“If the quantity of money and credit, which is buying power, increases faster than the quantity of goods and services and financial assets, that the prices of goods, services and financial assets will rise, [and] the value of money will go down."
Um, okay, so what does that mean if you're not an economist? Once the value of putting money into even very safe instruments like bonds starts to decline, he says, return on investment could become negative, so you lose money.
What's more, if you already expect long-term high inflation, Dalio anticipates a supply-demand imbalance that'll hurt the US dollar's status as the global reserve currency. Also, it's not just an American problem: the euro and the Japanese yen are in similar danger.
And who benefits from a weak dollar? China's yuan, which Dalio says will become "digital gold."
Watch his interview with Ian Bremmer on the upcoming episode of GZERO World.
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