Dalio Sees General Diversification Away From the US

• Dalio differentiates a 'capital war' from a 'trade war', suggesting the former is not yet fully recognized but has significant implications.
• Central banks are increasingly buying gold and replacing bonds, indicating a diversification away from fiat currencies and US assets.
• He draws historical parallels to monetary system breakdowns in 1971 (end of Bretton Woods) and 2008 (quantitative easing), seeing a similar pattern now with large deficits and monetization.
• Dalio expresses concern about the debt dynamic, where debt service payments rise relative to income, squeezing out spending and potentially leading to devaluations.

Ray Dalio discusses the concept of a 'capital war' as distinct from a 'trade war', highlighting a significant and underappreciated shift in global capital. He notes central banks are diversifying away from fiat currencies like the US dollar and euro by acquiring gold, signaling a weakening of the current monetary system due to excessive debt monetization and potential devaluations.