Dalio says gold may be key as era of low rates, QE comes to end

I believe that we are likely approaching a paradigm shift in the markets and recently explained the dynamic as I see it in this report. I thought you might find it interesting:https://t.co/mvjnKjSnHD— Ray Dalio (@RayDalio) July 17, 2019

For Dalio, monetary policy swings between helping debtors or creditors at each other’s expense, and the next move of the pendulum could lead to a new era of debt monetization and currency depreciation.

“The big question worth pondering at this time is which investments will perform well in a reflationary environment accompanied by large liabilities coming due and with significant internal conflict between capitalists and socialists, as well as external conflicts,” Dalio said.

Other key quotes:

• “I think that the paradigm that we are in will most likely end when a) real interest rate returns are pushed so low that investors holding the debt won’t want to hold it and will start to move to something they think is better and b) simultaneously, the large need for money to fund liabilities will contribute to the ‘big squeeze”’
• “There will have to be some combination of large deficits that are monetized, currency depreciations, and large tax increases, and these circumstances will likely increase the conflicts between the capitalist haves and the socialist have-nots”
• “In such a world, storing one’s money in cash and bonds will no longer be safe”
• “It is also a good time to ask what will be the next-best currency or storehold of wealth to have when most reserve currency central bankers want to devalue their currencies in a fiat currency system.

(By Nathan Crooks)