Author Topic: The Changing World Order? The end of the dollar as the world's reserve currency?  (Read 1157 times)

cool7hand

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I've just begun reading Ray Dalio's book, The Changing World Order. In it he analyzes the factors he believes support the approaching end of the dollar as the world's leading reserve currency and his predictions for the renminbi replacing it.

I'm curious if anyone else is reading it and might like to discuss thoughts here?
« Last Edit: January 12, 2022, 05:11:28 PM by cool7hand »

djadziadax

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LOL. Ray Dalio has huge investments in China which he cannot take out. He will praise China until they release his multi-billion dollar funds...

ChpBstrd

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I've read Dalio too, and find his theory interesting. It makes one notice the symptoms of decline that he notes. However, all societies are simultaneously growing and declining in different ways, just like some trees in a forest are always growing and some are always dying. A "healthy" forest will have a decent amount of dead and dying trees,

As far as China controlling the world's reserve currency, there are a several barriers their society will have to cross before that becomes a possibility. That said, none of these barriers is an impossibility. It all depends on the government's goals.

First, the world uses dollars because US-based markets offer a rules-based order with courts that will enforce contracts to the letter, regardless of nationality. Not everywhere is like that, and not China in particular. Remember when BP tried to invest in Russian oil projects and the oligarchs just expropriated their assets and ran them out? Yea, the world remembers too, and that's why investors are reluctant to put capital into autocratic places where influence within the regime counts for more than any law. Lo and behold, Russia's attempts to create a ruble-based parallel market for oil are going nowhere. China could, in theory, set up a better judicial system and start protecting foreign investors even at the expense of influential citizens. However, any truly independent judiciary would be a check on the power of the CCP, and the CCP is not a fan of checks and balances.

Additionally the US offers investors and traders a lot of industry standards. The established rules on stock settlement, disclosures, reporting, futures contracts, options contracts, forex contracts, commodities contracts, and accounting standards leave little room for the sort of shenanigans and scams investors fear when they wade into foreign markets. China could arguably set up a functional industry standards system within a few years, but too much transparency creates issues for a hybrid capitalistic/centrally planned economy, where the capitalists could see the government's moves and profit from them, or expose the government's corruption.

Most importantly, we should remember that the CCP's biggest (only?) threat comes from the class of wealthy merchants whose power and influence are growing as China grows. Throughout Chinese history, dynasties have always been overthrown, and rebellions were always led by the wealthy class. The CCP had to make an example of Jack Ma, and they've made examples of several other wealthy celebrities as a shot across the bow for the capitalistic aristocracy. China needs their millionaire/billionaire class to lead the businesses that drive growth, but the CCP also needs to find ways to keep them in their place. If property rights became as sacrosanct as they are in the West, defended by a court system independent from the party and based on rules that not even the government could violate, the Party would lose several levers of control over their restless and ambitious billionaires. The CCP has two goals: stability first and foremost - with no challenge to the ruling party, and economic growth second. Setting up a US-style financial system would involve the CCP giving up a lot of power. It would be putting economic growth first, while empowering the same class of people they massacred in the Cultural Revolution in a bid to stay in control.   

We in Western representative democracies tend to assume economic growth is a top priority for any government, but that is a fallacy. Our politicians literally promise us high-paying private-sector jobs, despite having little control over those, and that's as close as they get to having a winning strategy for staying in power. For a one-party authoritarian state, the #1 priority is staying in control. For individual politicians within such a government, the priority is fending off challengers. The nightmare keeping Chinese bureaucrats awake at night is the prospect of being replaced by businesspeople or rich people. Whatever happened to Jack Ma occurred at the same time the Chinese were watching Donald Trump demolishing America's existing systems of government and purging the existing bureaucrats.

Last, China watchers have noticed that Xi Jinping has consolidated power around himself, and essentially rules China more like an emperor than a president or party leader. https://cisac.fsi.stanford.edu/news/chinas-leadership-power-increasingly-concentrated However, concentrated decision-making power always comes with an unfortunate tradeoff - worse decision-making. As he ages, a sycophant-surrounded Xi can be expected to make a series of anti-economic decisions as his advisors jockey for succession and isolate him from certain perspectives. In the next decade, we could see Xi clamp down on his perceived opponents in the business class, ending China's economic ascent for at least a generation. This outcome is at least as likely - and historically more likely - than the outcome where China becomes the world's financial hub. The Cultural Revolution didn't make sense to Westerners either.

The funny thing is, China could have copied America's legal systems, courts, market standards, a regulatory infrastructure, and oversight / law enforcement systems years ago, free-floated their currency years ago, and ushered in a massive economic boom driven by foreign investment that would have put the U.S. in a distant second or third place. It's telling that they didn't do these relatively simple things, and preferred a more manageable pace of mercantilist growth.

The scenario everyone discounts is the one where the U.S. and China decline together. When the CCP decides economic growth is more of a threat than an asset, it does another Cultural Revolution and starts seizing the assets of foreign investors, ending the era of growth. Meanwhile maybe the U.S. continues to elect mealy-mouthed, narcissistic TV actors who make horrible decisions until the public grows frustrated with a system that constantly promises to solve all their problems but never delivers, and so along comes a Hugo Chavez / Recap Erdogan / Vladimir Putin with promises to break up that current system. Amid the power vacuum, maybe the EU moves past its decades-long forming, storming, and norming phases and starts performing. Or maybe the next generation of Indians rejects the lowbrow Hindu nationalism that is popular today and they become the next economic miracle country where everyone is advised to invest. In India, at least, the interests of the elected politicians are more aligned with economic growth.

Dalio makes a good case, but I'd like to read a detailed rebuttal before I buy into the narrative that the world will flock to a digital currency issued by the same form of government which currently rules Cuba and North Korea.

DaTrill

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If you haven't noticed, the date of China overtaking the US economy keeps getting pushed to the future (like many other long-term predictions).  China has a demographic issue that will create havoc on all their systems and will not replace the US as the new world order.  Dalio got drunk with China money and must talk it up or lose the capital.  Ray should focus on his clients and not writing self-help books.       

Like many of its peers, Bridgewater’s macro fund has struggled for the past decade, returning an annualized 1.6% for the 10 years through November. The firm lost 12.6% last year, and several institutional clients pulled their money.

"How did you return 1.6% annualized over the last decade?"

waltworks

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"How did you return 1.6% annualized over the last decade?"

Regression to the mean is a real bitch.

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bthewalls

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If you haven't noticed, the date of China overtaking the US economy keeps getting pushed to the future (like many other long-term predictions).  China has a demographic issue that will create havoc on all their systems and will not replace the US as the new world order.  Dalio got drunk with China money and must talk it up or lose the capital.  Ray should focus on his clients and not writing self-help books.       

Like many of its peers, Bridgewater’s macro fund has struggled for the past decade, returning an annualized 1.6% for the 10 years through November. The firm lost 12.6% last year, and several institutional clients pulled their money.

"How did you return 1.6% annualized over the last decade?"

Not ensure those figures are accurate....I’ve seen others

Baz

cool7hand

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I've read Dalio too, and find his theory interesting. It makes one notice the symptoms of decline that he notes. However, all societies are simultaneously growing and declining in different ways, just like some trees in a forest are always growing and some are always dying. A "healthy" forest will have a decent amount of dead and dying trees,

As far as China controlling the world's reserve currency, there are a several barriers their society will have to cross before that becomes a possibility. That said, none of these barriers is an impossibility. It all depends on the government's goals.

First, the world uses dollars because US-based markets offer a rules-based order with courts that will enforce contracts to the letter, regardless of nationality. Not everywhere is like that, and not China in particular. Remember when BP tried to invest in Russian oil projects and the oligarchs just expropriated their assets and ran them out? Yea, the world remembers too, and that's why investors are reluctant to put capital into autocratic places where influence within the regime counts for more than any law. Lo and behold, Russia's attempts to create a ruble-based parallel market for oil are going nowhere. China could, in theory, set up a better judicial system and start protecting foreign investors even at the expense of influential citizens. However, any truly independent judiciary would be a check on the power of the CCP, and the CCP is not a fan of checks and balances.

Additionally the US offers investors and traders a lot of industry standards. The established rules on stock settlement, disclosures, reporting, futures contracts, options contracts, forex contracts, commodities contracts, and accounting standards leave little room for the sort of shenanigans and scams investors fear when they wade into foreign markets. China could arguably set up a functional industry standards system within a few years, but too much transparency creates issues for a hybrid capitalistic/centrally planned economy, where the capitalists could see the government's moves and profit from them, or expose the government's corruption.

Most importantly, we should remember that the CCP's biggest (only?) threat comes from the class of wealthy merchants whose power and influence are growing as China grows. Throughout Chinese history, dynasties have always been overthrown, and rebellions were always led by the wealthy class. The CCP had to make an example of Jack Ma, and they've made examples of several other wealthy celebrities as a shot across the bow for the capitalistic aristocracy. China needs their millionaire/billionaire class to lead the businesses that drive growth, but the CCP also needs to find ways to keep them in their place. If property rights became as sacrosanct as they are in the West, defended by a court system independent from the party and based on rules that not even the government could violate, the Party would lose several levers of control over their restless and ambitious billionaires. The CCP has two goals: stability first and foremost - with no challenge to the ruling party, and economic growth second. Setting up a US-style financial system would involve the CCP giving up a lot of power. It would be putting economic growth first, while empowering the same class of people they massacred in the Cultural Revolution in a bid to stay in control.   

We in Western representative democracies tend to assume economic growth is a top priority for any government, but that is a fallacy. Our politicians literally promise us high-paying private-sector jobs, despite having little control over those, and that's as close as they get to having a winning strategy for staying in power. For a one-party authoritarian state, the #1 priority is staying in control. For individual politicians within such a government, the priority is fending off challengers. The nightmare keeping Chinese bureaucrats awake at night is the prospect of being replaced by businesspeople or rich people. Whatever happened to Jack Ma occurred at the same time the Chinese were watching Donald Trump demolishing America's existing systems of government and purging the existing bureaucrats.

Last, China watchers have noticed that Xi Jinping has consolidated power around himself, and essentially rules China more like an emperor than a president or party leader. https://cisac.fsi.stanford.edu/news/chinas-leadership-power-increasingly-concentrated However, concentrated decision-making power always comes with an unfortunate tradeoff - worse decision-making. As he ages, a sycophant-surrounded Xi can be expected to make a series of anti-economic decisions as his advisors jockey for succession and isolate him from certain perspectives. In the next decade, we could see Xi clamp down on his perceived opponents in the business class, ending China's economic ascent for at least a generation. This outcome is at least as likely - and historically more likely - than the outcome where China becomes the world's financial hub. The Cultural Revolution didn't make sense to Westerners either.

The funny thing is, China could have copied America's legal systems, courts, market standards, a regulatory infrastructure, and oversight / law enforcement systems years ago, free-floated their currency years ago, and ushered in a massive economic boom driven by foreign investment that would have put the U.S. in a distant second or third place. It's telling that they didn't do these relatively simple things, and preferred a more manageable pace of mercantilist growth.

The scenario everyone discounts is the one where the U.S. and China decline together. When the CCP decides economic growth is more of a threat than an asset, it does another Cultural Revolution and starts seizing the assets of foreign investors, ending the era of growth. Meanwhile maybe the U.S. continues to elect mealy-mouthed, narcissistic TV actors who make horrible decisions until the public grows frustrated with a system that constantly promises to solve all their problems but never delivers, and so along comes a Hugo Chavez / Recap Erdogan / Vladimir Putin with promises to break up that current system. Amid the power vacuum, maybe the EU moves past its decades-long forming, storming, and norming phases and starts performing. Or maybe the next generation of Indians rejects the lowbrow Hindu nationalism that is popular today and they become the next economic miracle country where everyone is advised to invest. In India, at least, the interests of the elected politicians are more aligned with economic growth.

Dalio makes a good case, but I'd like to read a detailed rebuttal before I buy into the narrative that the world will flock to a digital currency issued by the same form of government which currently rules Cuba and North Korea.

Thank you for your very thoughtful response. I'm going to give this some thought.

JAYSLOL

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I've read Dalio too, and find his theory interesting. It makes one notice the symptoms of decline that he notes. However, all societies are simultaneously growing and declining in different ways, just like some trees in a forest are always growing and some are always dying. A "healthy" forest will have a decent amount of dead and dying trees,

As far as China controlling the world's reserve currency, there are a several barriers their society will have to cross before that becomes a possibility. That said, none of these barriers is an impossibility. It all depends on the government's goals.

First, the world uses dollars because US-based markets offer a rules-based order with courts that will enforce contracts to the letter, regardless of nationality. Not everywhere is like that, and not China in particular. Remember when BP tried to invest in Russian oil projects and the oligarchs just expropriated their assets and ran them out? Yea, the world remembers too, and that's why investors are reluctant to put capital into autocratic places where influence within the regime counts for more than any law. Lo and behold, Russia's attempts to create a ruble-based parallel market for oil are going nowhere. China could, in theory, set up a better judicial system and start protecting foreign investors even at the expense of influential citizens. However, any truly independent judiciary would be a check on the power of the CCP, and the CCP is not a fan of checks and balances.

Additionally the US offers investors and traders a lot of industry standards. The established rules on stock settlement, disclosures, reporting, futures contracts, options contracts, forex contracts, commodities contracts, and accounting standards leave little room for the sort of shenanigans and scams investors fear when they wade into foreign markets. China could arguably set up a functional industry standards system within a few years, but too much transparency creates issues for a hybrid capitalistic/centrally planned economy, where the capitalists could see the government's moves and profit from them, or expose the government's corruption.

Most importantly, we should remember that the CCP's biggest (only?) threat comes from the class of wealthy merchants whose power and influence are growing as China grows. Throughout Chinese history, dynasties have always been overthrown, and rebellions were always led by the wealthy class. The CCP had to make an example of Jack Ma, and they've made examples of several other wealthy celebrities as a shot across the bow for the capitalistic aristocracy. China needs their millionaire/billionaire class to lead the businesses that drive growth, but the CCP also needs to find ways to keep them in their place. If property rights became as sacrosanct as they are in the West, defended by a court system independent from the party and based on rules that not even the government could violate, the Party would lose several levers of control over their restless and ambitious billionaires. The CCP has two goals: stability first and foremost - with no challenge to the ruling party, and economic growth second. Setting up a US-style financial system would involve the CCP giving up a lot of power. It would be putting economic growth first, while empowering the same class of people they massacred in the Cultural Revolution in a bid to stay in control.   

We in Western representative democracies tend to assume economic growth is a top priority for any government, but that is a fallacy. Our politicians literally promise us high-paying private-sector jobs, despite having little control over those, and that's as close as they get to having a winning strategy for staying in power. For a one-party authoritarian state, the #1 priority is staying in control. For individual politicians within such a government, the priority is fending off challengers. The nightmare keeping Chinese bureaucrats awake at night is the prospect of being replaced by businesspeople or rich people. Whatever happened to Jack Ma occurred at the same time the Chinese were watching Donald Trump demolishing America's existing systems of government and purging the existing bureaucrats.

Last, China watchers have noticed that Xi Jinping has consolidated power around himself, and essentially rules China more like an emperor than a president or party leader. https://cisac.fsi.stanford.edu/news/chinas-leadership-power-increasingly-concentrated However, concentrated decision-making power always comes with an unfortunate tradeoff - worse decision-making. As he ages, a sycophant-surrounded Xi can be expected to make a series of anti-economic decisions as his advisors jockey for succession and isolate him from certain perspectives. In the next decade, we could see Xi clamp down on his perceived opponents in the business class, ending China's economic ascent for at least a generation. This outcome is at least as likely - and historically more likely - than the outcome where China becomes the world's financial hub. The Cultural Revolution didn't make sense to Westerners either.

The funny thing is, China could have copied America's legal systems, courts, market standards, a regulatory infrastructure, and oversight / law enforcement systems years ago, free-floated their currency years ago, and ushered in a massive economic boom driven by foreign investment that would have put the U.S. in a distant second or third place. It's telling that they didn't do these relatively simple things, and preferred a more manageable pace of mercantilist growth.

The scenario everyone discounts is the one where the U.S. and China decline together. When the CCP decides economic growth is more of a threat than an asset, it does another Cultural Revolution and starts seizing the assets of foreign investors, ending the era of growth. Meanwhile maybe the U.S. continues to elect mealy-mouthed, narcissistic TV actors who make horrible decisions until the public grows frustrated with a system that constantly promises to solve all their problems but never delivers, and so along comes a Hugo Chavez / Recap Erdogan / Vladimir Putin with promises to break up that current system. Amid the power vacuum, maybe the EU moves past its decades-long forming, storming, and norming phases and starts performing. Or maybe the next generation of Indians rejects the lowbrow Hindu nationalism that is popular today and they become the next economic miracle country where everyone is advised to invest. In India, at least, the interests of the elected politicians are more aligned with economic growth.

Dalio makes a good case, but I'd like to read a detailed rebuttal before I buy into the narrative that the world will flock to a digital currency issued by the same form of government which currently rules Cuba and North Korea.

Thank you for your very thoughtful response. I'm going to give this some thought.

Agreed, this is the kind of post I come here for

MustacheAndaHalf

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Have you read about the collapse of Evergreen in China?  It's the country's second largest real estate developer.  At at the very start of the crisis, China said it would protect Chinese investors and let foreigners be defaulted on.  Even if they manage to repay dollar denominated loans, I expect investors to remember that reaction.  China also restricts how much Chinese Yuan leaves the country each year.  How are you going to pay a loan in Chinese Yuan if you're not allowed to buy any Yuan?

PDXTabs

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I think that to end the world hegemony that the US dollar has investors/businesses will need something better than the dollar, by some metric(s) of goodness. I don't see how the renminbi will be superior the the US dollar any time soon. Doesn't China have currency controls and currency manipulation as strikes against it? How is that better than the US dollar?
« Last Edit: January 18, 2022, 09:41:04 AM by PDXTabs »

ChpBstrd

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I think that to end the world hegemony that the US dollar has investors/businesses will need something better than the dollar, by some metric(s) of goodness. I don't see how the renminbi will be superior the the US dollar any time soon. Doesn't China have currency controls and currency manipulation as strikes against it? How is that better than the US dollar?

100% of currencies in existence involve manipulation*, and to some extent manipulation is what keeps them stable, liquid, and reliable. China's goals in manipulating their currency differ from the US's goals in manipulating the dollar. Particularly, China does not want a liquid worldwide market for its currency that would allow its oligarchs to stash money in overseas accounts, out of the government's reach. So if you are trading oil, iron ore, or electronics it makes more sense to trade in dollars than renminbi, even if you are Chinese.

*even cryptocurrencies and metals have splits, forks, and increases/decreases in supply.

PDXTabs

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I think that to end the world hegemony that the US dollar has investors/businesses will need something better than the dollar, by some metric(s) of goodness. I don't see how the renminbi will be superior the the US dollar any time soon. Doesn't China have currency controls and currency manipulation as strikes against it? How is that better than the US dollar?

100% of currencies in existence involve manipulation*, and to some extent manipulation is what keeps them stable, liquid, and reliable. China's goals in manipulating their currency differ from the US's goals in manipulating the dollar. Particularly, China does not want a liquid worldwide market for its currency that would allow its oligarchs to stash money in overseas accounts, out of the government's reach. So if you are trading oil, iron ore, or electronics it makes more sense to trade in dollars than renminbi, even if you are Chinese.

*even cryptocurrencies and metals have splits, forks, and increases/decreases in supply.

I don't disagree. I meant a currency manipulator as per The Omnibus Trade and Competitiveness Act of 1988. Eg:
https://home.treasury.gov/news/press-releases/sm751
https://www.nytimes.com/2019/08/06/business/economy/china-currency-manipulator.html
https://www.investopedia.com/trading/chinese-devaluation-yuan/
« Last Edit: January 18, 2022, 12:33:14 PM by PDXTabs »

bthewalls

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Would it be fair to say that most on this forum are from USA and perhaps pro USA and not So much Asia?...ok we got past that one.

Let’s be real here....no country gives much of a crap about another, but most play the long term game out of caution...China don’t.

Perhaps we need to look at this another way. Will USA/dollar be the reserve currency in 100 years?...150years.....200?....if not, in what decade would incremental changes be felt? Now?

USA society appears already staggeringly divided.

waltworks

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No offense, Bthewalls, but as an investor, what do you care what happens in 100 years? I guess if you have very young kids (or plan to have kids) you might be concerned about the effects on your grandchildren in that timeframe, but otherwise you and I will both be long dead.

As others have pointed out, there's not currently a plausible alternative to the US$ as a global reserve currency. That could change, of course, but if you own stock in multinational companies (which is most of VTSAX) then you shouldn't be worried about it. If you have piles of physical dollars under your mattress or are an active FOREX trader, different question, of course.

If you insist on debating 'Merica vs China, I'd say they both have pretty awful demographic problems, and that demographics is the biggest force in economics. The US can plausibly (at least for now) solve this problem with immigration, talented immigration even. Whether we actually do that is another question, of course. I have a hard time imagining China welcoming large numbers of highly educated international workers, on the other hand. But who knows.

-W

bthewalls

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No offense, Bthewalls, but as an investor, what do you care what happens in 100 years? I guess if you have very young kids (or plan to have kids) you might be concerned about the effects on your grandchildren in that timeframe, but otherwise you and I will both be long dead.

As others have pointed out, there's not currently a plausible alternative to the US$ as a global reserve currency. That could change, of course, but if you own stock in multinational companies (which is most of VTSAX) then you shouldn't be worried about it. If you have piles of physical dollars under your mattress or are an active FOREX trader, different question, of course.

If you insist on debating 'Merica vs China, I'd say they both have pretty awful demographic problems, and that demographics is the biggest force in economics. The US can plausibly (at least for now) solve this problem with immigration, talented immigration even. Whether we actually do that is another question, of course. I have a hard time imagining China welcoming large numbers of highly educated international workers, on the other hand. But who knows.

-W

Thanks for youR reply...I acknowledge And understand the tone.

Let’s wait and see if anyone can discuss the topic.

Baz

PDXTabs

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Would it be fair to say that most on this forum are from USA and perhaps pro USA and not So much Asia?...ok we got past that one.

Let’s be real here....no country gives much of a crap about another, but most play the long term game out of caution...China don’t.

Perhaps we need to look at this another way. Will USA/dollar be the reserve currency in 100 years?...150years.....200?....if not, in what decade would incremental changes be felt? Now?

USA society appears already staggeringly divided.

There is another big problem for moving away from a USD reserve world: foreign dollar bonds.

But let's ignore the dollar bonds for a second. Let's say that the division in the USA leads to a currency crisis and people flee the USD (I don't view that as entirely unthinkable, despite living in the USA). Now, let's pretend that you need to put some money into your mattress (and not just hold VT like I do). Why would you pick renminbi? Because I'd pick Euros as the least bad option out of a bunch of bad options. For the record I'm not anti-Asia, but I don't see a great currency to hold there. I don't think I have the stomach to put all my money into New Taiwan dollars and I don't think I want my mattress stuffed full of South Korean won or yen either, although I am happy to hold equities from all those countries (and Malaysia, but not China).
« Last Edit: January 18, 2022, 04:35:03 PM by PDXTabs »

ArnoldK

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What would happen if Ray Dalio would be from China and he would write a book in China about some currency replacing Renminbi?
Such books would not be allowed. And likely a life terminated. What if he would be from Russia writing about Rubel?

Seems to me that Xi got his goal achieved. Via his and Putins agents (like Ray, or other internet trolls) we are here are talking about Renminbi future supremacy. Just be more careful, please.
« Last Edit: January 18, 2022, 06:30:58 PM by ArnoldK »

markbike528CBX

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I wouldn't take Dalio very seriously. 
a) performance at his real job is not that great (numbers differ, but I don't have the data at hand).
b) he is not been proven right often.
   1] https://forum.mrmoneymustache.com/investor-alley/dalio's-paradigm-shift-is-nigh-anyone-got-a-professional-opinion/msg2576764/#msg2576764
   2]https://forum.mrmoneymustache.com/investor-alley/ray-dalio-predicts-recession-before-2020/msg1907918/#msg1907918  ---- didn't see that coming, and it didn't happen.
   3]https://forum.mrmoneymustache.com/investor-alley/bottom-is-in!/msg2604828/#msg2604828
         Quote from: bthewalls on April 10, 2020, 08:41:55 AM      Dalio makes for interesting reading....according to him we are all screwed.
   4] https://forum.mrmoneymustache.com/investor-alley/hedge-funder-if-youre-holding-cash-youre-going-to-feel-pretty-stupid/msg1867990/#msg1867990
          Re: Hedge funder: ‘if you’re holding cash, you’re going to feel pretty stupid’
           « Reply #3 on: January 23, 2018, 02:02:35 PM »  My issue with Ray Dalio is that .... almost as soon as he started to focus more on media exposure and "good business practices", Bridgewater's performance lagged behind the benchmark.
             Coincidence perhaps, but managing money is about performances, not positive image. My observation is that once you transition from investing to sales, it's a long road down.

All that said, a busted (US) clock is right twice a day.  Dalio seems to be a good enough writer/interviewer that he has some interesting and though provoking statements.
Are they correct and actionable though ?

DaTrill

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Many other predictions of China overtaking the US.

https://www.forbes.com/sites/timworstall/2013/03/25/isnt-it-wonderful-that-china-will-be-a-bigger-economy-than-the-us-by-2016/?sh=44aeaede548b

It won't happen. 

I will be carbon neutral (back to carbon in the ground) in 50 years (if I'm lucky).  Don't really care if USD or farts in a jar is the "greatest store of value in human history" that far in the future.   

US has every advantage any other single country has and we have them all.  Energy, innovation, legal, neighbors, coasts, room, arable land, defense, common language, liquid markets.  One may find a country or two that has one variable better than US, but all fall well short of even being top half where US is almost always at or near #1.  US is doing everything it can to be as crappy as UK or Canada and we still can't fail that badly.   

ChpBstrd

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I wouldn't take Dalio very seriously. 
a) performance at his real job is not that great (numbers differ, but I don't have the data at hand).
b) he is not been proven right often.
   1] https://forum.mrmoneymustache.com/investor-alley/dalio's-paradigm-shift-is-nigh-anyone-got-a-professional-opinion/msg2576764/#msg2576764
   2]https://forum.mrmoneymustache.com/investor-alley/ray-dalio-predicts-recession-before-2020/msg1907918/#msg1907918  ---- didn't see that coming, and it didn't happen.
   3]https://forum.mrmoneymustache.com/investor-alley/bottom-is-in!/msg2604828/#msg2604828
         Quote from: bthewalls on April 10, 2020, 08:41:55 AM      Dalio makes for interesting reading....according to him we are all screwed.
   4] https://forum.mrmoneymustache.com/investor-alley/hedge-funder-if-youre-holding-cash-youre-going-to-feel-pretty-stupid/msg1867990/#msg1867990
          Re: Hedge funder: ‘if you’re holding cash, you’re going to feel pretty stupid’
           « Reply #3 on: January 23, 2018, 02:02:35 PM »  My issue with Ray Dalio is that .... almost as soon as he started to focus more on media exposure and "good business practices", Bridgewater's performance lagged behind the benchmark.
             Coincidence perhaps, but managing money is about performances, not positive image. My observation is that once you transition from investing to sales, it's a long road down.

All that said, a busted (US) clock is right twice a day.  Dalio seems to be a good enough writer/interviewer that he has some interesting and though provoking statements.
Are they correct and actionable though ?

But isn't it a fallacy to criticize the messager rather than the message? What if Dalio was wrong about everything in his life except this one point?

I do appreciate that Dalio put the effort into assembling some very nuanced economic and socio-political data and history. He didn't just pull a talking-head make-a-prediction-get-publicity game, he actually did some homework on the subject. Doesn't that mean we have to debunk or reinterpret the data rather than the person who assembled it?

Many other predictions of China overtaking the US.

https://www.forbes.com/sites/timworstall/2013/03/25/isnt-it-wonderful-that-china-will-be-a-bigger-economy-than-the-us-by-2016/?sh=44aeaede548b

It won't happen. 

I will be carbon neutral (back to carbon in the ground) in 50 years (if I'm lucky).  Don't really care if USD or farts in a jar is the "greatest store of value in human history" that far in the future.   

US has every advantage any other single country has and we have them all.  Energy, innovation, legal, neighbors, coasts, room, arable land, defense, common language, liquid markets.  One may find a country or two that has one variable better than US, but all fall well short of even being top half where US is almost always at or near #1.  US is doing everything it can to be as crappy as UK or Canada and we still can't fail that badly.   

First, if the U.S. entered a period of decline that takes us from present-day income levels to undeveloped-country income levels 100 years from now, that would mean drastic changes within the lifetime of anyone with 10+ years remaining. In today's dollars, a straight-line 100 year trip from a median household income of $67,521 per year to, let's say, $3,000 per year (Jamaica or El Salvador levels) would involve a 0.96% decrease in income and economic activity per year.

That doesn't sound like much until you think about the 19.1% drop in incomes by year 20. Are you going to successfully retire and live off of investments in a country where income and corporate profits drop 19%? How far does it drop until there are riots in the streets, a coup leading to dictatorship, or a currency reset? What's the PE ratio of the stock market in a country like that? What is inflation?

Second, most empires had great advantages. An empire could be described as an assembly of advantages. So far, they've all ended up squandering their advantages and making dumb choices. Also, today's assets are tomorrow's liabilities. It's an asset that we have 4.18 million miles of roads, but what happens when they all need repaving and we're in the middle of a 20 year economic downturn? It's an asset that we've built massive coastal cities, but what happens when they need to be encircled by 30 foot flood walls? It's an asset that we have fancy military hardware, but what happens when it's useless against primitive insurgency tactics, when satellites can detect our submarines, or when anti-ship missiles can sink our navy - and still the defense industry lobbyists insist we buy more? Then it becomes a lost war waiting to happen. 

bthewalls

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Wonder what bridge waters annual average growth is since established?....

if it’s way under average his conservative approach is questionable...But if it’s average or above, his conservative approach Could be admired as it safe guards his clients instead of increasing risk to chase gains.