Ray Dalio: The 2020 Crisis Will Be Bigger Than The 2008 Recession

In the recent interview, Ray Dalio came out and said that he believes that the

crisis

of

2020

will

be greater than the one we had in

2008

and

will

be similar to the Great Depression of 1931. Alette Dalio explained it, although well, I think you could look at it. This is like a tsunami that hit the virus itself in social distancing and then what are the consequences in terms of the debris when you look at it? I think you have to think of it as income and balance sheets, you know, so it was a tremendous income and then the balance sheets generate losses and what and who has what savings, etc., and then how is that treated and to understand that there is You have to realize that there are these holes, these holes in income and holes in balance sheets and then you have to realize that there is the production of money and credit and who produces that money in credit.

Well, money and credit come in different flavors. There is money in US dollars and credit. There is euro money and credit in US dollars. So when you look at the world and you see it, you see a situation that is the same as what actually existed in the period from 1930 to 1945, where we are now seeing the production of a lot of debt. of borrowing by the government we are seeing zero interest rates and not the traditional type of monetary monetary policy, but the production of a large amount of money and credit, so the Federal Reserve is buying the Treasury debt and the Treasury is taking that money to me for the most part.

The Americans in some imperfect but remarkably large way and the Europeans are doing the same thing in their own way that the bank is a smaller bank because the world lives on about 70 percent dollars and only a small percentage of euros and they will produce there are four and there are. There aren't many banks around the world, so the rest of the world will have gaps that won't be filled, so if you think about that and say that American money printing and lending will leave us with a lot of debt and monetization is something interesting to talk about and we have to talk about who will pay these bills and how it will be shared, it will be something we will have to talk about, but you will know that they will get that money and the Europeans will get their versions of that money, but we are in a world new and that world is very similar to the world of 1932 45 and much of the world will not receive that money in credit, so what you have to understand is that right now we have a lot of debt on our hands, I mean, as of

2020

, that figure is around twenty-five point three trillion dollars, that is, approximately 107 percent of GDP.

We have to ask ourselves with all this debt on our hands, with all this money printing, who in the end? At the end of the day we will pay the bill, how this will all turn out and before you can answer these questions you need to know how the economy works in the key patterns that we can see throughout history. I want to let Dalio explain it very simply if he can take a minute. I would like to simply paint you a template that takes us. You know, over the last thousand years. The things that have happened over and over again.

There was a pattern that I would like to convey. Can I take a moment? and absolutely do it, there are four things that are the driving forces of our economy, our lifestyle and wealth, and the first and most powerful is productivity, which comes from people learning, inventing and doing things well just like Marco described them. Oh, and it grows slowly. you know, 1, 2 or 3% a year it grows slowly and is not volatile because knowledge is involved, but it grows and that raises our living standards over time, then there is a short-term debt cycle, the debt cycle short term is you know,

recession

s, expansions, booms and

recession

s last 8 to 10 years and then there's a long term debt cycle and that long term debt cycle that continues about once every 50 to 75 years is when you start a new type. of money and a new type of credit that began in 1945, the new world order at the end of World War II were the and with the Bretton Woods monetary system they created a new monetary system in 1945, a new money, so they eliminated practically the old one. money or they largely got rid of it and started over and that is the new world order, which was the American world order and we have seen it and still 70 percent of the money and credit that exists in the economy runs on dollars and what there is traditionally is collapse and then the fourth influence is politics and politics is largely how we deal with each other we can't and there's internal politics and external politics internal politics is how to deal with the wealth gap, How to deal with the values ​​gap Do you have a common mission?

Do we have an American dream that we can agree on and are we pursuing it together or do they fight for wealth and such? When you look at history, that's where revolutions are. its various forms and there is always a revolution in one of these, sometimes those are peaceful revolutions and therefore sometimes they are disruptive in their end, but it is a ship changing of wealth and that must take place, so in Nineteen, Roosevelt changed policies and change. taxes and so on in that way and then in other countries there was a change of democracy. Hitler came to power because of that gap, so the way people relate to each other internally there is also external politics, so politics means between countries and you have a situation where there is a rising power that challenges to the existing power there is competition and there is a risk of war and therefore how they treat each other, so whether there is a greater good or whether they are fighting each other is the decisive moment, so what to do What to do My understanding is that right now, at least in the short-term debt cycle, it appears that we are reaching the end of that cycle.

This is a chart of the history of the Dow Jones that gives us a good indicator for all the US markets, as you can see. It's been 12 years and we've had a strong bull run in the market, but if we rewind this graph back 70 or 80 years, we get a better view of the long-term debt cycle which, as Dahlia said, on average tends to last around 50 to 75 years ago, the bad news is that in the United States it has been exactly 75 years since the beginning of this current long-term debt cycle that we are in, which began in 1945, which is a strong indicator that the Things could be about to change but the question is what market conditions can we expect in the future again I will go to Dalian he thinks we are in a similar situation to 1930 to 1945 because the ingredients are exactly the same with debt on our hands low interest rates big money printing etc., and the bad news is that this period was not exactly the most fun or profitable for investors, since you know we had that Great Depression and since then it was quite volatile, so what now the question should move to what to do with our investments during this time again, let's go to Dalio, he said that the worst thing you can do is think that you can time the markets, so what the individual investor must do is know how to diversify well and in a balanced way, and to do so He created something he called an all-weather wallet.

This portfolio is supposed to be able to weather any economic season and still perform well. It makes up 30% of the stock and Dalio likes to use ETFs as a way to get exposure to the stock. In the ETF market in the US, there will also be DTF. This way you can ensure you diversify your net worth across countries around the world, then it is 40 percent in long-term bonds and 15 percent and some medium-term bonds also has 7.5 percent in gold, which is another thing Dalio alluded to recently. He says that if you don't own gold you don't know history or economics and finally, 7.5 percent sand commodities to top off this diversified and balanced portfolio, at least according to Dalio should be able to hold out.

This economic storm