Ray Dalio has a deep understanding of macroeconomic principles and their influence on global financial markets informs his strategic emphasis on the pivotal role of currencies in economic dynamics. His hedge fund, Bridgewater, became the largest in the world in 2012. His views on currencies matter.
Ray Dalio, born in 1949 and founder of Bridgewater Associates, is a seminal figure in finance, having launched one of the world’s largest hedge funds from his New York City apartment in 1975. Under his leadership, Bridgewater achieved remarkable success, becoming the largest hedge fund globally by 2012 and renowned for its impressive returns.
Dalio is not only credited with popularizing the risk parity investment strategy, which seeks to balance the risk distributed across various financial assets but is also recognized as a leading authority on currencies. His deep understanding of macroeconomic principles and their influence on global financial markets informs his strategic emphasis on the pivotal role of currencies in economic dynamics.
His views on currencies matter.
Transcript from Dalio's Discussion on Currency Collapse
"When those who are holding its debt, sell the debt, and the government/central bank, has to print money in order to buy that debt, in large size, while that's going downs. Those are the most important indicators. Again, I want to repeat selling the debt so that there is a big supply-demand imbalance and the central bank has to come in there and buy the debt and nobody else will buy, in large quantity, so that there's a currency devaluation. You have those those three things aligned, the currency devaluation going down at the same time as those are the two things that are happening and that's been a classic."
Dalio's Bank Run Analogy
"It's like a bank run. They come to the bank, there's not enough money in the bank, and so they have to make up the difference by the printing of money."
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