Investing legend Ray Dalio is raising concerns about the future of the US dollar. He believes that excessive government money printing could lead to a situation where the US might eventually revert to a gold-backed currency system.
A Historical Cycle?
Dalio argues that history shows a recurring pattern: currencies go through cycles of devaluation, ultimately leading back to a gold standard. He outlines this cycle as:
- Governments print large amounts of money.
- They use this cheap money to pay off debts.
- People lose faith in the devalued currency.
- Governments re-link their currency to gold.
While Dalio acknowledges that this isn’t an imminent event, he thinks it’s a plausible scenario.
Trump vs. Powell: A Clash of Economic Philosophies
Dalio recently commented on the differing economic approaches of former President Donald Trump and current Federal Reserve Chair Jerome Powell. He suggests that Trump favored devaluing the dollar to manage US debt, a strategy opposed by Powell’s focus on stable, low inflation. Dalio sees this as a classic conflict between debtors (who benefit from devaluation) and creditors (who are harmed).
Protecting Your Investments
To safeguard against potential currency devaluation, Dalio recommends holding around 15% of your investments in gold or Bitcoin.
Disclaimer:
This information is for general knowledge and shouldn’t be considered investment advice. Always do your own research before making any investment decisions./p>