“I think you have to relate the markets to the geopolitics, the politics.” That opening line from Ray Dalio’s interview on Bloomberg Television, frames the investing environment as a sequence of linked forces rather than isolated cycles.
Dalio traces how asset behavior cannot be separated from policy and conflict. “We have a bubble in 2000. And then 2001, you have the international geopolitical problem in terms of 9-11 and then the war on terrorism.”
The market response followed fiscal reality. “So we spend about $8 trillion in our wars on terrorism and we run big budget deficits.” Those deficits did not remain abstract. “And then we come into the period where we get down in 2008. We have the great global financial crisis.”
That crisis altered financial mechanics in lasting ways. “And in 2008, very important, that was the first time interest rates hit zero since 1933.”
Dalio explains the shift clearly: “So what happened for the first time since 1933 is we did quantitative easing. We printed money and we bought bonds.”
From that point forward, investors had to adapt. “We start to learn that large budget deficits can be monetized.”
The consequences extended beyond rates. “And from that, then we drive it down to negative interest rates.” Capital responded predictably.
“And now what that does is it causes the leveraging up of assets.” Dalio lists the areas most affected: “Private equity, the emergence of private markets, venture capital, private equity, all being leveraged up.”
As conditions changed, pressure followed. “At that point, we begin to have the tightening.” That transition has exposed structural weakness.
“We’re beginning to feel that effect, the deterioration of the venture capital market and the private equity market, and the fragility associated with that.”
Dalio, ultimately argues for discipline rooted in cause and effect. The sequence matters. When policy, leverage, and behavior move together, markets respond accordingly.
You can watch the entire interview here:
For all the latest news and podcasts, join our free newsletter here.
Don’t forget to check out our FREE Large Cap 1000 – Stock Screener, here at The Acquirer’s Multiple:
