Will The US Dollar COLLAPSE? - China & Russia Declaring ECONOMIC WAR On America | Ray Dalio

right now one of the things that has me the most unnerved is the attack on the dollar so you've got the brics Nations uh for people that haven't heard that acronym before Brazil Russia India China and South Africa uh are getting together and I know this has been going on for quite some time so I don't know if I should be overly paranoid about that in this moment or not but again going back to those indicators that point to a transition from phase five to phase six do you think there's anything that we can prepare for as we look at the big cycle as we see this particular moment with the assault on the dollar is is there anything in the big cycle that can educate us on how to deal with this moment just all happens over and over the decline of the British pound as a reserve currency and before that the decline of the Dutch guilder as a as a reserve currency all happen for the same reasons which is um you know two things are going on first of all they're holding all of this dollars and the stuff that we talked about is going on and then also there's the weaponization through sanctions of uh the uh Dollar in other words um the United States is greatest weapon to use as distinct from its military weapon is his sanctions and so sanctions means you freeze other assets you freeze assets those assets are the bonds and um so um that happened with Russia and there are threats of it with other countries China and so on and there's kind of the thinking well if I hold the bonds can I uh be can that happen to me and and then why am I transacting in this other third currency rather than transacting directly so for example um the United States uh share of World Trade has declined and China's share of World Trade has increased to become greater and um so um if two countries are trading let's say Saudi Arabia is trading with um vagina um why do they buy why do they go to the dollars in order to do that um you know uh no good reason to go to the dollars and you know they don't know that then they're worried about holding the dollars because they might get sanctioned and so you see more of those transactions taking place in other currencies and then the usefulness of the dollar as a storehold of wealth changes it's like think about it in um you know the the most fundamental way um everybody wants uh a medium of exchange and a storehold of wealth so in other words if everybody's using the dollar and World Trade then you want to save in dollars because you say okay now that's the thing I spend in and I and I save in the dollars um but over time as the share of World Trade goes down why aren't they denominating in who the like China has a larger share of World Trade traditionally the countries that have the world's Reserve currency have the largest share of World Trade and the largest share of world Capital flows and because the United States has declined and also there's a worry about that um holding it because of sanctions I mean just imagine how the Chinese must feel about having a lot of money in treasury bonds you know like I would be worried that I would like be treated like Russia would be treated I'm it's not something I would want to hold as you know a safe asset and other countries like who might feel that they can get sanctioned and for all those reasons uh they're less inclined to hold and when we when we call dollars what we're really calling is dollar debt because you don't hold you hold dollar debt and that's a pro what is a debt it's a promise to really receive currency so okay so now getting out of those things and transacting in other currencies seems to be the safer thing to do for those countries and so that's the dynamic that's taking place so it's it's um it's not an attack on the dollar it's like I don't want to hold those things and um so very similar to on the British pound you know what happened is the British had the war and they were the most powerful empire ever in the world and then World War II and they came out of World War II uh financially in debt a lot of debt and who hold who held the debt all these countries held the debt because that was the residual from that but they had a problem they had a debt problem and so they needed to print more money because it was too much of a squeeze and then you had so it deteriorated and then they you know they sort of said please hold my dad please hold my dad they went to commonwealth countries the part of those that were in the former British Empire and then you had the Suez Canal incident where um there's sort of a a war and everybody realizes well hey wait a second that British Empire ain't the British Empire and they're heavily in debt and then they say I don't want to own that debt and there went the British pound so that's just how the Mechanics Work okay so looking at the U.S and um I don't want to be cheeky and say speaking directly to uh the you know the US government but if I were to be so bold so if this is that predictable moment where okay there are actions that we can take as a country that will either help us keep um the world Reserve currency status and there are actions that we can take that will cause us to lose that status more quickly it seems like okay uh you've got the brics Nations they are moving away from the dollar it seems like that has already that card has already been played I don't know if you think there's anything that we can do to to make that easier but certainly speaking to printing so one thing that I've I've heard recently and this is a really fascinating concept that when you have other nations that are holding your currency holding debt as you said uh they're not like hoarding cash but they're they're holding a lot of debt if we print money what we're essentially doing is um externalizing inflation so we are causing a devaluation of that debt for all the countries that hold us now we're in a moment with Rising interest rates that's causing us to need to print uh but creating this really weird difficult moment where as we print then we have a need to raise interest rates but the reason we're having to print is because we're raising interest rates so it's a very difficult moment um but if if we could going back to your idea it's how we are with each other if we could get people to come together in the middle would one of the things we would want to convince the US government to do is to be very cautious about devaluing the dollar is is that an important idea it's more basic than that and it's um more simple but it's also more difficult um what the reason Cycles exist is that the next stage has been determined by what has already happened in the prior stage so hmm we are in debt a lot you can't change that we got a lot of debt and if you say what could you do I mean two things come to mind what you could do is you could be financially strong and you can not use um Financial sanctions as a weapon to scare the holders of those bonds but to be financially strong requires you to not spend more than you earn that means you either have to cut your spending or raise your earnings okay that's okay that ain't easy okay okay so are we going to cut our spending um okay now you look at it what are you gonna uh infrastructure programs I don't know poverty transfers defense spending okay what what are we going to cut um the world governments have the same basic economics as um people except for the fact that they can take money from one person and shift give it to another and they can print money that's it and so when you look at this um okay you have that Gap you can eliminate the Gap by taking money from some and eliminating another and not spending much okay okay that's not easy right okay okay what are you gonna the most governments now don't think how much money do I have to spend and then how do I prioritize that they think I need to spend on this I need to spend on that and I need to spend on that and they spend on it and then they either produce it they produce a deficit and then you either have to pay it back with hard money or printed money and that's situation so when you say what could we do well you've got to get financially strong in a politically fragmented environment in which everybody wants more and you and you have to uh you know like be a higher percentage of World Trade so that everybody wants to use your currency and um the um and not threaten the holders of that bonds with freezing their assets it is uh it's a tall order in this moment um I it has become so clear to me in the last month since you and I uh saw each other how important the reason that you keep coming back to it all comes down to how people treat each other so in this moment um I don't want to be a Debbie Downer but it does feel like the die is cast a little bit I don't see how we pull ourselves back from the precipice because to your point about being um fiscally responsible like we'd have to get into a position where we're making more than we spend I want to circle around to something as you were talking you mentioned infrastructure and it got me thinking about okay what are things that we would need to go right so I think everybody is aware and I've heard you say that there there are changes that are going to need to be made to capitalism in order to bring back a thriving middle class and the importance of the thriving middle class and you've defined the things you know again staying to the theme of principles here of uh the three things that we need to do to be strong as a country or for any country to be strong uh and you said two parents in the home uh great public education and then equal opportunity where where do you see us on those are we moving in the right direction moving in the wrong direction well again uh you know maybe I aspired too much to two parents in the home um it's certainly better if you have two loving parents raising a family that's that's good but maybe that's too much to ask for um but in other words good Parental Guidance you know okay you're raised well you're educated well you can go to a public school that educates you well and you have good guidance so you're well raised in a healthy environment and not only do you learn um you know skills and and all that but you learn how to behave well to with each other so you learn civility and um and um so you come out capable and civil um to a land of opportunity in which you can you know work and and and have a good environment um and really that's all you need if a society does that right um and I think you know where we you know the things that are going on you know um education in a lot of public education is um a is deteriorating it's a real problem um my wife works to help um the poorest school districts the poorest people uh in the state of Connecticut um and uh the state of Connecticut as usually it's always one two or three in terms of the highest per capita income and in the state of Connecticut as of last survey 22 percent of the high school students have either dropped out of high school whoa or or have uh absentee rates which are greater than 25 in our failing classes So at their living in pob with they're living in areas that don't have the things I'm talking about about parents nutrition and so on um and there's not adequate resources for them for example during covid um we um we found that 60 000 students didn't have uh computers or connectivities to take classes and the government wasn't going to provide it so philanthropically we we bought 60 000 computers and give the kids and one but we can't you know we can't do that you know so our society is um when you look at this um you see um drugs drug problems um you see how the cities are changing um you know the cleanliness of the Cities the education levels of the Cities mental illness um crimes and so on um you're not seeing you know you're seeing people fighting with each other a lot um not all the time there are wonderful places in the United States you know education some of the best universities their pockets some of them that you know their neighborhoods but there is this encroaching so you see infrastructure breaking down um school shootings I mean I don't you know like okay so you decide how we do it to hear more about Ray dalio's warning on the upcoming recession which we're almost certainly already in watch the full episode here talk to me about the three forces that you see that are influencing this moment we've got Banks collapsing US dollars under attack uh looming recession what

Channel: Tom Bilyeu

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Id: 4LOdU151RJE

Length: 17min 37sec (1057 seconds)

Published: Sat Jun 17 2023