Ray Dalio, founder of the hedge fund Bridgewater Associates, spoke about inflationary risks, dollar devaluation, and investing in China on Tuesday at The Wall Street Journal’s “Future of Everything Festival.”
The US government’s massive stimulus spending raises the risk of inflation and could debase the dollar due to large amounts of money put into the system, Dalio said.
President Joe Biden’s $1.9 trillion stimulus package, along with his $2 trillion American Jobs Plan risk forming a bubble, with money overflowing in the economy, Dalio said. He suggested such risks should be carefully balanced, and “productivity” is essential to prevent the economy from overheating.
The hedge-fund manager believes stock markets are in a bubble that isn’t being driven by debt.
“There’s two types of bubbles,” Dalio said. “There’s the debt bubble when the debt time comes back, and you can’t pay for it, and then you have the bubble bursting. And the other kind of bubble is the one where there’s just so much money and they don’t tighten it as much, and you lose the value of money. I think we’re more in the second type of bubble.”
Dalio has been a long-time admirer and advocate of China. He has previously said the country isn’t perfect, but should be “open-mindedly assessed based on evidence.”
He rejected the idea that China’s repression of largely Muslim minorities in the province of Xinjiang should influence investor decisions.
“I don’t really understand, and I don’t study the human-rights issues. I follow what the laws are on those particular things,” he said, and added that the US too has human-rights concerns. “Would I not invest in the United States because of those?”
The billionaire also touched upon Robinhood and its popularity among retailer investors. Having previously expressed concern about the GameStop saga being a product of wealth inequality, he suggested the trading app is a progressive step for the investing world.
“It’s information. It allows you to play the game. And there’s nothing like doing it in amounts you can afford,” Dalio said. “It’s a real plus, but it has some drawbacks, too.”