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DAVOS, SWITZERLAND – Billionaire investor Ray Dalio believes America’s ballooning debt situation could eventually devalue the dollar (DX=F) as a store of value.
So it’s time to think about broader acceptance of alternative funds like cryptocurrencies.
“We have a situation where we have a lot of debt and we’re generating it at a rapid pace. So yes, we have to think about alternative funds,” the Bridgewater Associates founder said on Yahoo Finance’s inaugural podcast at the World Economic Forum. In Davos, Switzerland (video above; listen below).
“And by the way, these are not just individuals who are thinking about it. These are countries and central bankers who are thinking about it. Change, holdings of bonds and debt as assets, and buying gold,” Dalio added. Other assets in the mix are a reality.”
Bitcoin prices have soared 165% in the past year, rising more than $100,000 per coin after Donald Trump won re-election in November. The new administration is widely expected to be friendlier to the world of cryptocurrencies. Trump and his wife, Melania Trump, even issued their own coins.
Dalio stepped down as CEO of Bridgewater Associates in 2017 and handed over control of the company in October 2022. His current role at the company includes directing the committee that oversees the company’s investment strategies.
Veteran investing, with Estimated net worth With a value of $14 billion, he is no stranger to making calls against the grain market and economic calls. Some have succeeded. Others haven’t done so yet – if ever.
In an April 2022 interview, Dalio warned me of a period of stagflation — or slow growth and high inflation. This hasn’t exactly worked out from a growth standpoint as the world recovers from the Covid-19 pandemic. However, global economies continue to suffer from high levels of inflation that hamper consumers’ purchasing power.
Recently, Dalio has been drawing attention to the country’s burdensome deficit, which has reached a staggering $1.8 trillion in fiscal year 2024. He shares more of his debt concerns in a new online book titled “How do countries go bankrupt?“.
The worst-case scenarios for US debt (such as significant inflation) have not occurred. But markets are not ignoring this issue, as the Trump administration is likely to increase debt levels by extending his landmark tax cuts.
Dalio believes the 10-year Treasury yield now hovering near 5% is just beginning its climb, which could weigh on stocks and support a greater shift in areas like cryptocurrencies.