Ray Dalio

There's a big difference between wealth and money.

And I want to just highlight it, okay?

Wealth is very easy to create because it's almost...

What I mean by that is I could put out a raise $50 million or individuals can raise $50 million at a billion dollar valuation.

And they will call that person's a billionaire and that there's a billion dollars more wealth.

Okay, it's not literally that you have to have those transactions.

And wealth is not worth very much unless you convert it to money.

In other words, you have all of that wealth, but you can't spend wealth.

Right.

You have to sell it, sell some of it in order to get money, in order to pay it.

And so when wealth rises a lot,

relative to money, you have a risky situation.

Now, the other thing about- Why is that a risky situation?

Because when there's a movement, the bubbles pop when there's a movement that I need to get money.

Now, that quite often is I need to get money because it's a debt service payment.

In other words, let's say quite often people borrow to buy wealth.

Okay, so there's a lot of borrowing now, not only in buying stock, but companies themselves buying to create wealth.

And when you need to get the money, like in all the stock market bubbles, there was a lot of borrowing to buy the wealth.

Well, when the need for money came along, they had to sell some of that wealth

to get the money and then that produces a dynamic.