Veteran hedge fund manager Ray Dalio says that financial markets are shifting into a new era as crypto assets may become more vulnerable to government regulations.
In a new interview on The David Rubenstein Show, the billionaire says that the days of “cheap money” are ending as the Federal Reserve loses the ability to create money without triggering noticeable inflation.
“What’s happened is they produced a lot of debt and gave out a lot of money. So everyone’s got money, and it’s also very easy to borrow money to buy things.
As a result, if you create much more buying power, then you create goods and services and you’ve got a lot more inflation.
The Federal Reserve is behind the curb, slower to tighten monetary policy. As a result, we’re now starting to see the rise in interest rates… That means the days we’ve had before, the easy days where they dump money on you and you don’t have much inflation, those are past, and now we’re in a different part of the cycle.”
The co-founder of Bridgewater Associates says that for diversification purposes, he allocates a small percentage of his investment portfolio in crypto. With that said, Dalio says he expects significant regulatory headwinds to put a damper on the digital asset market.
“[Crypto] is a very vulnerable incident because they can track who is operating it. It’ll be outlawed probably by different governments, and in terms of its size, it has issues.
So I think too much attention is spent on crypto… I think we’re now in an era where we’re going to have different types of money. We’re going to question money as a medium of exchange but it’s also a store hold of wealth, and we’re going to be questioning what is the right store hold of wealth.”
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