Ray Dalio’s Dollar Crash Prediction. Here’s How It Will Happen

Speaker 1: The United States has enjoyed over 70 years, have been the leading reserve currency, resulting in having a very strong dollar. This has helped them to be able to borrow a lot of money and grow their empire that we know to be today.

However, the billionaire Ray D’Alessio put lightly he doesn’t see this lasting forever, especially when we’re talking the U.S. dollar. He’s come out and he’s wrote a bunch of articles on his website called Principles, which detailed the decline of the U.S. dollar. And this video, I want to try sum up the key lessons from these articles and show you why the decline of the US dollar is not if, but when. First of all, what is money? That’s simple. Money is something that we use as a store hold of wealth. Now, throughout time, there is a cycle in the way money works. There is six key stages that you need to know at the start of the cycle. There is no debt, very low debt and hard money. So back in the day they use simple things like grain and beads as a sort of hard money. More recently, it’s been gold, which you use to exchange for goods and services. So that stage one very simple hard money is used as currency. Then stage two comes, which is claims on hard money. Obviously, it’s very tough. Carry metal money around everywhere. So what they did as they developed paper money, paper money is just a claim on some form of hard money, a.k.a. United States. Before 1971, money was simply a claim on a certain amount of gold. So money back then was actually backed by something unlike today. Then stage three follows, which is increased debt. And this is the stage where people discover the wonders of debt and credit. We can now borrow these paper claims and only have to pay it back at a later date in the future. However, what happens is, you guessed it, people get too greedy, they borrow what they can’t afford and too much debt grows. Eventually, there is more paper claims on hard money.

Then there is hard money in the system which leads to some problems. And that’s when stage four comes, which is the debt crisis, defaults and devaluation. People demand to get the hard money out of the bank. The bank realizes it doesn’t have enough and they either default or get bailed out by the governments, a.k.a. like what happened in the 1930s, the huge bank run when people realize the banks didn’t have the assets to pay back their money. And then stage five comes Fiat money, which is the stage that we are currently in. The promise to deliver hard money becomes too difficult and too constructive. So generally the government decides to abandon the system and use fiat money, fiat money. This is just paper money that the government can now print as much as they possibly desire because it’s not backed by anything. What a wonderful idea. And yes, it all seems well and good when they initially implement the idea, but of course, huge ramifications are to come from it. So this change to fiat money. The star of Stage five happened in 1971. 1971, President Nixon told the world that the dollar would no longer be tied to gold. And now we can print as much money as we possibly wants. And this was the start of the final stages of the long term currency cycle. You see, what happens in stage five is governments, people, companies. They tend to get too greedy and they look to expand economically as much as they possibly can. So they pull up a lot of debt eventually. They can’t afford to pay their debt payments back and they have to print money to service their debts and obligations. Just think what’s happened in 2020. They’ve printed trillions of dollars for the economy and stock markets for the problem when you print a lot of money is you devalue. It’s if there were a hundred mining leases in the world instead of one, the painting wouldn’t be worth as much. If there were 1000 Niagara Falls, it wouldn’t be as famous.

You get the points I’m trying to make, the more you have of something, the less valuable it becomes. And this is what happens when you print a lot of money. People flee out of the currency because they realize it’s worth less and they look for an alternative store hold of wealth. And this is a big problem with the American dollar. Now, yes, they have helped bail out businesses through the mass printing of money, but every time you do this, you devalue it. And when you stop printing trillions of dollars worth, you devalue it a lot. Let’s just say that. And that’s when stage six comes, which is the flight back into hard money. People start running away from the currency that was once the leading reserve currency because of the mess devaluations. And they look for other strongholds of wealth and the form of other currencies or assets. The assets that they look for typically is gold, other currencies and also assets in other countries. This is the stage that is yet to fully come and the current cycle. But we are seeing strong movements towards its OK. This graph might give you a better picture of how things look. We’ve had the new world order and we’ve had that period of prosperity. We’ve had the debt bust and the creation of fair money. And right now we’re in the printing money and credit stage. You know, it doesn’t take a genius to know that. Just look at the trillions of dollars that the Fed has printed in 2020 and the future. There’s going to be some type of restructuring. Let’s just hope it’s peaceful and well done, because the thing you need to know about currencies is out of the 750 currencies that have existed since the seventeen hundred, only about 20 percent has survived. And out of that 20 percent, they have all been devalued. And when you look at the United States dollar that has been massively devalued, just like the British pound before, it’s in the Dutch guilder before that, the two previous leading reserve currencies. So this graph shows what currency returns of the three major reserve currencies in relation to gold since 1900. As you can see, all three leading reserve currencies followed the same cycle of devaluation. The U.S. dollar is doing nothing different and at some stage will lose the leading reserve currency status. It’s not if, but when you see the devaluations of currencies, they all follow a pattern.

First is the bank run where people power to the banks to get out money. Then who normally goes together with substantial debt problems frequently related to wartime spending, a.k.a. the fourth Anglo-Dutch war for the Dutch guilder, the the World Wars for the UK and Vietnam for the US. Then three banks respond to this by printing a lot of money and devaluing the currency and therefore is a rising power and economic competitor whose currency and economy starts catching up to the leading one. When it catches up, people tend to flood out of the leading currency and see the other one. Now, of course, we know the main competitor to the USA is China right now. They haven’t exactly caught up, but they’re getting very close. As you can see here, this chart gives a rough estimate of the relative standing of great empires. First, it was the collapse of the Netherlands losing to the UK, then the UK to the USA, and now China’s fast catching up to the USA. They haven’t fully caught up, which is why people aren’t rushing out of the dollar to the yuan, but they’re getting close. And that brings us on to the question. Well, what do we do about this? For those who hold a lot of cash on the banks or bonds, you got to reevaluate your strategy. One thing that you can do is spread your cash to a range of different currencies, not just the USA. You can simply go to the bank and ask them to move your money into a couple more currencies, preferably currencies that are printing money by the bucket load. Another thing that you can do is look at diversifying into gold and silver. They’re known as the symbols of safety, the hard money of the past. And when people realize how much the dollar has been devalued, they’re going to run to the symbols of safety. This is why you’ve got smart investors like Robert Kiyosaki, of course, Ray Dalio and even Warren Buffett buying gold. Of course, Warren Buffett’s bought a gold mine, but still it’s a form of gold. Another thing that you can look at doing, as Dalio talked about in his articles, is invest in assets in other countries. I don’t know if you’ve been paying attention, but even Dalio himself has been buying a lot of Chinese stocks recently. It doesn’t have to be Chinese stocks, but you can invest in countries throughout Europe and Australasia.

There’s plenty of other places to diversify your dollar into because the worst thing would be for the dollar to crash, let’s just say halved. And then all of your savings go down 50 percent. In my opinion. It’s better to be prepared. But I want to sum this up because some of you might find this a little confusing. Remember the date, August the 13th, 1971, on this date, President Nixon announced that the US dollar could no longer be converted to gold. Now, America could print as much money as they possibly desired as there was no asset backing it up. Then the debt starts to pile on. People borrow a lot of money more than they can afford, and the Fed is forced to print money. And a lot of it’s trillions of dollars were printed in 2020 to help the economy and stock markets. The problem with this is that massively devalues the currency. And when people wake up to this, the dollar is in huge risk of a crash.

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