Ray Dalio | The All-In Interview (youtube.com)
Fed cut rates, and you'd expect, based on a few decades, for bond buying to go up, but bonds were sold off. Central banks and soverieng wealth funds have shifted to have less bonds and more gold and hard values.
Gold is the third largest reserve currency, after dollars, Euros. Fourth is Yen.
All currencies values are going down relative to gold, bitcoin and other commodities.
All the big countries, USA, China, France, UK are approaching 100% central government debt levels (100% debt to GDP). (Japan has 200% and Germany approaching 50%.)
Adding gold into a portfolio reduces the risk of the portfolio. Have 10-15 uncorrelated bets in a portfolio, according to Dalio. Purely uncorrelated, which is not a retail investor thing just buying different sectors, but an expert thing.
PP terms equities from 1966-1984 negative real return. What is the denomination market value is measured by? What can you buy for that money? How many politicians can I buy with my dollar?
Reminder of when we talked here on L&SJ about Blackstone being behind Trump, with lots of utilities and energy company holdings, while Black Rock was Biden, with BigTech, consumer discretionary, financials, blanced, and some NATO specifications trapped-market companies NGrummond, Ratheon, Lockead.
The faster governments cut, the less they have to cut rates. It's non-linear. Bond markets will react.
Taxes are inflation, because it costs you more. Dalio.
Big fragmentation of states and internationally, Dalio thinks.
Supply and demand cycle, are things going to still be as good in 18 months as currently in the US? There might be a lot of fighting in the midterm elections. Great challenges in the states. A lot of disatisfaction with money and power. Laws, in an environment where might is right, in the US and internationally. No longer any attempt at a cooperative world order, with TWO et al obsolete. Technology war, and maybe increased military spending, which creates a budget issue. Climate will be an economic issue as well as environmental.
Does law work, state by state? Conflicts between the state and federal governments. How do sanctuary cities work?
The problems will be greater as times are less good, and at the same time cooperation on the problems will be less.
You don't have enough money, and you need money to make domestic people happy and also to support international conflict, and there is no UN or WHO or system to make judgements internationally. Polarity to due with wealth and values. And then tech disruptions, where no one, not China or the US, can lose because they'll lose militarily.
'Productivity helps but you have to put it in its place.'
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