(Bloomberg) -- Ray Dalio thinks there are better assets to hold than cash as central banks print money and keep interest rates low in response to the coronavirus pandemic.
“Please remember that while it doesn’t move around in value as much as other assets, there is a costly negative return to it,” the billionaire investor said during a Reddit Ask Me Anything event on Tuesday. “So I still think that cash is trash relative to other alternatives, particularly those that will retain their value or increase their value during reflationary periods (e.g., some gold and some stocks).”
Even with the printing presses rolling, Dalio said there’s currently a “short squeeze” on the U.S. dollar as most people around the world still use it for savings and transactions -- at least for now.
“Having the world’s printing press to produce the world’s currency is the equivalent of having the world’s most important asset, especially in times when so many people need the world’s money,” he wrote before noting that what people ultimately value is health, education and being able to take care of family. “I think a lot about what money is worth and believe that it has no intrinsic value.”
When asked about the response to the global crisis, the billionaire founder of Bridgewater Associates said he’s been surprised and inspired by healthcare workers, teachers and small merchants.
“I am most impressed by folks who are on the front lines and in often cases suffering financially but are unwaveringly doing the right things to help others,” he said.
Other Key Quotes:
- “We are now in an era of the most massive MP3/helicopter money monetary stimulation since WWII.”
- “I believe that increasingly there will be questions by bondholders who are receiving negative real and nominal interest rates while there is a lot of printing of money about whether the debt assets they are holding are good storeholds of wealth.”
- “I think that pursuing peace and savoring life, rather than fighting over wealth and power, is much wiser.”
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