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Growing fiscal concerns in some of the world’s biggest economies are adding momentum to a so-called “debasement trade,” as investors flock to the perceived safety of Bitcoin, gold and silver while pulling away from major currencies.

A growing pile of debt across the US, Japan and Europe that countries are struggling to manage is boosting the appeal of alternative assets like precious metals and cryptocurrencies, which are setting new milestones.

The political situations across these countries “give you a reason to buy gold and Bitcoin as debasement hedges,” according to Chris Weston, head of research for Pepperstone Group.

Problems ahead for America

However, Dalio was equally pessimistic about the United States. While acknowledging its culture of entrepreneurship and innovation, he pointed to severe challenges across the board. The U.S. has a significant debt problem, and its internal political landscape is dangerously polarized by wealth and values gaps, putting democracy itself at risk. Furthermore, he argued that it’s in a “great power conflict” with China and its allies, and the two countries are locked in a technology war that will determine the future world order. “The winner of the technology war is going to win all wars,” Dalio stated, referencing historical precedents like the development of nuclear weapons.

As Dalio was speaking, the U.S. and China—with several of the world’s richest men in the mix, including Rupert and Lachlan Murdoch, Larry Ellison and Michael Dell—were negotiating the final details of U.S. control of TikTok. Control over the algorithm was the final detail being negotiated in late September as Donald Trump and Xi Jinping held crunch talks, underscoring the crucial nature of technology in this great-power conflict.

Despite this grim outlook, Dalio’s message is not one of despair but of individual preparation. He insists the crucial question is not whether to be concerned, but “how you as an individual handle it.” He offers clear, actionable advice for navigating the uncertain times ahead.

First, he stresses the importance of flexibility and mobility, citing a Chinese saying: “a smart rabbit has three holes.” This means having the ability to move yourself and your capital away from bad situations and toward better ones—like a rabbit would choose one of its three habitats, depending on its problems in the wild. Dalio suggested that being anchored to an asset such as a house can limit this crucial flexibility in a fast-changing world.

Financially, individuals should focus on building strength through disciplined earning, spending, and saving, paired with smart investing. On a personal level, Dalio advises people to understand their own “nature” and find a path in life that aligns with it. For those early in their careers, he emphasizes that the priority should be learning from the best possible mentors, not chasing the highest-paying job. The most fulfilling life, he argues, comes from having meaningful work and meaningful relationships, which correlate more strongly with happiness than vast amounts of money.

Central to all of Dalio’s advice is his guiding principle for personal growth: “Pain plus reflection equals progress.” He said that he believes the “best learnings come from the pain,” because you have to pay attention to learn how reality works and deal with it, and develop principles for dealing with reality better. “I learned that process and from that process my company Bridgewater became the largest hedge fund in the world,” he said, adding that it it made him a “ve

There is a global washing of negativity...and its been goinig on for a while.

Dalio has been warning...so here we go for what its worth...

Ray Dalio warns ‘we’re heading into very, very dark times’ and says the solution comes from a Chinese proverb: ‘A smart rabbit has 3 holes’

September 22, 2025 at 12:11 PM EDT

Legendary billionaire investor Ray Dalio has issued a stark warning about the future of the United States and the United Kingdom, stating he is not optimistic about either nation’s trajectory and believes “we’re heading into very, very dark times.” Drawing on his own proprietary study of 500 years of history, the founder of the world’s largest hedge fund, Bridgewater Associates, points to a predictable 80-year cycle that suggests an era of significant global and internal strife is upon us.

Dalio’s framework is built on five major forces that drive history in cycles: a money and debt force, internal conflict, geopolitical conflict, acts of nature, and human inventiveness, particularly technology. He argues that both the U.S. and the U.K. are exhibiting clear symptoms of a cycle nearing a dangerous phase.

“The U.K. has a financial problem, the government has a debt problem,” Dalio explained in an appearance on the “Diary of a CEO” podcast, noting that when debts rise relative to income, it squeezes the economy. This financial strain is connected to the second force: intense internal conflict. With large wealth and opportunity gaps, societies are experiencing deep divisions between the left and right, leading to a loss of trust in the system. Dalio believes the U.K. also lacks the culture of inventiveness and the robust capital markets seen in the U.S., further hindering its prospects.

While that’s arguable, what is not is that productivity in the U.K. has been remarkably flat for roughly 20 years. Diane Coyle, a professor of public policy at the University of Cambridge, talked to NPR’s Planet Money about it in 2022. “We’ve had flatlining productivity since the mid-2000s,” she said. “And while compared to other countries, they’ve had slowdowns, we’ve just had a much worse slowdown than anybody.” The London School of Economics revisited the subject earlier this year, calling it a “productivity puzzle” while concluding that the U.K. had “had the worst contraction in labour productivity after the financial crisis” compared to the U.S., Germany and France.

Thanks 3Bear. I would have thought we are way past the act of trusting paper fiat from governments which simply have no idea (plenty of ideologies)

France is broke and has been for a long time and of course France’s slide into political and fiscal dysfunction is generating a groundswell of support for a sweeping wealth tax that would represent a radical break from the pro-business agenda of President Emmanuel Macron.

The proposal is the work of French economist Gabriel Zucman who wants to impose a 2% tax on the assets of people with net wealth of 100 million euros, equivalent to $118 million, or more. Economics, lest we forget, is the dismal art, and one can be sure there are far more ideolgies and well meaning assumptions than there are things that work in the real world.

The more ungovernable France becomes, the more investors are pushing its borrowing costs to levels familiar to Europe’s debt-laden periphery. The yield on France’s 10-year bonds has risen above Greece’s (?!) and its borrowing rate is currently neck-and-neck with Italy’s...and we still dont know whether the Presidents wife has a pe&us? LOL https://www.youtube.com/watch?v=w3B0Tc1hEVA

And with the best of british, the United Kingdom has engineered a housing and energy shortage, not unlike what Australia has done or is trying very hard to do. https://www.theatlantic.com/ideas/archive/2025/03/uk-needs-abundance/681877/

We are well versed witht he FIAT FIASCO ....The idea of a "fiat fiasco" where all countries are broke is a concept associated with Ray Dalio's work on big debt cycles, suggesting that fiat currency systems eventually lead to devaluation and crises due to excessive debt and money creation. Dalio argues that while fiat systems can experience severe crises, they tend to "erode over time" rather than collapsing suddenly, unlike hard currency systems. Collapse or erode, the trend is to devalue and this has been going on for decades

So gold to the moon, or just who would you believe

the gold gnome

GOLD GETS INTO THE MORGAN STANLEY 60/40 PORTFOLIO!!!

A 60/20/20 portfolio strategy that includes 20% gold is a more resilient inflation hedge at a time when U.S. equities are offering historically low upside over Treasuries and investors are demanding higher yields for long-term bonds, Morgan Stanley (MS.N), opens new tab Chief Investment Officer Mike Wilson said on Tuesday.

A 60/40 portfolio, which typically has 60% of its holdings in stocks and the remaining 40% in fixed income, counts on moves in the two asset classes to offset one another, with stocks strengthening amid economic optimism and bonds rising during turbulent times.

Wilson, however, favors a 60% allocation to equities and 20% each to fixed income and gold . Within bond markets, the prominent Wall Street bear prefers shorter-duration Treasuries of five years over the 10-year notes to capture rolling returns along the yield curve.

"Gold is now the anti-fragile asset to own, rather than Treasuries. High-quality equities and gold are the best hedges," Wilson told the Reuters Global Markets Forum, opens new tab.

The strength of a dual hedge lies in the contrast: both hedge inflation, but equities are growth-linked risk-on bets, while gold rallies as a safe-haven when real rates fall in downturns.

U.S. stocks have rebounded from near bear-market levels following President Donald Trump's "Liberation Day" tariff announcement on April 2, with the S&P 500 (.SPX), opens new tab and Nasdaq Composite (.IXIC), opens new tab hitting several new highs in September - a historically weak month for equities.

Spot gold prices, meanwhile, surged past $3,700 an ounce to a record high on Tuesday, buoyed by mounting expectations of a rate cut by the Federal Reserve this week.

SO GOLD MINERS ETF, GOLD BULLION ETF, NEWMONT, BARRICK OR ... ANGLO GOLD

1 YEAR 3 YEAR

GDX 79% 131%

GDXJ 85 167

NUGG 45 79

NEM 50 110

ANGLO G 142 253

BARRICK 62 102

ANGLO IS A STAND OUT ...

enjoy, I have !!!

the gold gnome

Thanks Mr Bond, Hospital again, Hope the nurses are not getting the upper hand...??

In a new report, Ashwin Thapar, of D.E. Shaw Investment Management, argues that as global wealth grows, so should gold holdings. He estimates that since 1975, gold has ranged from 1.8% to 7.3% of developed market liquid wealth (it has recently broken above that range).

Newly mined gold increases the stock of gold less than 2% a year, according to JPMorgan Chase. The remainder of gold wealth comes from a rising price. Over the long run that is probably enough to keep up with Treasury bills, but not a plain vanilla mix of stocks and bonds. The purpose of gold is to damp the impact when something hammers stocks, bonds, or the dollar. The trick is to figure out what that something is.

Inflation is gold’s best friend

Gold does best when fiat currencies (the kind central banks issue) lose purchasing power. Gold soared during the 1970s as stocks and bonds foundered amid double-digit inflation.

U.S. inflation, at around 3%, is hardly a disaster. And the Federal Reserve thinks it will be lower in a year in part because of a weaker labor market, which is why it is likely to trim interest rates on Wednesday.

But the structural forces that kept inflation below the Fed’s 2% target before 2020 have switched direction. Globalization, which brought a flood of low-cost goods to American shores, is out; tariffs, protection and reshoring are in. Before, legal and illegal immigration compensated for an aging labor force. That inflow has been cut off even as fertility rates hit new lows.

These structural pressures need not push inflation higher. The Fed can ensure inflation stays low by raising the real interest rate (the nominal rate minus inflation), which weakens demand and pricing power. As D.E. Shaw points out, higher real rates are bad for gold.

But making such tough decisions requires the Fed to remain independent. And before long, it may not be. On Tuesday, President Trump told reporters the Fed should be independent, “but I think they should listen to smart people like me.”

He is taking unprecedented steps to ensure the Fed listens. He has just installed the chairman of his Council of Economic Advisers, Stephen Miran, as a Fed governor; Miran will retain his White House title while on the Fed. Trump is also trying to fire another governor for alleged mortgage fraud. By next May, he can replace Chair Jerome Powell. He is forthright about his goal: get interest rates down faster.

TRUMP IS FORTHRIGHT AND IS GETTING HIS WAY, AND IT IS THE GOLDEN WAY...

GOOD LUCK MR BOND, WE WILL ALL NEED A BIT OF IT TO SURVIVE ...GLAD I AM NOT IN GAZA

The passage by the central government of the world’s leading reserve currency country, which is heavily indebted, of a budget bill that will produce big deficits that will require large bond sales and big increases in debt service payments, which will most likely be dealt with by the central bank pushing real interest rates down and monetizing its debt—increasing the risk to fiat money and debt denominated in it.

The imposition of relatively large tariffs for both economic and geopolitical reasons in an attempt to make the country more competitive, bring in tax revenue, and use trade as a weapon against opposing countries.

Moves by the country’s leader to increase his control over the central bank.

Moves by the country’s leader to gain control over both the political system and his political opponents that he believes are ruining the country, leading to conflict between those of the hard right and those of the hard left.

Moves by both the rightist (Republican) and leftist (Democratic) sides in a democracy to influence the elections to come out in their favor via redistricting initiatives (by Republicans in Texas and Democrats in California) rather than through representative democracy.

The deployment of the National Guard in cities that have social disorder and political opposition to the leader’s policies.

The shooting, martyrizing, and eulogizing of a political figure (Charlie Kirk) in a country where there is a lot of gun violence and increasing political violence.

Leaders from a group of rival powers (China, Russia, India, North Korea, Iran) gathering in meetings and for a military parade to talk about and display their powers to challenge the leading world power and its world order.

The incursion (by Russian drones) into countries (Poland and then Romania) that are in an alliance with other major countries (NATO countries) requiring them to enter a war if an attacked member country triggers that action.

The attack of a country at war (Israel) on its enemies who were being housed in a neutral sovereign country that was trying to help negotiations between Israel and Hamas.

There are many more news items that I could cite that paint a picture that is inconsistent with what we have become used to in this world order since World War II but is very consistent with what has happened at other times in history, especially during prior breakdowns in monetary, political, and geopolitical orders (e.g., in the 1930s).

https://www.linkedin.com/pulse/how-countries-go-broke-big-cycle-tiny-nutshell-ray-dalio-flnce/

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