Billionaire hedge fund manager Ray Dalio issued a stark warning regarding the current state of global currencies, drawing historical parallels to the 1930s and 1970s.
All Fiat Currencies Will ‘Go Down Together’
On Tuesday, in a post on X, the founder of Bridgewater Associates said, “Gold is now the second largest reserve currency, behind the US dollar,” emphasizing a major shift in the global monetary order.
To understand this shift, he pointed to a historical pattern of fiat currency devaluations, stating that “we’re currently facing a classic currency devaluation similar to what we saw in the 1970s or the 1930s,” referring to the Nixon shock and the Great Depression, during which all currencies went down relative to hard currencies such as gold.
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The post includes a snippet of Dalio’s recent appearance on The Master Investor Podcast, where he said that gold’s newfound prominence as a reserve currency puts it ahead of other major currencies.
He concluded by reaffirming gold’s appeal in such an environment. He said, “If events today follow a similar pattern, that makes hard currencies an attractive asset to hold.”
Dalio Warns of ‘Very, Very Dark Times’
Earlier this week, appearing on a podcast with Steven Bartlett, Dalio warned of “very, very dark times” for major Western economies, including the United States and the United Kingdom, pointing specifically to their mounting financial liabilities in recent years.
Before this, Dalio warned of a “debt-induced heart attack” for the U.S. economy in the “relatively near future,” which he says was caused by many years of big deficit, in his column in The Financial Times early this month.
At the Future China Global Forum in Singapore last week, the 76-year-old billionaire warned about America’s $37.5 trillion debt, saying that it could trigger a “crisis.” He also said that with massive trillion-dollar annual interest payments, the demand for U.S. debt is declining, creating imbalances in supply and demand.
Late last month, U.S. Federal Government interest payments reached a record $1.2 trillion over 12 months, with market observers warning that it could reach $1.4 trillion by 2026 if the fiscal trajectory worsens.
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