The founder of an internationally renowned hedge fund suddenly issued a public warning that something was going to be wrong in the United States, and the possibility of a civil war had increased to between 35% and 40%, what signal did this early warning send to the outside world?
Recently, Dalio, the founder of Bridgewater Fund, an internationally renowned investment institution and the world's largest hedge fund, said to the public that I am worried about U.S. Treasury bonds because debt levels are high, and high interest rates are exacerbating U.S. debt levels. And as the U.S. ramps up sanctions on some countries, international buyers who are worried about the U.S. debt situation and possible sanctions will reduce demand for U.S. Treasuries.
Against the backdrop of rising debt levels in the United States, the probability of a "civil war" in the United States is increasing, and this probability will be between 35% and 40%. Therefore, he suggested that investors should seek to move some of their funds abroad, such as India, Singapore, Indonesia, Malaysia, Vietnam, etc., while gold is also a good investment vehicle.
How do you feel when you see this warning issued by Bridgewater Fund?
I think Mr. Dalio has a very point. Why?
First, the debt-driven economic growth model of the United States is set to fail. As we all know, the United States relies on the dollar as the international reserve currency, and the carrot and stick approach has pioneered a debt-driven economic growth model. In short, the United States continues to send dollars to the outside world through the international trade deficit, and on the other hand, it coerces and induces countries around the world to buy US Treasury bonds in the form of carrots and sticks to make the dollar flow back.
The United States will never run out of money, and countries around the world are working hard for it and supplying it with blood. Therefore, if the United States shakes, the whole world will be shaken. As long as this pattern is not broken, the cycle will be repeated, and the United States will be able to stand at the head of the bridge forever. Therefore, this is why the United States keeps asking China to buy US bonds again and again.
At present, the scale of the debt of the United States has reached a new high, which has exceeded 34 trillion yuan, and now the daily interest alone is as high as 2 million US dollars. One can imagine the current debt pressure in the United States, how big the debt burden is. However, the economic growth data of the United States in the first quarter of this year, and the recent non-farm payrolls data are seriously worse than expected, which means that the Fed's continued policy of high interest rates and high interest rates has begun to eat away at the United States.
At the same time, the rise of China and other countries, and the strengthening of the internationalization of currencies such as the renminbi are all impacting the hegemony of the United States and the dollar. Moreover, China has begun to reduce its holdings of U.S. Treasury bonds for many months, and now China holds only more than 700 billion U.S. Treasury bonds, a level that has fallen to a new low since 2009. Against this backdrop, the U.S. debt-driven economic growth model will be unsustainable. This is one of them.
Second, the division of American society is becoming more and more extreme. Affected by the recent Palestinian-Israeli conflict, and especially Israel's recent practices that violate international morality, many universities in the United States have erupted in support of Palestine, calling for a ceasefire and ending the fighting, and strongly accusing the United States of stopping its support for Israel's huge demonstrations, and even many physical clashes have broken out. This gives us a glimpse of the deep division of American society. As the phenomenon of the differentiation of social values in the United States becomes more and more obvious, it cannot be ruled out that the possibility of further riots will be further increased in the future.
So it makes sense for Bridgewater's Dalio to be so public