One of the world’s most powerful and richest men just came out with a scathing essay on why he believes the “world has gone mad and the system is broken.”
Analysts say that this only proves the value proposition of Bitcoin, gold, and other alternative assets.
“The World Has Gone Mad”
On Tuesday, Ray Dalio, the founder of Bridgewater Associates, released his latest views on the macro environment on LinkedIn.
In the short but sweet LinkedIn blog piece, Dalio, valued at some $18.7 billion, drew attention to what he sees as massive holes in today’s macroeconomy.
These include but aren’t limited to extremely low, and even negative interest rates for the creditworthy, large government deficits that he believes are almost certain to “increase substantially,” the impending collapse of “sound finance” in “reserve currency countries and their currencies,” massive liabilities in pensions, and a growing wealth gap.
Dalio remarked that all these factors have led him to believe that the “system of making capitalism work well for most people is broken.”
My below piece “The World Has Gone Mad and the System is Broken” explains some of the crazy things that are happening, why they are happening and why I believe that they are unsustainable. I’d be interested in knowing what you think about them. https://t.co/daUdsw0XLy
— Ray Dalio (@RayDalio) November 5, 2019
With all this in mind, Dalio concluded by writing:
“This set of circumstances is unsustainable and certainly can no longer be pushed as it has been pushed since 2008. That is why I believe that the world is approaching a big paradigm shift.”
Dalio’s cries that the current direction the economy is taking is unsustainable comes shortly after a Bloomberg published a jaw-dropping report titled “Half the World’s Banks Are Too Weak to Survive a Downturn, McKinsey Says”.
As reported by Blockonomi on that matter, American consultancy McKinsey & Co. revealed in a study that a “majority of banks globally” are likely running uneconomic operations “because their returns on equity aren’t keeping pace with costs.” As Kausik Rajgopal, a senior partner at the firm said in an interview:
“We believe we’re in the late economic cycle and banks need to make bold moves now because they are not in great shape… In the late cycle, nobody can afford to rest on their laurels.”
McKinsey warned in its report that if changes to the global financial infrastructure aren’t made soon, banks — at least 50% according to its estimates — risk “becoming footnotes to history”.
McKinsey’s report and Dalio’s essay go to show that the traditional finance system is on thin ice. And right now, it isn’t clear if moves are being made by institutions, central banks, individuals, and governments to right the ship, so to speak.
Bitcoin Fixes This
So, what’s the solution? Bitcoin, according to some industry executives anyway.
The libertarian chief executive of ShapeShift, Erik Voorhees, wrote that Dalio’s comments only show the need for something like Bitcoin.
Voorhees cited one facet of the post, in which Dalio stated that the collapse of the current system is likely to see governments try and “trap” the “rich capitalists,” who may attempt to move their capital and operations to places “in which the wealth gaps and conflicts [resulting from those gaps] are less severe.”
This, of course, validates the need for an uncensorable, unseizable, decentralized, and non-sovereign money like Bitcoin.
I don’t even need to say Bitcoin here… but it’s just so obviously the escape hatch for those paying attention. It is really tragic how many people willfully remain tied to fiat and government money systems
— Erik Voorhees (@ErikVoorhees) November 6, 2019
It isn’t just Voorhees. Former Point72 portfolio manager Travis Kling wrote on Tuesday that “Ray did that thing again,” referring to one of his previous tweets, in which he stated that Dalio has mastered the art of promoting Bitcoin without using the word “Bitcoin.”
Indeed, the other facets of Dalio’s sweeping piece seem to convey the value of Bitcoin. For instance, the large government deficits that Dalio expects to build up will likely cause high level of inflation eventually, resulting in a rush for a scarce asset like Bitcoin.
Regardless, it still remains to be seen when the “paradigm shift” that Dalio expects will take place, and how Bitcoin and other cryptocurrencies will take a role in the usurping of the current guard.
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