Large-scale fiscal stimulus in the United States increases inflationary risks and could lead to a serious devaluation of the dollar, billionaire and founder of the investment company Bridgewater Associates ($ 148 billion under management – ProFinance.ru) Ray Dalio said, speaking on Tuesday at an event organized by the Wall Street Journal.
Biden’s $ 1.9 trillion stimulus package and the $ 2 trillion American Jobs Plan investment program risk forming a bubble, flooding the economy with money, the expert fears. In his opinion, it is necessary to increase labor productivity to prevent this from happening.
In addition, the investor believes that the US stock market has already reached a bubble, but this time it was formed not due to an increase in the debt burden, but due to the devaluation of the dollar.
“There are two types of bubbles,” the investor explained. “There is a debt bubble when it’s time to pay your debts and you have nothing to pay with. Then the bubble bursts. Another type of bubble occurs when there is a surplus of money, in which the Fed does not tighten monetary policy properly. In this case, you are losing money because of the decline in the value of money, and I think we are closer to the second type of bubble. “
In October 2020, Ray Dalio advised investors to move from cash and bonds to stocks and gold. Since S&P 500 index grew by about 20%.