Head Of World's Biggest Hedge Fund Sees "Economic Collapse" Due To Money Printing By Early 20

The Head Of The World's Biggest Hedge Fund Sees "Economic Collapse" Due To Money Printing By Early 2013

www.zerohedge.com

As part of its most recent issue the New Yorker has released a must read interview with Ray Dalio - head of the world's biggest hedge fund, Bridgewater.

Dalio believes that future inevitable money printing will "lead to a collapse in currencies and bond markets." Dalio is even kind enough to give a time frame. "I think late 2012 or early 2013 is going to be another very difficult period." He is, to say the least, quite diplomatic:

(visit the link for the full news article)

Dalio believes that some heavily indebted countries, including the United States, will eventually opt for printing money as a way to deal with their debts, which will lead to a collapse in their currency and in their bond markets. “There hasn’t been a case in history where they haven’t eventually printed money and devalued their currency,” he said. Other developed countries, particularly those tied to the euro and thus to the European Central Bank, don’t have the option of printing money and are destined to undergo “classic depressions,” Dalio said. The recent deal to avoid an immediate debt default by Greece didn’t alter his pessimistic view. “People concentrate on the particular thing of the moment, and they forget the larger underlying forces,” he said. “That’s what got us into the debt crisis. It’s just today, today.”

Dalio’s assessment sounded alarmingly plausible. But when one plays the global financial markets a thorough economic analysis is only the first stage of the game. At least as important is getting the timing right. I asked Dalio when all this would start to come together. “I think late 2012 or early 2013 is going to be another very difficult period,” he said.

Diplomatic he is indeed. Bernanke has had the presses printing at full capacity in the last few years. Through quantitative easing, the US has been flooding the world steadily with dollars. Deflating the greenback is not bad per se, but it's done too excessively. This has already led to growing cracks in the bond market. Investors like China have ceased from increasing its investments in the US and plenty have gradually decreased their amount of treasury bonds. Yet, the debts continue to rise. We're quickly heading for the turning point where investors loose faith in the US ever being able to pay their dues. Bankruptcy is the logical consequence and the Weimar Republic as well as Zimbabwe have shown what printing of money on a massive scale does to a country.

The political and social unrest we see today is nothing in comparison to what still lies ahead of us. I've always been curious to know if and what role World War II played in ending the great depression. History repeats itself and there's no doubt on my mind that this is going to be the worst financial crisis mankind has ever seen. I hope not, nor do attempt to fear monger, but an armed conflict seems like a viable outcome of the # TPTB have made.

www.zerohedge.com
(visit the link for the full news article)

i dont think he's very well informed. its got to happen way before that in my opinion. perhaps if (when) they have a war it may stimulate something, like stolen oil.

You don't need to be a hedge fund manager to predict that outcome from printing money at will.

High school economics teaches this lesson.

In the 20th Century it happened in Germany, Argentina, Iraq and Zimbabwe to name just a few.

For some reason I find the idea of a complete financial crash exciting. I guess that is good for me as now that seems inevitable. The US simply can not operate in the manner it has without causing an eventual financial meltdown of absolutely ridiculous proportions.

did he reach that conclusion by himself... or did he also read the LEAP20/20 report

the same article says the USA bonds will fall off a cliff by 2013
so will the tax advantaged savings ...IRAs and such,

to be more specific... in the period of the first 100 days into the new administration, no matter who is elected in Nov 2012 in the USA...because thats when the major changes in the structure of savings/investing gets completely revised, capital gains gets taxed up to 50%, ROTH IRAs, tax credits all go the way of the dodo bird

read it all here:

www.leap2020.eu...

reply to post by orangutang


You are so out of your league here, that you have no idea.

Bridgewater analyzed the housing crash and debt bubble years in advance and Bridgewater made decent money on it.

They have also one of the most stringent truth-telling cultures of any hedge fund out there. If you know something, can prove it and enable money making on it, then everybody else will listen to you.

I listen to Dalio interviews very carefully, on the rare occasion when he bothers to give a big picture view (every two years or so).

BTW, his opinion is not his own personal navel gazing or reading the tea leaves, but very detailed decision tree analysis and probability calculations of his whole team, including some of the best macro-thinkers in the world.

So, when Dalio goes forth to give his proposition, he is much better informed than even most of the hedge-fund crowd, not to mention politicians or ordinary people at ATS.

No, his team is not infallible and giving an exact date on anything financial is nigh impossible due to the reflexivity of the markets. Just making a prediction that enough people will believe and act on, will bring towards the prediction date in time to the present time.

Read up people, before you assume. There's no substitute for education and critical analysis based on facts (as opposed to prejudice).

Originally posted by Pathaka
...

So, when Dalio goes forth to give his proposition, he is much better informed than even most of the hedge-fund crowd, not to mention politicians or ordinary people at ATS.
...

That is actually very worrying on one account. He is doing nothing but stating the obvious. If he is a big guru, and this is what a big guru does, just imagine the economic vision of your average hedge-fund and bank manager. Scary eh?...

Inflation happens when too much money circulates in relation to the demand for goods and services. Too much money chasing too few goods and services.

Whats the best way to combat this? We need to increase demand for goods and services first and then increase the value of money, aka purchasing power. One way is to increase wages and increase the labor demand but with over-automation and jobs being shipped to asia its almost impossible.

In other words the whole system, intentionaly or not, is destined to fail. The greed for corporations to show a higher bottom line and thus create an increase in the demand for any given stock traded publicly has led to corporations trying extra-hard to skimp out on labor. Fewer people working and artificially low salaries/wages means small purchasing power. Everyone is a consumer and worker at the same time...or at least most of us.

I see another way of getting out of this prolonged recession(borderline depression) and strangely enough no one has mentioned it yet. The FED in america could charge a negative interest rate thus stimulating growth. A zero interest rate is not enough and that is why they say the best way to get out of a depression is through war because everyone goes into overdrive producing new military hardware and new inventions occur much faster.

The best way to solve the problem is through socialism and a planned economy. Market socialism allows for prices to be set by supply and demand, while the state takes ownership and control of major industry thus business ventures not needing to show a profit and be attractive to potential investors. Less consumption creates stability and a healthier enviroment.