Bridgewater Associates founder Ray Dalio is warning that the US may be forced to go back to a gold standard at some point in the future.
In a post on the social media platform X, the billionaire says that historically, currencies go through cycles of devaluation that eventually end in being linked back to gold, something the US may not be able to avoid.
Says Dalio,
“The U.S. dollar used to be backed by gold – and it’s not far-fetched to think we may be headed there again in the future.
History shows us that the same cycles repeat time and time again. One such cycle is related to currency devaluation.
Once people start to lose trust in the fiat system, we see a specific cause and effect reaction occur.
1) Governments print a lot of money
2) They pay off the debt with the cheap money
3) Nobody wants to hold the devalued currency
4) Governments go back and link money to gold
Will this same pattern happen again? It’s hard to say, and it wouldn’t happen anytime soon. But it is conceivable.”
Dalio recently said that Donald Trump was attempting to devalue the dollar as a way to make the US debt more manageable, contrary to the goals of Fed Chair Jerome Powell to maintain stable, low inflation.
“As previously explained, when there is too much debt and borrowing, the classic way of dealing with it is to push real interest rates down and devalue money, which is bad for creditors and good for debtors. That is what Donald Trump is pushing for and what Jay Powell is defending against.”
The hedge fund veteran has also warned that, in order to defend against an expected currency devaluation, he thinks that allocating about 15% of one’s money in gold or Bitcoin is necessary.
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