Ray Dalio Reveals Whats Coming After QE

stormAnd it’s not what you expect…

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by Rory, The Daily Coin

I have known for some time that our economy is in a lot of trouble. Today, that has been confirmed by someone that runs one of the largest, most well known funds anywhere in the world.

We have spent a lot of time on gold and silver the past several months and truly focusing in on our money. Our labor is traded for goods and services that help our lives function in a way that makes us comfortable and, hopefully, happy. We trade our time/labor to someone else who pays us in the currency issued for that jurisdiction. This is how economies develop and, with any luck, a prosperous economy and growing community emerge.

For well over four thousand years silver and gold served this purpose and in some areas of the world this still holds true. Unfortunately, in most of the world we use a central bank issued fiat currency to transact commerce and we trade our time/labor for this fiat currency. In the U.S. we use Federal Reserve Notes (FRN), most people refer to as the “dollar”. If you read the print on the FRN you will quickly learn this is a representation of money and is actually a debt instrument. It clearly states this on each and every denomination of “dollar” printed by the privately owned, Federal Reserve System.

Part of our current situation is as follows. The U.S. retail consumer has amassed over $1 trillion in student loan debt, over $1 trillion in auto loan debt and the federal government is $19 trillion in debt (plus the unfunded liabilities like Social Security and Medicaid which total over $100 trillion) and counting. Brother, can you spare a dime? Our nation is so far in debt it has to look up in order to see the bottom.

Question: How does a person that owes $30,000 in student loans plus another $15,000 in auto loans purchase a home, pay a mortgage/rent or start family when the only job they can find pays them $12-15 an hour? Is that enough income to service the current debt load? The student debt can not be written off as a bankruptcy, the person is stuck with that debt until it is paid off, even if they die, their estate is straddled with that debt – it must be repaid. The auto loan is another story and, my guess is, we will begin seeing auto loan defaults spike within the next 12-18 months as more and more people realize their shiny new toy has lost it’s luster and it’s value.

So, the currency we use is an instrument of debt, our nation is drowning in debt and, according to the TV life couldn’t possibly get any better in the good ole U.S. of A.

Enter Ray Dalio, Bridgewater, which manages over $150 billion in assets around the world, is one of the smartest people in the room – any room – when it comes to financial instruments and how to generate wealth. Recently, Mr. Dalio was explaining how we arrived at our current conjuncture in this unfolding economic collapse.

During this conversation Mr. Dalio explained that Monetary Policy #2, Quantitative Easing, (QE) placed all the financial instruments in the hands of the people that already had financial instruments and thus have left the actual producers out in the cold. QE was designed to provide the people at the top with relief from the financial nightmare that began in 2008.

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Quantitative Easing, buys financial assets from people that have it and it stays in the financial community.

– Ray Dalio, Source

There is, to my knowledge, no clearer, easier to understand explanation of QE than the one Mr. Dalio just offered. The people that have assets are given the means to purchase more assets and that drives up the price of those assets making it impossible for anyone outside this small group of owners to purchase anything of value.

Mr. Dalio goes on to explain the next step in this unfolding nightmare of economic collapse.

We are going to have to move toward, increasingly, the making of purchases that put money directly in the hands of spenders. Because the linkage between having money in the financial assets and having spending is becoming weaker and weaker.

****

Monetary Policy 1 – interest rates have become ineffective. Monetary Policy 2 – Quantitative Easing – purchasing financial assets by the people that own financial assets has become ineffective. Monetary Policy 3 – Central Banks, around the world, printing money and putting money directly in the hands of consumers.

Source

That has to be some of the most terrifying words I have ever typed. It is hard to even fathom how this could work. Which brings me to something I have been thinking about all day.

Our labor, the citizens of the U.S., has been traded to other countries, through bonds sold by the U.S. Treasury dept. Other countries, primarily China, Japan and the OPEC nations, own our labor through the issuance of bonds. How does this work if no one is working but somehow still is receiving an “income”? How do the bonds get paid off and what are those bonds worth? How does China, Japan and the other countries, that own our debt get paid back? Will these countries just accept printed monopoly money? If so, why hasn’t the U.S. Treasury already paid off these bonds? What’s the difference if the debt is paid off today, with monopoly money or tomorrow with monopoly money?

The above is described in the first ten minutes of the video below. I would strongly suggest spending ten minutes giving this a listen. If anyone reading this is managing more than $100 billion in assets, you’re probably good to go, but those that are not managing $100 billion in assets, may want to give this person a minute of your time. He may teach us all a little something about what is coming. And, by the way, if you know what’s coming at you, you have a much better chance of preparing properly for the event once it arrives. The cancer is growing by the day.

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