Ray Dalio, the billionaire hedge fund supervisor and founder and chief funding officer of Bridgewater Associates, believes capital markets are not
Ray Dalio, the billionaire hedge fund supervisor and founder and chief funding officer of Bridgewater Associates, believes capital markets are not free.
Chatting with Bloomberg, Dalio mentioned markets have modified quite a bit so central banks just like the Federal Reserve not act throughout the confines of the normal financial system.
“There are markets which can be pushed by central banks not solely their actions however their need to be an proprietor of these belongings. Their priorities about that possession once they purchase and once they promote aren’t the identical because the traditional free-market allocations. And in consequence, the capital markets aren’t free.”
He mentioned central banks, in regular instances, will put cash on deposit for banks to borrow and lend it to individuals who will pay. This creates the credit score system and different monetary belongings compete with one another. Now, Dalio mentioned, the financial system and the markets are extra pushed by the possession of belongings by central banks.
He mentioned central banks discovered themselves in a scenario “the place they’re the market makers” after the 2008 Monetary Disaster and created the atmosphere the place markets are not free. However, he identified, if the central banks didn’t permit lending to blue-chip corporations and fallen angels, then giant elements of the financial system may fall.
Dalio mentioned the U.S. greenback can also lose attractiveness as a result of as a reserve forex, the flood of money out there means the normal valuation of cash not exists. He has beforehand expressed issues over the U.S. greenback’s position as a reserve forex.
Dalio is famously bearish on money however nonetheless has not thrown his weight in direction of different options, like say cryptocurrencies. Dalio mentioned in April “money is nearly at all times the worst funding.” The billionaire has talked about bitcoin earlier than however felt cryptocurrencies are a lot too unstable to perform as a retailer of worth.