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Dalio says capital markets are “not free” because central banks run the economy

July 4, 2020

Ray Dalio, the billionaire mutual fund manager and founder and chief investment officer of Bridgewater Associates, is convinced of it Capital markets are no longer free.

Speaking to Bloomberg, Dalio said the markets have changed a lot Central banks like the Federal Reserve no longer operate within the confines of the traditional economic system.

“There are markets that are driven by central banks not only for your actions, but also for your desire to own these assets. Your priorities for buying or selling this property do not match the classic free market allotments. As a result, the capital markets are not free. “

Dalio says capital markets are “not free” because central banks run the economyDalio says capital markets are “not free” because central banks run the economy

Said In normal times, central banks put money on deposits so that banks can borrow and lend to people who can pay. This creates the credit system and other financial assets compete with each other. NowDalio said: The economy and markets are driven more by the ownership of central bank assets.

He said central banks were “able to be market makers” after the 2008 financial crisis and created the environment in which the markets were no longer free. But he noticed if central banks don’t allow loans to be given to blue chip companies and fallen angels (Institutions or governments that have lost investment grade), Much of the economy could fall.

Dalio said that The US dollar could also become less attractive as the cash rush in the market as a reserve currency means that the traditional valuation of money no longer exists. Previously, he was concerned about the role of the US dollar as a reserve currency.

Dalio is famous for being pessimistic about cash, but he hasn’t yet explored other alternatives, such as cryptocurrencies. Dalio said in April: “Cash is almost always the worst investment.” The billionaire has spoken about Bitcoin before, but he felt it Cryptocurrencies are too volatile to act as a store of value.

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