Ray Dalio - He's good, but not that good.... "bitcoin is a bubble", he says. Remember 1982 Ray?
I have a lot of respect for Mr. Ray Dalio and what he's accomplished with his Bridgewater Associates hedge fund. The fund has over $160 billion under management. And, he admittedly likes the "game", i.e. Wall Street and the markets. Indeed, I feel a kinship with Mr. Dalio because I also like the "game". It's exhilarating when you "win". That adrenaline rush is a hard habit to kick.
But, where we part company in our mutual viewpoints is a type of situational awareness he seems to lack. He firmly believes that "bitcoin is a bubble", and I firmly disagree.
In 1982, Ray Dalio firmly believed that the global economy was heading into a depression, and he bet the farm on that belief. Subsequently, he was wiped out and had to borrow $4,000 from his dad to handle family finance obligations until he could sell his second car. A very humbling experience.
To be fair, around that same time, I too bet the farm on the anticipated buyout of National Airlines by PanAm, I had that deal backwards, and I too got wiped out. The ONLY difference here was I had a full time job, so I didn't need to borrow from my dad. Like Ray, I spent many months evaluating what I did wrong. But, in both our cases, our arrogance was our blind spot.
My remedial training was extensive as I evaluated everybody's trading techniques and strategies. I studied everything from stocks, bonds, commodities, derivatives to currencies. And what I learned made me a far better trader than I had ever been. Introspection is a very healthy process, and failure is a very powerful motivator to "get it right"! Humility opens the mind.
Getting to the point, about three years ago (during Greece's first collapse), a strange thing started to happen. Valuations of ALL asset classes were declining systematically. Oil started declining taking the metals, particularly copper and iron with it, then the rest of the commodities market. Next, bonds started declining, which provoked the central bankers to start propping them up by insane "quantitative easing" (QE was printing money to buy bonds). Then derivatives began creating big liquidity problems (which have NOT been resolved) for the major global banks. These actions spooked some foreign holders of US debt, which led to a major dump of US Treasuries by China and a host of other Asian and Mid-East countries. At this point, the FED quietly (or as reported by CNBC & Bloomberg, a "private investor") began buying up Treasuries using their secret "private investor" facility in Belgium. If they had not, all of those Treasuries would hit US markets, US Treasuries would be impossible to move and all the "cash" the Fed created would have shown up in the US economy to an estimated tune of about 450% inflation.
With all of the asset classes in disarray, one more element comes into play, the London Bullion Exchange, and the real reason gold never came close to the $10,000 per ounce projections so many gold traders had predicted. The manipulators of the gold markets in Europe had a sweet deal with the gold trade because they really didn't have enough gold to cover contracts, so most of the time, they settle contracts in Euros or US dollars. (What some folks called "paper trading".) But, VERY RARELY did they allow physical delivery. If they had not done this, and allowed gold to soar to its true value, physical delivery would have gained popularity and then their fraud would have been exposed. I remember seeing contract expirations that would have easily netted investors over $45 million in profits just for holding gold over the weekend. But, not once did anybody take advantage of the "physical delivery" option. A very curious scenario for sure. Every weekend, someone would leave roughly $45 to $50 million on the table. Why?
When the Shanghai Gold Exchange opened, a very healthy gold arbitrage play began to emerge, which forced London into a more realistic gold contract brokerage ( i.e. they began to unwind their contracts, put another way they stopped writing gold futures contracts on gold they didn't have.)
While all these things were happening, a lot of analysts were worried about "valuations" of ALL assets. They were seeing huge problems of extremely over-valued assets. Mohammed El-Erian talked about this frequently with nearly every interview he gave. But, few people picked up on what was the true problem, and most STILL don't! It seemed like Mohammed El-Erian's warnings about "valuation equilibrium" was a code word/phrase nobody could decipher.
What the smart folks figured out was that this "valuation equilibrium" problem was THE KEY problem to the over-valued assets. Put another way, with the central bankers creating money out of thin air to prop up every asset class, they had undermined the values of EVERYTHING including the currencies. Again, about this time, quietly some smart folks were seeing the unmolested integrity of blockchain assets, namely bitcoin, and started seeing that it's value could remain stable in the turmoil of an "unwinding" quantitative easing scheme. Recently, the FED openly admitted it was going to :normalize" its balance sheet, and the markets yawned. In essence, in order to "normalize", the FED will be forced to contract the money supply by an estimated $3.0-4.5 TRILLION. Such contractions in the past have led to depressions, you may have heard about 1929? It was in all the papers!
So, right here at this point is where I differ with Ray Dalio. It's the valuations that will be forced to reset themselves based on some standard not arbitrarily defined by central bankers. The expansion and contraction of the "money supply" will wreak havoc on everything within the economy. But, and this is a very BIG BUT, because the quantity of bitcoin can not be increased or decreased, it will give it a unique stability that all the other asset classes can not achieve until currencies are reset and/or backed by gold. And few people believe such a reset can happen. Regardless of your belief in a reset event, the interim period will push demand for a stable medium of exchange beyond present day imagination. Here, bitcoin, fills in a huge gap. It is the perfect medium for exchange. It can not be inflated, deflated, or counterfeited. It can not be controlled by any central bank or government.
Bottom line, we're not looking at a "correction" of asset values, but we are looking right into the face of a systemic collapse of the fiat currency system. Why? Because when currency is created out of thin air to "stabilize" values, it has the opposite effect. The old rule of supply and demand has never failed to prove itself. As a reference, take a look at the German Weidmar Republic, 1922. A wheelbarrow of Reichmarks would buy a single loaf of bread. That's a serious valuation problem, not unlike today's valuation problems.
When the average person finally realizes what "true valuation" is all about, bitcoin will explode. At this moment, the ONLY reason why bitcoin has not exploded to much higher values is simply ignorance of the imminent systemic failure of fiat currencies or even the threat of a failure. There has been a deliberate cover-up of the real risks by all the financial news outlets because they are OWNED by the global banking establishments. Nobody wants a bank run!
But consider this perspective, when the internet first started, few people could imagine its capabilities, and fewer still could ever imagine its economic impact. But, those that did, were wildly rewarded. Had you invested just $1000 in Google or Amazon or Netflix when they started, what would your life look like today? Consider this, bitcoin is your second chance.
What you are about to see in the not too distant future will NOT be a market correction, but a systemic failure of the fiat currency system. And I say that not to generate fear, but to explain that the central bankers made it a grim reality created by their insane greed, derivative perversions, and infinite currency creation (quantitative easing) which destroyed true valuations of all assets used in our economy. Finding value for most fund managers has become an act of wishful thinking bordering on futility. You don't have to go down that road.
Few people talk about the integrity of an asset. And maybe they can't wrap their minds around a stable asset that can not be perverted by banking schemes because through their entire lives they have taken this financial perversion as normal, as if inflation is some magical phenomena that comes out of the darkness of night. But, that is were we'll have to go, stable values based on some sterile standard. In that period, bitcoin will be a pristine standard that folks will gravitate to out of necessity.
Will bitcoin always be a great investment? No, nothing lasts forever. Just like Apple stock, at some point bitcoin values will loose their momentum, but that will be closer to the realm of $1 million or so. It's just supply and demand proving itself again, as it has done so many times down through history. History always repeats itself because most folks fail to expand their situational awareness of where they are in time and space.
Sorry, Ray Dalio, but it appears you're too narrow in your thinking. Just don't bet the farm this time around on what you believe, it maybe much harder to start over again, Bitcoin will shock a lot people holding very staunch preconceived ideas because those folks are missing the REAL problem.... true valuation of assets, and that is firmly based in the value of currencies.... which bankers keep undermining.
But, where we part company in our mutual viewpoints is a type of situational awareness he seems to lack. He firmly believes that "bitcoin is a bubble", and I firmly disagree.
In 1982, Ray Dalio firmly believed that the global economy was heading into a depression, and he bet the farm on that belief. Subsequently, he was wiped out and had to borrow $4,000 from his dad to handle family finance obligations until he could sell his second car. A very humbling experience.
To be fair, around that same time, I too bet the farm on the anticipated buyout of National Airlines by PanAm, I had that deal backwards, and I too got wiped out. The ONLY difference here was I had a full time job, so I didn't need to borrow from my dad. Like Ray, I spent many months evaluating what I did wrong. But, in both our cases, our arrogance was our blind spot.
My remedial training was extensive as I evaluated everybody's trading techniques and strategies. I studied everything from stocks, bonds, commodities, derivatives to currencies. And what I learned made me a far better trader than I had ever been. Introspection is a very healthy process, and failure is a very powerful motivator to "get it right"! Humility opens the mind.
Getting to the point, about three years ago (during Greece's first collapse), a strange thing started to happen. Valuations of ALL asset classes were declining systematically. Oil started declining taking the metals, particularly copper and iron with it, then the rest of the commodities market. Next, bonds started declining, which provoked the central bankers to start propping them up by insane "quantitative easing" (QE was printing money to buy bonds). Then derivatives began creating big liquidity problems (which have NOT been resolved) for the major global banks. These actions spooked some foreign holders of US debt, which led to a major dump of US Treasuries by China and a host of other Asian and Mid-East countries. At this point, the FED quietly (or as reported by CNBC & Bloomberg, a "private investor") began buying up Treasuries using their secret "private investor" facility in Belgium. If they had not, all of those Treasuries would hit US markets, US Treasuries would be impossible to move and all the "cash" the Fed created would have shown up in the US economy to an estimated tune of about 450% inflation.
With all of the asset classes in disarray, one more element comes into play, the London Bullion Exchange, and the real reason gold never came close to the $10,000 per ounce projections so many gold traders had predicted. The manipulators of the gold markets in Europe had a sweet deal with the gold trade because they really didn't have enough gold to cover contracts, so most of the time, they settle contracts in Euros or US dollars. (What some folks called "paper trading".) But, VERY RARELY did they allow physical delivery. If they had not done this, and allowed gold to soar to its true value, physical delivery would have gained popularity and then their fraud would have been exposed. I remember seeing contract expirations that would have easily netted investors over $45 million in profits just for holding gold over the weekend. But, not once did anybody take advantage of the "physical delivery" option. A very curious scenario for sure. Every weekend, someone would leave roughly $45 to $50 million on the table. Why?
When the Shanghai Gold Exchange opened, a very healthy gold arbitrage play began to emerge, which forced London into a more realistic gold contract brokerage ( i.e. they began to unwind their contracts, put another way they stopped writing gold futures contracts on gold they didn't have.)
While all these things were happening, a lot of analysts were worried about "valuations" of ALL assets. They were seeing huge problems of extremely over-valued assets. Mohammed El-Erian talked about this frequently with nearly every interview he gave. But, few people picked up on what was the true problem, and most STILL don't! It seemed like Mohammed El-Erian's warnings about "valuation equilibrium" was a code word/phrase nobody could decipher.
What the smart folks figured out was that this "valuation equilibrium" problem was THE KEY problem to the over-valued assets. Put another way, with the central bankers creating money out of thin air to prop up every asset class, they had undermined the values of EVERYTHING including the currencies. Again, about this time, quietly some smart folks were seeing the unmolested integrity of blockchain assets, namely bitcoin, and started seeing that it's value could remain stable in the turmoil of an "unwinding" quantitative easing scheme. Recently, the FED openly admitted it was going to :normalize" its balance sheet, and the markets yawned. In essence, in order to "normalize", the FED will be forced to contract the money supply by an estimated $3.0-4.5 TRILLION. Such contractions in the past have led to depressions, you may have heard about 1929? It was in all the papers!
So, right here at this point is where I differ with Ray Dalio. It's the valuations that will be forced to reset themselves based on some standard not arbitrarily defined by central bankers. The expansion and contraction of the "money supply" will wreak havoc on everything within the economy. But, and this is a very BIG BUT, because the quantity of bitcoin can not be increased or decreased, it will give it a unique stability that all the other asset classes can not achieve until currencies are reset and/or backed by gold. And few people believe such a reset can happen. Regardless of your belief in a reset event, the interim period will push demand for a stable medium of exchange beyond present day imagination. Here, bitcoin, fills in a huge gap. It is the perfect medium for exchange. It can not be inflated, deflated, or counterfeited. It can not be controlled by any central bank or government.
Bottom line, we're not looking at a "correction" of asset values, but we are looking right into the face of a systemic collapse of the fiat currency system. Why? Because when currency is created out of thin air to "stabilize" values, it has the opposite effect. The old rule of supply and demand has never failed to prove itself. As a reference, take a look at the German Weidmar Republic, 1922. A wheelbarrow of Reichmarks would buy a single loaf of bread. That's a serious valuation problem, not unlike today's valuation problems.
When the average person finally realizes what "true valuation" is all about, bitcoin will explode. At this moment, the ONLY reason why bitcoin has not exploded to much higher values is simply ignorance of the imminent systemic failure of fiat currencies or even the threat of a failure. There has been a deliberate cover-up of the real risks by all the financial news outlets because they are OWNED by the global banking establishments. Nobody wants a bank run!
But consider this perspective, when the internet first started, few people could imagine its capabilities, and fewer still could ever imagine its economic impact. But, those that did, were wildly rewarded. Had you invested just $1000 in Google or Amazon or Netflix when they started, what would your life look like today? Consider this, bitcoin is your second chance.
What you are about to see in the not too distant future will NOT be a market correction, but a systemic failure of the fiat currency system. And I say that not to generate fear, but to explain that the central bankers made it a grim reality created by their insane greed, derivative perversions, and infinite currency creation (quantitative easing) which destroyed true valuations of all assets used in our economy. Finding value for most fund managers has become an act of wishful thinking bordering on futility. You don't have to go down that road.
Few people talk about the integrity of an asset. And maybe they can't wrap their minds around a stable asset that can not be perverted by banking schemes because through their entire lives they have taken this financial perversion as normal, as if inflation is some magical phenomena that comes out of the darkness of night. But, that is were we'll have to go, stable values based on some sterile standard. In that period, bitcoin will be a pristine standard that folks will gravitate to out of necessity.
Will bitcoin always be a great investment? No, nothing lasts forever. Just like Apple stock, at some point bitcoin values will loose their momentum, but that will be closer to the realm of $1 million or so. It's just supply and demand proving itself again, as it has done so many times down through history. History always repeats itself because most folks fail to expand their situational awareness of where they are in time and space.
Sorry, Ray Dalio, but it appears you're too narrow in your thinking. Just don't bet the farm this time around on what you believe, it maybe much harder to start over again, Bitcoin will shock a lot people holding very staunch preconceived ideas because those folks are missing the REAL problem.... true valuation of assets, and that is firmly based in the value of currencies.... which bankers keep undermining.
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