Ray Dalio on How to Make Money in Any Economy

Nicole Lapin (0:00)

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Run your business your way with Square. Get started today. Headlines and financial news are pretty much always going to be scary, but there's money to be made in any economy. And that's what I took away from my conversation with legendary investor Ray Dalio. Ray Dalio started investing when he was just 12 years old, built Bridgewater into one of the biggest hedge funds on the planet, and made more money for his clients than any other hedge fund manager alive. I had Ray on Money Rehab last year, and honestly, I do not get starstruck very often these days, but I totally was with Ray. I cannot even play it cool. He is one of the greatest living investors, and he is so in demand that not a lot of people get to ask him for his advice, but he made time for us Money Rehabers. Ray has an all-weather portfolio designed to withstand any economic condition. I'm gonna break that whole thing down at the end of the episode. But before I unpack it, it's really important to understand how he sees the markets. And I know it sounds kind of woo-woo and unnecessary, but I'll show you what I mean. Dalio's whole worldview starts with one simple idea. Money is debt, and debt is money. I know it takes a second to wrap your head around it, but once it clicks, it really clicks. Almost all the spending power in the economy comes from somebody borrowing, in other words, credit. And every dollar of credit creates a dollar of debt that somebody else eventually has to pay, right? It's a marketplace. When the borrowing keeps piling up faster than the income to service it, it starts hardening like plaque in an artery, and it starts squeezing out everything else. Ray's diagnosis for the US, we have got a lot of plaque, and we're at the risk of an economic heart attack. It's dramatic, but honestly, fair. And why can't the government just handle it? Ray has an answer for that too. A government's debt works exactly like our credit cards, but governments have some levers that we do not. Like governments can print money, and that's cool, but printing money doesn't exactly create wealth. It actually just waters down every single dollar that's already out there, which shows up in our lives like inflation. A government can also tax its people to cover its bills. So when a country is drowning in debt, those are the levers, it can tax or it can print.