[MONEY] Ray Dalio: straightforward explanations of the current financial madness - [PEACE]

[Zenaan Harkness]

Ray Dalio knows how to communicate, at least in his field of
expertise:

  Dalio: "The World Has Gone Mad And The System Is Broken"
  https://www.zerohedge.com/markets/dalio-world-has-gone-mad-and-system-broken
  https://www.linkedin.com/pulse/world-has-gone-mad-system-broken-ray-dalio?articleId=6597520880811724801#comments-6597520880811724801&trk=public_profile_article_view

  I say these things because:

  - Money is free for those who are creditworthy because the
    investors who are giving it to them are willing to get back less
    than they give.

    More specifically investors lending to those who are creditworthy
    will accept very low or negative interest rates and won’t require
    having their principal paid back for the foreseeable future.

    They are doing this because they have an enormous amount of money
    to invest that has been, and continues to be, pushed on them by
    central banks that are buying financial assets in their futile
    attempts to push economic activity and inflation up.

    The reason that this money that is being pushed on investors
    isn’t pushing growth and inflation much higher is that the
    investors who are getting it want to invest it rather than spend
    it.

    This dynamic is creating a “pushing on a string” dynamic that has
    happened many times before in history (though not in our
    lifetimes) and was thoroughly explained in my book Principles for
    Navigating Big Debt Crises.

    As a result of this dynamic, the prices of financial assets have
    gone way up and the future expected returns have gone way down
    while economic growth and inflation remain sluggish.

    Those big price rises and the resulting low expected returns are
    not just true for bonds; they are equally true for equities,
    private equity, and venture capital, though these assets’ low
    expected returns are not as apparent as they are for bond
    investments because these equity-like investments don’t have
    stated returns the way bonds do.

    As a result, their expected returns are left to investors’
    imaginations.

    Because investors have so much money to invest and because of
    past success stories of stocks of revolutionary technology
    companies doing so well, more companies than at any time since
    the dot-com bubble don’t have to make profits or even have clear
    paths to making profits to sell their stock because they can
    instead sell their dreams to those investors who are flush with
    money and borrowing power.

    There is now so much money wanting to buy these dreams that in
    some cases venture capital investors are pushing money onto
    startups that don’t want more money because they already have
    more than enough; but the investors are threatening to harm these
    companies by providing enormous support to their startup
    competitors if they don’t take the money.

    This pushing of money onto investors is understandable because
    these investment managers, especially venture capital and private
    equity investment managers, now have large piles of committed and
    uninvested cash that they need to invest in order to meet their
    promises to their clients and collect their fees.

  ... [Similar clarity on govt health and pension funding ...] ...


  - At the same time as money is essentially free for those who have
    money and creditworthiness, it is essentially unavailable to
    those who don’t have money and creditworthiness, which
    contributes to the rising wealth, opportunity, and political
    gaps.

    Also contributing to these gaps are the technological advances
    that investors and the entrepreneurs that I previously mentioned
    are excited by in the ways I described, and that also replace
    workers with machines.

    Because the “trickle-down” process of having money at the top
    trickle down to workers and others by improving their earnings
    and creditworthiness is not working, the system of making
    capitalism work well for most people is broken.