Ray Dalio vs. Cash
Cash is king used to be a literal saying. Today, it just might be an old saying of past generations — that’s what billionaire Ray Dalio thinks. Ray Dalio is an American billionaire investor and founder of the world’s largest hedge fund, Bridgewater Associates. On Tuesday, he commented on cash, saying it’s not a safe investment in the current state of the economy.
Dalio says cash isn’t a safe investment because it will be taxed by inflation. The initiatives put in place by the Government and the Federal Reserve propped up the economy and stock markets amid the global pandemic. However, the system’s surplus money supply might cause inflation. Dalio said “You can’t raise living standards by raising the amount of money in the system because that’s just more money chasing the same amount of goods… It will affect the inflation rate.” He’s not wrong.
In October, we saw inflation rise at its fastest pace since the early 1990s. Prices for personal consumption expenditures, excluding food and energy, grew by 4.1% from last year. And just today, Fed chair Jerome Powell told lawmakers it’s time to retire the word “transitory” when referring to the current inflation. He confirmed inflationary pressures will last well into the new year.
You don’t have to be an expert economist to notice the power of your dollars decreasing. Every day I see people complaining about the increase in prices. Groceries, gas, toiletries, food from your favorite restaurants — they’re all becoming more expensive.
Are you sitting on cash right now or have you put all your cash in investments like stocks and cryptocurrency?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
