Terrifying Global Consequences of the US Banking Industry Crisis, According to Ray Dalio
In a recent interview with Chris Williamson on YouTube, billionaire Ray Dalio expressed concern that the US banking industry crisis has caused other countries to stop purchasing government debt.
Dalio believes the Federal Reserve is responsible for a much larger problem, of which the Silicon Valley Bank collapse is just a symptom.
Over the past year, interest rates have risen to historic levels, causing the bonds that were sold to banks, companies, and other nations a few years ago to be devalued. As a result, bond prices have decreased significantly, and the prices of newer bonds with higher yields have increased.
The Federal Reserve’s tight monetary policies have created a catastrophic environment for the US, causing other countries and buyers to shy away from US bonds just when the government needs more money to fund its national deficit.
According to Dalio, this phenomenon is happening globally, affecting banks, insurance companies, and other institutions.
He cites the same thing happening in Europe and with Japanese companies that bought US dollar bonds.
While marking the bonds to market would result in a calamity, Dalio believes buyers are no longer interested in purchasing them, creating a lesser demand for the debt that the government must sell to pay for the deficit.