy makers want it to go, so the central government borrows a lot and the central bank prints a lot of money and creates a lot of credit to buy this debt, which the central government spends to target what they want to save,” he wrote.

[Read more…]

TRENDING NOW

Who Is Experiencing the Most (and Least) Price Inflation?

(Economic Policy Journal) According to Bloomberg, low-income Americans are getting hit hardest by price increases as the economy starts to open up.

Armed Man Barricaded Inside Honolulu Hotel Room

(Associated Press) An armed man who barricaded himself inside a hotel room at a resort in Honolulu and fired shots through the...

Biden Sees ‘Win’ for US in Electric Vehicle Battery Deal

(Associated Press) Two big South Korean electric vehicle battery makers said Sunday they have settled a long-running trade dispute that will allow...

Marxist BLM Founder Spends Millions on High-End Homes

(Cassandra Fairbanks, Gateway Pundit) Black Lives Matter co-founder and self-described Marxist Patrisse Khan-Cullors has bought not just one, but four high-end homes,...

Feds Charge 3 More in Massive California Unemployment Fraud

(Associated Press) Federal prosecutors said Friday that they have charged three Southern California women with using prison inmates' names to bilk a...