Ray Dalio’s $300 million safe haven bet in Australia’s Riverina

Microsoft’s Bill Gates calls it “a chilling image that’s hard to refute” while former Treasury Secretary Hank Paulson says it sheds “new light on the key reasons nations win in the economic and social arenas.” global politics, and applies it to China and the United States today”. .

But Dalio, whose Bridgewater Associates fund manages $5 billion for the sovereign wealth fund China Investment Corp, frets when people think it’s about picking winners and losers.

“Please don’t make this an anti-American and pro-Chinese argument because that’s not what I’m doing,” says Dalio, “I’m not saying China will win or the USA will be winners I just look at the different health measures of their conditions.

“Sometimes people misunderstand – like I’m pro-China and anti-US. That’s not it at all, I’m just trying to describe the dynamics, the realities as accurately as possible.

But Bridgewater’s latest investment summary makes it clear that some of its biggest bets have been against the currencies of traditional world powers.

“Bridgewater also tells investors that it has made significant returns on interest rates – being short in the US, Europe and the UK. Next come commodities and currencies from developed countries – for example , sell short the [Japanese] yen,” the company statement read.

The United States is heading for stagflation

Now, as the Federal Reserve begins to tighten interest rates to curb inflation at a 40-year high, Dalio thinks America is heading for a period of stagflation, low growth and high prices, which means that it are reluctant to invest in US debt securities such as bonds.

“As a global macro investor, I have to be realistic,” says Dalio, “so I have to paint an accurate picture.”

This image, as Kissinger, Gates and Paulson say, is scary – and Dalio says the Aussie should beware of it.

“If you take all these measurements and consider them as indices of health, objectively [America] is in decline. And yes, as an American, I’m concerned about that.

“And as a citizen of the world, if we believe in the world order that we’ve had since 1945, and Australia is an ally in that belief, then you should care about things that are unhealthy.”

three things happen

He says there are three things happening that people need to wake up to. The first is creating a lot of debt and printing money and its effects.

“The second is the great internal conflicts between the left population and the right population, especially in the United States, which threaten to threaten the democratic system.”

Dalio, who at the age of 12 bought his first stock with his golf caddy money, warns that while some redistribution of wealth is warranted, it must be done with far more care than in the past .

“It’s a reality that if you redistribute wealth and reduce productivity, you will suffer overall.”

Legendary figure: Colin Bell, CFO of Bell, photographed in 2007. “Colin was my best friend,” says Ray Dalio, founder of the hedge fund. Sasha Woolley

Its third important factor is that there is a “great power conflict”.

It is, he says, “where there is no longer a dominant power, like the United States and the old American world order. And so, there are comparable powers lining up for a great power conflict.

China is clearly the big one, and the power Australians need to recognize.

“The measures of China’s global power have increased dramatically. Since I started going to China, its per capita income has increased 26 times. By all objective measures, you now have something close to power parity with the United States. »

When asked if he thought the US government should spend more on military and diplomatic efforts in the Pacific to counter China’s aggressionhe dodges.

“It’s the kind of compromise that exists when you don’t have enough money. It will be up to others to choose whether it is better to spend on defense in Europe or on defense in Asia.

“People often say, are you on this side or on that side? Do you think democracy is better than autocracy? I don’t know the answers to these questions.

“The important thing to see is that when you’re in deep debt and you don’t have enough real money, hard money, you’re in a very difficult position.”

While his safe bet is inflation-linked assets and, of course, Australian farmland, Dalio says the real solutions to all of these risks to a nation’s power and economy are the two things that are probably the hardest to find.

“Productivity and unity are what it takes.”

And one of Dalio’s most enduring investments – an Australian farm – is proof of that.

He met his Australian farming business partner, the late Colin Bell, through a friend in London.

“I bought Australian wool options from him. He came to my house in New York and we got to know each other and have remained good friends ever since. We bought a number of farm properties, and we still have them.

“Colin was my best friend. So sad to lose him.

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