The global economic system is moving towards a "paradigm shift" while the distance between the rich and the poor is worsening, warns US billionaire Ray Dalio.
The founder of the hedge fund company Bridgewater Associates has criticized in a blog the current situation, in which he maintains that the money is free for solvents because the investors who lend it "want to receive back less than they give" .
Invest and not spend
Dalio thus referred to low or negative interest rates in various parts of the world, where investors concentrate huge funds from central banks that seek in vain to boost economic activity and fight inflation.
The reason why regulators are not successful is that investors who receive funds "rather want to invest and not spend," explains the expert.
"As a result of this dynamic, the prices of financial assets have grown and the expected gains have fallen while economic growth and inflation slow down," Dalio writes.
By having abundant funds, venture capital investors sometimes impose start-up investments on businesses that they don't need because they already have more than necessary.
"Investors threaten to harm these companies through enormous support to their rivals if they do not accept the money," says the financier.
At the same time, this expert argues that there are government deficits and it is very likely that they will increase substantially, something that will lead governments to sell more amounts of debt that “cannot be absorbed without boosting interest rates at a time when a rise in they would be devastating for markets and economies »because there is a lot of debt in the system.
The funds destined to buy the bonds and finance the deficits, most likely, will come from the central banks, which will buy the debt with printed money without backing.
"This dynamic that throws through the window financial prudence will continue and, probably, will accelerate particularly in countries that have reserve currencies to support their currencies," says Dalio.
Ray Dalio predicts a lack of funds to meet obligations in the pension and public health system that will result in social cuts, a tax increase and more money printing, which would aggravate the conflict between poor and rich.
"More and more wealthy capitalists will move to places where the social gap and conflicts are less severe and government officials will work harder to stop those large tributaries," he predicts.
Faced with these problems, the billionaire concludes that "the system that sought to make capitalism work well for most people has failed."