Ray Dalio: rising prices threaten investor income He warned that the rise in the value of their portfolio may not bring them income due to inflation and high prices, according to Bloomberg.
According to Ray Dalio, rising inflation in the United States, which peaked since 1990, is a threat to income. “Some people make the mistake of thinking that they are getting richer because they see their assets rise in value. But they don't see how their purchasing power is declining, ”Dalio said. He noted that those who hold cash are most affected.
The billionaire also noted that at the moment the United States spends much more than it earns. Therefore, they try to cover their expenses by printing money that is depreciated. The founder of the hedge fund called this path false for the country. But he pointed out that real income (money left after obligatory payments, adjusted for inflation) is a production capacity for the state economy. “Printing money and giving it away won't make us richer if the money isn't channeled into increasing productivity. When a lot of money and loans are issued, they fall in value, so having more money may not guarantee an increase in income and purchasing power, ”Dalio explained.
The rise in prices in the United States has already broken a record and is the highest since 1990 of the year. Consumer prices in the country in annual terms in October increased sharply – up to 6.2 percent from 5.4 percent a month earlier, and the consumer price index rose by 0.9 percent compared to September, which was the largest jump in four months. Moreover, both indicators were higher than analysts' forecasts, who had expected annual inflation at 5.8 percent and 0.6 percent in October. This has been driven by high prices for energy, housing, food and vehicles. At the same time, small business in the United States also showed pessimism. Confidence in the future of American companies has reached a minimum. The entrepreneurs explained that it was the growing costs of production and labor costs, due to which they lose profits.