Billionaire-investor Ray Dalio said that the US is approaching the late stages of a debt cycle that threatens the role of the dollar as the reserve currency of the world, a shift that could, according to him, stimulate the demand for Bitcoin, gold and other assets with limited delivery.
Dalio, founder of Bridgewater Associates, published the comments after accusing the financial times of incorrectly displaying his views that are shared in an interview.
He said that he agreed to respond in writing to the questions of the newspaper, but when the exchange was not published, he made the entire Q&A audience to prevent ‘distortions’.
Fiat -Valutas intended to fall
Dalio argued that the rising debt service costs of the US government, now about $ 1 trillion per year, combined with new loan needs, trust in treasuries and the dollar eroding.
He added that this dynamic makes alternative assets more attractive.
According to Dalio:
“Crypto is now an alternative currency that has limited its stock, so all things that are the same, if the supply of dollar money rises and/or the demand for it, would probably make an attractive alternative currency.”
He also shared his conviction that all Fiat -currencies are destined to fall in value against “hard currency” such as Bitcoin.
Dalio said:
“This is what happened in the period from 1930 to 1940 and the period 1970 to 1980.”
He made the statement in response to a question or crypto to replace the dollar. He also responded to questions about stablecoins and their exposure to treasuries.
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The FT wondered whether the dynamics could pose a systematic threat to stability. Dalio replied, “I don’t think so.” He added that the decreasing purchasing power of the treasury is a greater systemic threat.
Dalio has previously suggested that investors assign up to 15% of their portfolios to alternatives such as Gold and Bitcoin to protect against monetary debasement.
Reserve status in danger
Dalio said that the Federal Reserve is confronted with a dilemma between increasing interest rates, risking standard and unrest on the market or printing money to cover obligations, which would weaken the value of the dollar.
He warned that foreign holders have already started reducing their exposure to American bonds and turning to gold, a classic sign of stress in the late cycle.
He added political threats to feed independence, could accelerate the erosion of trust and push investors to scarce, decentralized assets.
Dalio put this pressure in the context of what he calls the ‘great cycle’, a recurring series of forces, including debts, political struggle, geopolitics conflict, climate risks and technological disruption.
He said that their convergence could cause enormous and unimaginable changes in the next five years.
By publishing the Q&A, Dalio said that he wanted to give a clear, non-party analysis of how American policy decisions reform global financing. For Bitcoin, his warnings suggest that his role as a hedge can strengthen as trust in the dollar erodes.
