Previous Next
Money printing to deal with massive debt will lead to a collapse in the economy by 2013, predicts Ray Dalio.

WELL, THIS IS WEIRD. Earlier today I was speaking with my ex-wife (and still best-friend) about the current economic situation. I expressed my thoughts about what I think is an impending collapse, of course predicating it with my statement that “I’m not paranoid or a doomsday person.”

Later in the day I received an email sent through the contact form on my blog from “Stef”, someone I don’t know. The subject just said “interesting read” and all that was in the body was this link to a Business Insider article published yesterday.

I never open these kinds of emails but the title, which showed in the URL of the link, piqued my curiosity: the-head-of-the-worlds-biggest-hedge-fund-sees-economic-collapse-due-to-money-printing-by-early-2013. The universe is trying to tell me something, I thought.

There hasn’t been a case in history where they haven’t eventually printed money and devalued their currency.

The article, which was originally published on a blog called Zero Hedge, tells how Ray Dalio — head of Bridgewater, the world’s biggest hedge fund — predicts the collapse of the economy in “late 2012 or early 2013″ due to money printing. He says that countries heavily in debt, including the US, will print more money to deal with it. “There hasn’t been a case in history where they haven’t eventually printed money and devalued their currency,” he said in an interview printed in The New Yorker.

Estimates of Dalio’s hedge fund is around $80 billion and has performed well despite recent and current problems with the economy. So he’s probably one to heed. He seems to know something about something.

 

 

About The Author

Carlo Alcos

Carlo is the Dean of Education at MatadorU and a Managing Editor at Matador. Like him on Facebook and follow him on Twitter. He lives in Nelson, British Columbia.

  • Concerned reader

    Carlos,

    Please reread the article and think twice before posting something like this in the future. Dalio does NOT say anything about an economic collapse! Rather, he predicts quantitative easing will wreck the value of currencies. The two are VERY different. To simplify for you, Dalio merely is saying the US will print money to pay off debts, lessening the value of the dollar. This is very basic supply and demand stuff.

    • http://matadornetwork.com/ Carlo Alcos

      I’ll admit I’m no economics expert. I was going off what the Business Insider article read. Maybe I should have taken the fact that their title used scare quotes around “economic collapse” into more consideration. The article does say, “Dalio believes that future inevitable money printing will “lead to a collapse in currencies and bond markets.” You’re right, he doesn’t say economic collapse, but what will come out of a collapse in the currency and bond market? I think this is a good starting point for a conversation, so I’d like to hear some predictions of what will happen if/when this does occur.

      For the record, I don’t really like how you end that comment with “This is very basic supply and demand stuff.” That’s pretty condescending. I don’t think there’s anything basic about it, there’s too much interference in the market for it to be basic supply and demand.

      • Concerned reader

        Carlos,

        Thanks for the reply. Didn’t mean to come off rude. That last sentence wasn’t aimed at you. Rather, it was towards Dalio, as most economists recognize printing money as a precursor to inflation- supply and demand. In other words, he isn’t really saying anything new. Also, should the US pay it’s debts wih printed money, the dollar would respond gradually, not with massive inflation in a short time period. Imagine a 5 year period where the dollars value dropped hugely, but at a consistent pace. The fed wouldn’t simply print 14 trillion dollars in a month.

        Anyways, my apologies for the harshness of the initial comment! Thanks for the link.

    • felix

      so the difference is in how you term the whole issue? Gold was valued at 250.00 an ounce not long afo but now it is 1700.00 yet the gold has not gone up in price, no, that is how badly the dollar’s value has gotten and they predict it to go to 5000.00 an ounce . None of this stuff with the economy is by chance but rather the ones with all the gold are doing this on purpose so that they own and control everything. Those who are not preparing now will suffer greatly in 21013,if that is when they pull the plug on the old currency and introduce the one world currency. They already have the world bank in place so it is only a matter of time.

  • Jon_Roland

    The situation is different when it is the U.S. dollar and it is the backing for most of the currencies of other nations. One nation like Argentina in 2000 can undergo collapse without it affecting the rest of the world much, and enable them to recover in a few years, after a period of misery and social breakdown. That is also a very different situation than prevailed in 1931, when national currencies were still officially backed by gold. It only takes a widespread expectation of collapse to cause one, and that could happen next month. It would proceed as a kind of “panic”, with people everywhere abandoning currencies of all kinds except gold or silver, or reverting to barter in commodities. A gallon of gas could become the new dollar.

    As in 1929 the harbinger could be everyone trying to sell their assets denominated in dollars and other national currencies, and trying to convert into tangible commodities in their possession. As currencies lose value, people will likely pay off debts in now worthless currency on things they want to preserve through the depression, and walk away from everything else. The result will be a general collapse of banks and investment institutions like pension funds and insurance companies. Suddenly investments held in the form of financial assets will become worthless. Countries less dependent on such assets would suffer the least, but even they might experience unemployment of more than 50%. For the wealthier nations like the U.S., Europe, and Japan, it could go to more than 80%. For those countries that have to import most of their food, it could literally bring famine and widespread death.

    The recovery from the Great Depression was made possible by the industrial capacity of the U.S. and by the availability of cheap natural resources, especially oil. If the coming collapse brings the deterioration of that industrial capacity beyond a certain point, the world may enter a situation in which economic growth is “behind the power curve”, meaning that no amount of kind of investment of effort can revive it. That could mean a dark age from which we would never recover.

    • http://matadornetwork.com/ Carlo Alcos

      Thanks for the detailed comment Jon.

  • Migraine Mike

    Zero Hedge prints a doomsday prediction atleast once a month

  • ajax

    Currency devaluation is WORSE than price inflation. Currency devaluation is the coward leader’s way of foisting the debt upon the populace by stealing their wealth. When prices go up exponentially, middle class can’t buy a damn thing, including basic needs! The powerbrokers print trillions in order to prop up the central holdings, its the same as stealing even though its not technically reaching into someones pocket taking bills! The economy may still slog along but at what misery! Better those who divorce themself of the current fiat currencies and find new ways to do buisness! Shield yourself and your local community from the bankster’s game of exponential increasing missery, and lead movement’s to arrest and prossicute the likes of Goldman Sachs, JP Morgan, etc etc etc countless other fraudster’s steering fed gov’t away from the people! No this is not an anti-semetic statment, I don’t care if a Jewish person runs a fraud bank or if its a dutch South African, the problem is the practice and mindset, not anyone’s race! There are countless patriotic liverty loving Jewish people across the US who would agree with me and I would fight alongside them!

    • ajax

      In the above I meant to type “price deflation” rather than “price inflation”-currency devalue(hence price inflation) is worse than price deflation.

  • Rob Dunker

    The amount of money printing that has already happened with more to come will unleash inflation like never seen before. First Deflation and than Hyper-inflation. There is no more basic supply and demand in this system anymore. The free market is a dead zombie propped up by the fed.

  • Charlie Hicks

    You know some how there is this voice in the back of my head saying. This how the u.s is going to take China off the top of economy

  • Robert Olson

    Yes alaska will be free from the USA. finally. the only reason we join was because of the money. no need for the USA anymore. I also see texas leaving the USA. The economy collapsed in sept 2000. we did nothing but print or credit are way to health. clinton did a lot of credit causing a massive bubble. I hate the clintons. I hope they die.

  • Robert Olson

    ok the person below us is stupid. for the poor and middle class an economic crash will happen. 30% in crease in food and energy would be a killer. PLEASE READ THE ARTICLE YOUR SELF NEXT TIME.

  • Robert Sterling

    Oh well beans and rice for 2013!

  • Sarah Starling

    it is now fact that asia cannot decouple from the west globalisation means we are all interconnected we live in interesting times have we learnt from history.

    • Doug Saul

      All countries are setup the same way,Borrow and encrease the depy window,wont work thats why its a globel collaspe

  • Denise Matzavinos

    So what’s new.

  • Anonymous

    I just ate a donut.

We've dug into our Matador archives to pull out recession-proof ways of saving money.
Matador Trips editor Carlo Alcos explains why traveling in times of recession is a noble...
Chris Staudinger knows how to raise the cash for your travel videos.
Need to raise money to travel the world? Online poker might be the ace up your sleeve.
What happens when a producer from Spike TV finds himself a huge fan of an economic...
In a gift society, if you have more than you need, you give it to somebody who needs it.
Humanity has reached a fundamental turning point in its economic history.
Let's stop for a second and look at this purely by the numbers.
Here are some quick cash jobs you can start linking into right now.
Spot.Us is a new economic model for writers based on 'community funded reporting.'
When you stop to ask yourself what homeless people spend money on, why not ask yourself...