Ray Dalio

We should talk at some point.

What is money and can money be an effective storehold of wealth and what happens if it's not?

And so we are at what I would call stage five in a six-stage cycle.

The sixth stage is when there's a breaking down of these orders.

We're not there yet, but we are close to there and headed in that type of direction.

what does a breakdown look like what does stage six look like well um from the monetary point of view um it is that um there the the demand for the reserve currency um is not sufficient to meet the supply

So what that means is you see a supply-demand problem.

You produce a lot of supply, and the demand's inadequate, and all things being equal, there will be a rising long rate.

while the central bank is trying to hold that from down by easing the short rate and shortening the maturity of the debt that it sells.

Okay, that dynamic.

And that then the currency, these debts and the currency, falls relative to the non-fiat currencies, in other words, like gold.

In other words, you are seeing a movement

by central banks and countries to hold gold as an alternative reserve currency, partially because of that supply-demand situation and partially because they worry

that um there may be a payments problem and the payments problem like it um it happened in japan uh prior to world war ii you had an economic problem and the united states um um sanctioned essentially um didn't pay the the the japanese uh their debt the money in terms of that like a debtor creditor problem and they didn't make those payments much like russia you know you um they they basically

because they have the ability to take control of the treasuries and other things.

And so there is becomes more of a reluctance to hold that money as that and a movement more into the non fiat currency, which is gold.

Right, and it's a risk that both the debtor and the creditor have to each other.

So think about a China.

Yes.

And if you were thinking China, how do you feel about holding treasury bonds?