Ray Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund, and author of bestsellers *Principles*, *Big Debt Crises*, and *The Changing World Order*, recently stated at the Abu Dhabi Finance Week (ADFW) that we are approaching a debt and currency crisis. He warned investors to steer clear of debt assets and instead hold hard currencies like gold and Bitcoin.
### Debt Levels in Major Countries at Unprecedented Heights
According to reports, Ray Dalio mentioned in his speech at the Abu Dhabi Finance Week in the United Arab Emirates:
“I believe we may be approaching a debt and currency problem. I would recommend staying away from debt assets, such as bonds and other liabilities, and instead hold some hard currencies like gold and Bitcoin.”
Hard currencies are defined as assets linked to physical commodities, such as gold and silver, or assets with a stable issuance like Bitcoin. In contrast, currencies like the US dollar are subject to government policy controls. Recently, both gold and Bitcoin have reached historic highs. Gold prices were driven up primarily by demand for safe-haven assets amid geopolitical events, while Bitcoin’s rise may have been influenced by the regulatory openness under the Trump administration, with even some considering Bitcoin for inclusion in asset reserves.
(Syria regime collapses! President Assad flees, testing Russia’s influence in the Middle East)
Dalio’s *Big Debt Crises* is a well-known work reflecting on the events of the 2008 financial crisis, a decade after the collapse. Dalio and Bridgewater Associates successfully navigated the financial crisis using their unique economic model, making the firm’s name synonymous with success during that period.
“In the coming years, these countries will inevitably face a debt crisis, leading to a significant devaluation of their currencies,” Dalio said. He added that the debt levels of the US, China, and all major countries, except Germany, have reached “unprecedented heights,” a scale that is unsustainable.
Dalio advocates for reducing debt exposure, although another renowned investor, Howard Marks of Oaktree Capital, is one of the largest distressed debt investors. We previously reported on Howard Marks’ perspectives on debt positions.
**Analyzing Howard Marks’ Latest Memo on Asset Allocation (Part 1)**
**Analyzing Howard Marks’ Latest Memo on Asset Allocation (Part 2)**
### Debt, Currency, and the Economy as Key Drivers of the World
Dalio posits that the five major forces driving the world are: “Debt, currency, and the economy”, domestic order, power conflicts, natural forces, and technology. On how to approach things, he advised: “Do not get too caught up in the daily minutiae of the news, but rather focus more on the large driving forces.” He emphasized the need to adopt strategic and tactical thinking, taking a global perspective and recognizing that what you know about the future is far less than what you do not know.
The report also noted that last year, Dalio opened a branch of his family office in Abu Dhabi, capitalizing on the Middle Eastern market. He praised the Gulf Cooperation Council (GCC), which consists of six member states: Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain, and Oman.
(Bridgewater’s Ray Dalio steps down, no longer views cash as trash, recounts Bitcoin’s transformation)
### Risk Disclaimer
Cryptocurrency investments are highly risky, and their prices can be highly volatile. You may lose your entire principal. Please carefully assess the risks involved.