Ray Dalio, the billionaire hedge fund supervisor and founder and chief funding officer of Bridgewater Associates, believes capital markets are now not free.
Talking to Bloomberg, Dalio mentioned markets have modified quite a bit so central banks just like the Federal Reserve now not act throughout the confines of the standard financial system.
“There are markets which are pushed by central banks not solely their actions however their want to be an proprietor of these belongings. Their priorities about that possession after they purchase and after they promote aren’t the identical because the traditional free-market allocations. And consequently, the capital markets aren’t free.”
He mentioned central banks, in regular occasions, will put cash on deposit for banks to borrow and lend it to individuals who pays. This creates the credit score system and different monetary belongings compete with one another. Now, Dalio mentioned, the economic system and the markets are extra pushed by the possession of belongings by central banks.
He mentioned central banks discovered themselves in a scenario “the place they’re the market makers” after the 2008 Monetary Disaster and created the atmosphere the place markets are now not free. However, he identified, if the central banks didn’t permit lending to blue-chip firms and fallen angels, then giant elements of the economic system may fall.
Dalio mentioned the U.S. greenback can also lose attractiveness as a result of as a reserve forex, the flood of money out there means the standard valuation of cash now not exists. He has previously expressed concerns over the U.S. greenback’s position as a reserve forex.
Dalio is famously bearish on cash however nonetheless has not thrown his weight in direction of different options, like say cryptocurrencies. Dalio mentioned in April “money is sort of all the time the worst funding.” The billionaire has talked about bitcoin earlier than however felt cryptocurrencies are a lot too risky to operate as a retailer of worth.