Instead, the hedge fund manager would want to see the introduction of a “inflation-linked currency” to the public, which would help customers safeguard their purchasing power.
Billionaire investor Ray Dalio believes fiat money is in significant “jeopardy” as an effective repository of wealth, but he also does not believe Bitcoin (BTC) and stablecoins will be the solution.
On CNBC Squawk Box on Feb. 2, Dalio, the founder of hedge fund company Bridgewater Associates, argued that the vast money production of the US Dollar and other reserve currencies has him questioning if they are forms of “effective money.”
“We are in a world in which money as we know it is in jeopardy. We are printing too much, and it’s not just the United States, it is all the reserve currencies.”
However, Dalio was quick to weigh in on whether Bitcoin was a viable answer, stating that despite everything it has done in “12 years,” it is still too volatile to be used as money:
“It’s not going to be an effective money. It’s not an effective store holder of wealth. It’s not an effective medium of exchange,” he argued.
He also disregarded stablecoins as a viable form of money since they are a carbon copy of state-backed fiat currency.
Instead, Dalio recommended the establishment of a “inflation-linked currency” to ensure customers’ purchasing power is protected.
“The closest thing to that is an inflation index bond, but if you developed a coin that says OK, this is buying power that I know I can save in and put my money in over time and transact in everywhere, I believe that would be a terrific coin,” he added.
“So I believe you will witness the creation of previously unseen currencies that will likely end up becoming attractive, viable coins. I don’t believe Bitcoin is it “He went on to say.
Not everyone, however, agreed with Dalio’s assessment of Bitcoin and the possibility of an inflation-linked coin.
Eric Weiss of Bitcoin for Family Officers, a digital asset manager, was among many who warned his 38,300 Twitter followers that such a coin could not exist:
“[Bitcoin] is extremely near to providing the solution to the world’s problems, according to Ray, but it is too volatile. He’s looking for and describing a solution that doesn’t and can’t exist “Weiss stated.
Cathie Wood, CEO of ARK Invest, saw Bitcoin differently, referring to it as a defence against wealth expropriation in sections of the developing world: “Those communities need a fallback, an insurance policy like Bitcoin,” she said.
Dalio’s current thoughts on Bitcoin follow his recent declaration that it is “one heck of an invention” that might serve as a credible inflation hedge. However, these comments were made on January 28, 2021, before the current bear market began.
The billionaire investor has previously stated that by January 6, 2022, BTC should account for 1-2% of an investor’s portfolio.
The hedge fund manager indicated on May 24, 2021, that he would like to buy BTC over bonds as an investment instrument, but then declared on August 5, 2021, that he still favours gold.
Dalio stepped down as a co-chief investment officer on October 4, but stayed on board as a mentor.