|March 29, 2021|
Sovereign Valley Farm, ChileRay Dalio is the founder of one of the largest investment firms in the world and has amassed a personal fortune nearing $20 billion from his business and investment acumen.
In short, he understands money and finance in a way that most people never will. And it’s for this reason that his latest insights are so noteworthy.
In a recent, self-published article entitled “Why in the World Would You Own Bonds When. . .”, Dalio makes some blunt assertions about the alarming US national debt, the decline of the dollar, and other negative trends in the Land of the Free.
Here’s a summary of the major points:
1) Interest rates are now so low that “investing in bonds (and most financial assets) has become stupid.”
Dalio points out that bond yields are so low today that investors would essentially have to wait more than 500 years to break even on their bond investments after adjusting for inflation.
That’s why sensible people are already ditching the bond market.
JP Morgan’s CEO Jamie Dimon recently said he wouldn’t touch a US government 10-year Treasury Note “with a ten foot pole.” Neither would Dalio, as he told Bloomberg this month.
2) This is a big problem for Uncle Sam. Investors are ditching US government bonds at a time when the US is “overspending and overborrowing”.
They just passed a $1.9 trillion stimulus, and they have another $3 trillion spending package ready to go, plus plenty of momentum for Universal Basic Income, health care, Green New Deal, and just about everything else.
In short, the government is going to have to sell a LOT of bonds (i.e. increase the debt) at a time when investing in bonds has become stupid.
3) This creates a huge problem for the US dollar.“The frightening thing about this,” Dalio says, is that many investors have already come to the conclusion that bonds are terrible investments.
So these investors could decide to dump the bonds they already own “at the same time as the [US] government has to sell a lot bonds.”
Just imagine– the US government could easily have to sell another $4 trillion worth of bonds over the next 12-months to cover its massive budget deficit, plus all these wild spending programs.
But then on top of that, investors who currently own US government bonds may decide to dump another $3 trillion worth of the bonds in their portfolios.
This would mean that $7 trillion worth of bonds flood the market at a time when few people want to buy them.
4) As Dalio explains, this would cause one of two things to happen:
“Either interest rates will rise,” in order to entice investors to buy bonds, or the Federal Reserve “will have to print substantial amounts of money to buy [the bonds] that the free-market buyer won’t buy.”
And it’s pretty clear they’re going with option B.
Last year, the Fed was by far the single largest buyer of all the newly issued US government bonds. Yet as Dalio writes, “when they print money and buy those bonds. . . that lowers real rates and it accelerates a depreciation in the value of the dollar, and it also raises inflation pressures.”
5) So what are the potential consequences?
“The real risk, the big risk,” Dalio told Bloomberg, “is of a monetary inflation . . . and that monetary inflation means that even when the economy weakens, inflation rates rise.”
This is essentially stagflation, i.e. rising inflation coupled with a sluggish economy.
6) When does Dalio see these consequences starting to arise? “Late this year.”
7) There are plenty of bigger picture issues too. Dalio acknowledges that the US government is going to need a LOT of money to finance all this spending, so taxes will likely rise. A lot.
As Dalio writes, tax increases “could be more shocking than expected.”
He also believes that “the chances of a sizable wealth tax bill passing over the next few years are significant.”
8) Dalio writes that, as a result of such tax policy and other destructive rules, “the United States could be perceived as a place that is inhospitable to capitalism and capitalists.”
And the combination of high taxes, high inflation, and hostility towards capitalism may compel many investors and businesses to shift their capital and operations overseas and “run from less hospitable places to more hospitable places.”
9) But don’t expect the US government to sit idly by while capital leaves the country. Dalio believes there is “the possibility of capital controls” to prevent money from exiting the United States, as well as “prohibitions against capital movements to other assets” outside of the US dollar like “gold, Bitcoin, etc.”
So, in short: too much debt and money printing leads to a declining value of the US dollar, and potentially stagflation.
As a result, the government is likely to drastically raise taxes and chase business and capital away from the United States, leading to capital controls and prohibitions on alternative investments.
This is not some wild conspiracy theory or crazy conjecture. This is one of the wealthiest, most successful fund managers in human history bluntly calling the end of the US-dollar debt supercycle.
We’ve been writing about this theme for more than a decade, so our readers will not be surprised by either Dalio’s comments, or the solutions he proposes.
His top recommendation, for example, is “a well-diversified portfolio of non-debt and non-dollar assets.”
And in Dalio’s view, diversification means “currency diversification, country diversification, as well as asset class diversification.”
In other words, don’t keep all of your eggs in one basket, one country, or one currency.
You can read the entirety of this article here, or watch his interview with Bloomberg.To your freedom,
by Jon Rappoport
Oh well, we can dream………..
On January 29, 2027, the new president announced his choice for Attorney General, Claire Washington. Five days, later, she appeared at her confirmation hearing. Senator Grove Fatheringill III opened his folder and consulted his list of questions—
First of all, Ms. Washington, I want to offer my congratulations on your nomination. It’s about time we had another woman of color as—
Senator, I consider that an insult. I’m not here because I’m black. I’m here because the president thinks I’m qualified to serve. My skin is black. I was raised in what you could call “black culture.” But I’m my own person, which is to say, I’m an individual. My thoughts and actions aren’t black and they aren’t white. And frankly, I don’t care what people think of that remark. I’m not fronting for a particular culture. I happen to believe in the US Constitution. And if I may raise a few more hackles among those people waving their banners of political correctness, I am a sister to two brothers in my family, but I’m a not a “sister” to anyone else.
Ms. Washington, I didn’t mean to imply that as an African-American, you—
I’m not African American. My ancestors have lived in the United States for four generations. Are you British-American, Senator?
No. I was just…Ms. Washington, why don’t you tell us what your background…how your background and education equip you for the position of Attorney General?
I’m not sure they do. But I will say this. My first act upon gaining confirmation would be to pursue wide-ranging RICO cases against major gangs in the inner cities of America.
Excuse me, what?
Termination. Ending. Abolishment. Cancelation. Disbanding. Prosecution. Incarceration. Of gangs. As continuing criminal enterprises. Gangs continue to destroy the quality of life wherever they make their money.
What are the socio-economic causes that lead to the formation of gangs?
I’m interested in what the gangs are causing, as they sell toxic drugs, shoot and kill people, recruit innocent children into their ranks, destroy families, and make streets lethally unsafe.
For decades, the Department of Justice has failed to mount RICO cases against gangs. Do you know why? Because the gangs sell drugs for cartels, and the cartels launder their money in banks. The cartels and the banks are protected, because IMPORTANT PEOPLE are making huge profits from the drug business. If you confirm me, all that will end like the snow ends when spring comes.
Are you accusing—
Yes, Senator, I am. Whoever you were about to ask me about, I am accusing them.
I didn’t even get a chance to—
My second line of attack will be against the CEOs of major corporations that pollute the environment—not with CO2—which is not killing anyone—but with highly dangerous chemicals. Certain key pesticides, for example.
However, you surely understand that modern industrial-scale agriculture—
And three, I will make sure pharmaceutical companies that sell highly toxic medicines are prosecuted to the fullest extent of the law, which means their CEOs will go to prison for very long terms.
Opioids, for example? Because we’re already—
Senator, this goes far beyond opioids. Every year in the US, FDA- approved drugs kill at least 100,000 people. That’s a million deaths per decade. Since the year 2000, when those numbers were published, the federal government has done NOTHING to remedy what amounts to a continuing holocaust. Under my administration, the complacence and negligence will end. I assure you.
But highly reputable medical journals publish studies of those drugs and—
The most prestigious journals are complicit in the continuing crime. They knowingly publish studies which are criminally deceptive. I will relentlessly prosecute their editors and reviewers.
Hold on. Are you talking about—
I’m talking about the New England Journal of Medicine, the Journal of the American Medical Association, and other publications. I’m also talking about FDA executives, who will become prime targets for DOJ prosecutions.
Criminal charges against—
Yes, Senator. Very serious criminal charges.
Ms. Washington, what about the guns? We have to take away the guns from people.
After every mass shooting, the usual politicians bray about taking guns away from the people who didn’t commit the crime. That’s not going to happen under my watch. I look at a map—as any citizen can—and I see where, in this country, people are shooting other people in large numbers. We will go into those areas and clean out the killers. The gangs.
That doesn’t make any sense.
It makes perfect sense. If America were attacked by China, would you want us to respond by assaulting Greenland?
China? My God, what are you talking about?
As any person with a few brain cells would understand, I was making a comparison to illustrate a point. I don’t envision an attack against the US from China.
The press and social media will be all over that China remark.
So what? The press and social media take perverse delight in twisting people’s statements. I don’t run my life by fear of what others will say. Do you?
Of course not. But—
Senator, I’ve just sketched out the top issues on my agenda. If you confirm me as the next Attorney General of the United States, you can expect to see action against those crimes from day one. And any prosecutor in the Department of Justice who doesn’t take my assignments seriously and honestly and with great zeal will be fired summarily. I want tigers, not house cats.
There are so many other crimes that need—
Yes there are. And I will go after the perpetrators. I don’t care what color their skin is. I don’t care where they live. I don’t care about their position in life or their reputation.
When it comes to protests in the streets of America—
If crimes are committed during these protests and riots, such as looting, burning, and assault, the states should arrest and prosecute the criminals. If they don’t, we will sue the states in court. If we find judges who refuse to hear our serious cases, we will do everything possible to bring those judges to justice.
Judges?? But there are many peaceful protests that—
Peaceful protests are of no concern, except when local law-enforcement tries to squash them for obvious political reasons. Then we would become involved. And I mean INVOLVED.
Ms. Washington, I want to return to the subject of opioids—
So do I, Senator. Because in 2016, both house of Congress passed a bill President Obama signed—and I know, for a fact, that the unanimous vote on that bill in both the House and the Senate was a sham, and virtually no one read the bill—
How can you say that?
Because it’s true. The bill, which became a law, has made it almost impossible for the DEA to enter the premises of pharmaceutical companies that are clearly TRAFFICKING opioids and put a stop to the crime of murder. It’s a detestable law. It’s called the Ensuring Patient Access and Effective Drug Enforcement Act of 2016, and it was signed by President Obama on 4/9/16. Perhaps you recall that the Washington Post ran an article on that opioid scandal.
I seem to remember—
The article mentioned an attempt was made to reach President Obama for a comment. He declined.
Ms. Washington, I don’t know about the other senators gathered here today, but I could never confirm you as the next Attorney General of the United States.
I assumed my confirmation would run into roadblocks. However, it occurs to me that the American people—many of them—would take a different view from yours. Who knows? If so, I suggest they contact your office.
Now wait a minute—
As we speak, several colleagues of mine are publishing, at my personal site, a list of all the bills you’ve voted to approve during your long and distinguished career in the Senate; and who, specifically, those votes benefited, and how much money in campaign donations you’ve accepted from those who’ve benefited. I assure you, the chart makes interesting reading.
THERE WAS AN UPROAR IN THE CHAMBER.
The networks cut the live feed.
Later that day, a bevy of reporters hungry for more red meat caught up with Claire Washington at her office. Before live television cameras, she said:
“Here it is, ladies and gentlemen. I don’t live or work on a plantation. Not in the fields, not in the house. I’m not black or white or red or yellow or purple or blue. I’m a free American. My only standard is the Constitution. For decades, the Department of Justice has served special interests. Under my watch, all that would end. I don’t fear the biggest corporate CEOs in the country, or the lowest gang killers in Chicago, or US Senators. If you want a racket and crime busting Attorney General, here I am. My bloodhound law partners are already preparing a case against Pfizer and Moderna for lying to the public about the safety and efficacy of their COVID vaccines—“
The television networks cut the live feed again.
But they had a bit of the problem, as they would discover in the next few days. Whenever the face of Claire Washington appeared on screens, ratings shot up to all-time levels…
Twitter, Facebook, YouTube, and other social media rabidly deleted posts that supported the AG nominee, but it didn’t seem to matter.
As Chris Wallace of FOX commented, “Something in the soul of American culture has been unleashed. We don’t know what it is, but it’s moving up and out like a hurricane. We’d probably like to say it’s a rerun of the Trump effect, but it’s bigger than that…”
Two weeks later, with the Senate confirmation hearings still in mysterious adjournment, Claire Washington sat down for an interview with 60 Minutes’ Tom Dooley. She jumped in with both feet:
“Censorship has overtaken America, Tommy. If I win appointment as the next Attorney General—and opinion polls are showing the American people want me in that office—I’m going to go after social media giants with a vengeance. They’re the public square and the town hall, whether they like it or not, and they have no right to set off a bomb in the middle of the 1st Amendment. Frankly, these CEOs are some of the scummiest aristocrats I’ve ever come across. I’ll tell you a little secret. Ending censorship would eventually put social media operations in a hole. With an adequate spread of opinion across the whole cultural and political spectrum, tension and drama would deflate like an old bag. Finally, nobody would care. It’s censorship that actually drives the popularity of these sleazy social media outfits…”
Mark Zuckerberg and his wife promptly left the country for a visit to China.