Billionaire investor Ray Dalio, founder of Bridgewater Associates, has warned that the global financial system is at risk of collapsing in a debt crisis sparked by a mountain of unsustainable national debt.
At a financial conference in Abu Dhabi on December 10, Dalio said that the concentration of indebtedness at unprecedented levels in the economies of major nations, including the United States and China, poses increasing risks.
Dalio, who is considered to be one of the few globally influential voices in finance, warned that levels of debt will cause the worth of money to fall sharply in coming years. He said it is ‘impossible for these countries to escape from a debt crisis in the years ahead, which will set in motion a massive decline of value in money terms.’
Dalio Warns Against Debt Assets, Backs Bitcoin And Gold
Dalio had a few words about the risks in debt-fueled assets, adding warnings that investors should ‘stay away from debt assets such as bonds and debt.’ He also said the Apple of five major forces that shape the global economy are money, economy, internal political order, external geopolitical forces and debt. This may come as a call for caution to nations all over the world, struggling with growing fiscal burdens, and plagued by fears of future fiat currency stability.
“I want to steer away from debt assets like bonds and debt and have some hard money like gold and Bitcoin.”
These increasing risks prompted Dalio to urge investors to move into ‘hard money’, deferred monies, such as Bitcoin and gold since they are considered stores of value. These assets, unlike debt-based investments, can preserve wealth when financial stability is weak, the renowned investor said.
That support for Bitcoin represents a stunning about-face for Dalio, who has always been skeptical of the cryptocurrency. At first skeptical about Bitcoin’s potential longer term, Dalio, who is no stranger to a good investment opportunity, has come to believe Bitcoin can serve as a hedge against inflation and financial uncertainty.
In 2022, he suggested that a small allocation of about 2% depending on how much there is in a portfolio of investment in Bitcoin along with gold, is a way to help reduce risk in an extremely turbulent environment.
But Dalio’s consideration of Bitcoin as a ‘hard asset’ indicates cryptocurrency’s growing mainstream acceptance as a recognizable form of investment, even with all the unpredictability and regulatory concerns associated with the digital asset sphere.
As the world already talks about the future of Bitcoin within global finance, Dalio’s remarks came at a time when discussions surrounding Bitcoin’s place are louder than ever. When U.S. President-elect Donald Trump takes office in January, expectations are that the U.S.
The government will begin toying with the idea of a national Bitcoin reserve in 2025. But prominent gold advocate Peter Schiff has long continually touted Bitcoin as an unreliable asset, and he isn’t alone in his skepticism.
Schiff also tweeted on Dec. 9 that his administration could begin to take some steps toward fiscal responsibility by selling off the Bitcoin that the U.S. government holds. According to Schiff, eliminating the government’s Bitcoin holdings would not only reduce the 2024 budget deficit but also put to bed any talk of a “Strategic Bitcoin Reserve,” which he would never support.
In their views, while Schiff still believes gold is the better store of value in theory, Dalio’s standing alongside gold and Bitcoin shows the ideological split between old-school financial insiders and Bitcoin aficionados.
While Dalio’s comments don’t offer new perspectives on Bitcoin’s future, they add another layer of high execution to the current debate about its place in the global financial system. Investors are drawn to Dalio’s call for diversification into hard assets like Bitcoin and gold in the face of rising global debt and growing financial market uncertainty.
