Ray Dalio reveals how real wealth seems to be growing through inflation

Nov 13, 2021 | BUSINESS

Billionaire investor Ray Dalio has raised red flags as US inflation hit a 31-year high and the cost of living in the world’s biggest economy saw a 6.2% year-on-year increase.

The founder of Bridgewater Associates, the world’s largest hedge-fund firm, warned that rising portfolio values have nothing in common with increasing wealth.

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“Some people make the mistake of thinking that they are getting richer because they are seeing their assets go up in price without seeing how their buying power is being eroded,” Dalio wrote in a post on LinkedIn earlier this week. 

“The ones most hurt are those who have their money in cash,” the financial expert added.According to Dalio, a long-standing opponent of money-printing, it’s somewhat more important to find something to buy with money in periods of rising prices to protect funds from depreciation.

“When a lot of money and credit are created, they go down in value, so having more money won’t necessarily give one more wealth or buying power,” he wrote, adding that real wealth becomes a function of production capacity over time. 

Dalio warned that the US is currently spending rather more than it is earning, and is trying to cope with inflation by printing money that is being inevitably devalued.

“There isn’t an individual, organization, country, or empire that hasn’t failed when it lost its buying power,” the investor wrote. 

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