“People DON’T KNOW What’s Coming!” Prepare For The CHANGING WORLD ORDER | Ray Dalio Latest Interview

Holding cash and debt assets is a bad thing to realize that you have to think in terms of buying power not the number of dollars. You have so the worst thing is to be in cash like I say “cash is trash” and to be in and to be out of the bonds. So, I think there are three things, three big forces to keep your eye on and when you see them in their cycle. Then it’s clear first that you are earning more than you are spending when you look at those three forces. I want to make sure that they’re clear and you could align them up and you could see where you are in the country earning more than its spending and building savings. Or is it spending more than it is earning and creating debt because one man’s debts are another man’s assets and when somebody is holding those assets. 

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They’re producing a lot more of that money and debt they go down in value money goes down in value as they produce it to produce that buying power and then that gets people bad returns and it produces a higher amount of inflation. It produces bad returns for holding debt or so, in other words, cash or bonds and then people get out of cash and bonds and that produces rising interest rates. While there’s rising inflation and that produces stagflation. So, I want them to get the mechanics of that because that’s happening now. You could see it, this is not controversial, we are producing a lot of debt. We’re spending a lot more than we’re earning. As a result, they’re printing a lot of money and the printing of a lot of money creates. A lot of inflation the second force that is dealing with is the internal conflict force. 

How are you with each other? Are you operating a cohesively common mission and moving in the right direction? Is the system working or are you at each other’s throats? Is the system threatened because history’s shown when the causes that people are behind? They are more important to them than the system is in jeopardy. That is a risky situation. It’s a risky situation because it produces disorder and it can produce a form of civil war and at those times when you have that you see greater and greater polarity in politics. It shows up at greater and greater populism of the left and populism of the right. Populists want to fight for their side. They’re not moderates. 

Moderates want to work together to try to find a compromise that’s best for the whole populists appeal to their crowd by saying: “I am fighting for you and they will fight each other and that fight can be at the threat of the system”. We’re in the part of the economic cycle where the government has given a lot of money and credit to people. They’ve put it out. Well, no surprise that’s leading to a lot of inflation. It takes buying power away from people and it also means that then there’s going to be higher interest rates and that’s going to squeeze people. So, that makes that wealth gap and that wealth issue more difficult. So, that’s the second force and the third force is the rise of a great power, the geopolitical force that’s going on that. We’re seeing today with China and Russia and so on. And how that’s changing because when the power of a country diminishes, when we get weaker financially or how we are with each other? And so on there are greater vulnerabilities and there’s always the competitive power that learns how to become stronger. Competition always happens. There’s the establishment and then there’s new competition and as they get stronger in all ways: militarily, commercially, and so on. That’s the dynamic that we’re seeing.

What’s necessary is you have to earn more than you spend as a society. We look at our country as a whole to not having laptops and connectivity is today the equivalent of not having u running water and electricity or the telephone? The world is richer today. We have more per capita income, we have more technology and know-how. It just has to be redeployed in a way where it maximizes the efficiency essentially. The equality of holding cash and debt assets is a bad thing. So, a lot of money is in cash because people think that cash is the safest investment but they are measuring that in the amount of money that they get nominal returns. 

They say it doesn’t wiggle much, but think about it. It’s lost as of the most recent statistics eight and a half percent over the last inflation is eight and a half percent. They received virtually. No interest rate in cash and so there’s an eight and a half percent loss of buying power. As a result of inflation and so psychology should change, it is in the process of changing to realize that you have to think in terms of buying power – not the number of dollars. You have and you have to think how much is your best buying power. So, the worst thing is to be in cash like I say “cash is trash” and to be in and to be out of the bonds. Geographic location is important. In other words not just all in U.S and U.S dollar assets. I would say those three things again. I’m looking to go down to the country’s first area. They earn more than they spend. They have a good income statement and balance sheet. This is going to be very important in the period of head ahead because of the amount of credit that’s going to be available to bridge. The gap between spending and earning cash flows and so on is going to be quite narrower. So, a lot of companies are even able to raise cash and not have good cash flow because of growth expectations in the future. They will find it more difficult than’ll be true for individuals. It’ll be true for countries, so does it have a good income statement? Balance sheet will be important the second is places. How are they working with each other? Is there civil civility or is there civil war on the brink of civil war? Because countries where they work well together they’re productive are going to have a real competitive advantage. 

This article is a transcription of a video made by Jamiee Tree

Original video: https://youtu.be/es1CyKKeriw