In recent weeks, analysts and economists have focused on the conflict between Donald Trump and Federal Reserve Chair Jay Powell. Ray Dalio, a successful investor and founder of Bridgewater Associates, analyzes the root causes of this struggle, emphasizing that it relates to the value of money rather than specific policy details.
Trump Wants to Devalue Money
Ray Dalio argues that the current confrontation between Trump and Powell centers on the issue of currency devaluation. He points out that lowering real interest rates and inflation help debtors but hurt creditors. Trump is pushing for lower rates and dollar devaluation, while Powell resists this trend.
Economic Indicators and Risks
Dalio notes that economic indicators do not signal an acute crisis, but they remain unstable. The unemployment rate stands at 4.1%, but there is a slow upward trend. Meanwhile, the tech sector, particularly in AI, shows positive trends, creating a split between strong and weak areas of the economy.
Future of Money's Value
According to Dalio, defending the value of money is linked to risks, including debt and geopolitical issues. He predicts that efforts to defend the value of money are unlikely until inflation intensifies. Dalio also notes that historically, achieving real monetary tightening requires time and deep economic problems.
The conflict between Trump and Powell highlights the complex relationship between politics and economics. Despite the current lack of acute crisis, economic and political factors may create challenges in the future, making the situation extremely fragile.
