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How America’s capitalist system is ‘broken,’ according to billionaire financier Ray Dalio

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“The world has gone mad and the system is broken.”

So says Ray Dalio, the billionaire financier and founder of Bridgewater Associates, the largest hedge fund in the world with $160 billion in assets.

There are several problems, including an overzealous lending market, a growing mountain of government debt and a widening divide between the rich and poor that’s becoming more tense, he says.

“This set of circumstances is unsustainable and certainly can no longer be pushed as it has been pushed since 2008. That is why I believe that the world is approaching a big paradigm shift,” Dalio wrote in a LinkedIn post published Tuesday.

Dalio, 70 and worth almost $19 billion, does not elucidate what that paradigm shift will be in his post, but he has been outspoken in his criticism of the very capitalist system that made him successful. In an interview with CBS’ “60 Minutes” in July, Dalio said the U.S. economy must change or there will be a “conflict” between the rich and the poor. And in January, he said “capitalism basically is not working for the majority of people.”

In his recent LinkedIn post, Dalio zeroed in on the way money is flowing through the economy.

First, says Dalio, we are in a situation known as “pushing on a string.” That is a scenario where central banks (like the Federal Reserve in the United States) are struggling to get their monetary policies to actually stimulate increased spending, according to Dalio’s book, “Principles for Navigating Big Debt Crises,” which he references in the LinkedIn post. That in turn leads to “low growth and low returns on assets,” he says in the book and echoes in the post. ”[T]he prices of financial assets have gone way up and the future expected returns have gone way down, while economic growth and inflation remain sluggish,” Dalio writes on LinkedIn. “Those big price rises and the resulting low expected returns are not just true for bonds; they are equally true for equities, private equity, and venture capital….”

In the venture capital and start-up space, this means “more companies than at any time since the dot-com bubble don’t have to make profits or even have clear paths to making profits to sell their stock because they can instead sell their dreams to those investors who are flush with money and borrowing power,” Dalio says.

At the same time, the U.S. government is out of money — and still spending, as deficits continue to grow. Governments need to fund obligations like pensions and healthcare, Dalio points out.

“Since there isn’t enough money … there will likely be an ugly battle to determine how much of the gap will be bridged by 1) cutting benefits, 2) raising taxes, and 3) printing money…” Dalio writes.

“They are promises that have to be paid — they will either be paid by higher taxes or they’ll be not paid and defaulted on,” Dalio told CNBC at the Greenwich Economic Forum on Tuesday. “I don’t think they will be defaulted on. I think by and large, they’re going to be paid, but if they raise taxes too much, then it changes the nature of that economics.”

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Saoirse McHugh: We need to talk about capitalism

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N HER FORTNIGHTLY column for TheJournal.ie, Saoirse McHugh of the Green Party writes about what we can do as individuals in the face of climate chaos.   

A most ludicrous situation is taking place in which we are disrupting weather systems we have relied on for centuries, poisoning drinking water, destroying habitats that provide food and fuel and pushing ourselves outside of the relatively stable climate we have enjoyed for the past few thousand years.

Despite all of this, most of our media and the great majority of our politicians refuse to talk about the reason why I believe this is happening. What is driving us to continue down such a grim and unpredictable path? The answer is capitalism.

Extracting profit from resources (often privately owned) and labour only to reinvest in further extraction has wreaked havoc on our world. The accumulation of profit as a shaping force in society leaves so much unaccounted for and undervalued.

In general, there is no cost given to implications such as resource use, pollution, and (much and all as I don’t like the term) ecosystem services such as air and water cleaning, pollination and nitrogen cycling.

When these are factored into cost it can have an alleviating impact, but of course the natural world does not trade in dollars and no amount of money can ever compensate for species extinction, coral reefs dying or the damage caused by oil spills like the BP Deepwater Horizon oil spill in 2010.

The need for growth and the relentless expansion into and enclosing of new commons, such as carbon use and genetic information, means that capitalism is entirely incompatible with a finite planet and a just world.

Despite all this it is rare to hear our economic system discussed openly in Ireland outside of a few groups or lone politicians. It has developed the impression of being outside of our control, almost like some God imposed this system upon us.

When the conversation comes up politically, our elected representatives shy away from it and speak in vague terms about prosperity and growth. They do not delve into the idea that not only do we have the power to begin changing our economic system, but we have a moral and environmental imperative to do so.

‘But look at North Korea and Cuba’ 

I am not fully sure why there is such hesitancy to speak about capitalism. Is it because decades of American television have well and truly damaged the ability to talk about it without somebody bringing up the Soviet Union and communism?

I myself have had so many conversations where capitalism comes up and is met with: “But look at North Korea and Cuba, look at how many people died in Soviet Russia.” No doubt atrocities occurred in countries which were under a different economic system.

However, that argument ignores and minimises the atrocities that have been carried out in capitalist countries. The suffering and destruction capitalism has caused and is continuing to cause in the world is immeasurable.

It is a system with its origins in colonialism and to this very day there is a massive extraction of wealth from previously colonised countries. The social, physical, and economic violence used to keep these relationships in place is beyond comprehension and much of it has become accepted as normal.

It is ridiculous to talk about environmentalism without talking about capitalism, yet many people do so. Not only is it a part of our lives but it is the system within which we all operate.

It is all that most of us have ever known and for that reason people tend to avoid the conversation, perhaps for fear of looking radical or outside of the world of common sense.

The promises of green growth or sustainable capitalism are tempting, yet I fear that every year spent chasing these will-o-the-wisps is a year lost while continuing to worsen our predicament.

There will be no climate justice until we move to a different economic system. We need to halt the extraction of wealth from previously colonized countries and, more than that, repay and compensate these countries as fully as possible.

Obviously, it is not just capitalism that damages the environment. There are discussions of petroleum-based socialism and of communism focused on growth, which are extremely damaging too but we have arrived at a time where capitalism is the dominant economic model.

There is no point in skirting around the issue, we need to transform our economies and recognise that any politician who is not engaging in the conversation about our economic model and ways to change it is wasting everyone’s time. 

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Letter: Socialism may not be the cure but capitalism is the illness

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Socialism may not be the cure but capitalism is the illness. All Hanson offers is more of the same prescriptions that brought us to climate change, inequality, huge government, corporate and private debts, erosion of our infrastructure, a health care crisis, international turmoil, etc.

How about some ownership and something new? If we redefine the goal as sustainability instead of growth, universal equity in services and opportunity, building community instead of dominance, and building a world for the seventh generation in the future, then we must acknowledge that capitalism as we have known it is broken.

Rather than try to pigeonhole the opposition with a derogatory label, let’s find a way to utilize human character to fulfill the promise of a better world for all living creatures both now and in the future.

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Let’s restore our values, do away with capitalism

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One of the worst things that colonialism, apartheid and capitalism did to our people was to destroy the black family structures, the writer says.

In this past decade, we witnessed a degeneration of politics across the spectrum, with social media, notwithstanding its use, becoming the worst platform for corrosive politics.

We also witnessed moral degeneration and character assassination as influenced by capitalism.

The moral degeneration in SA is very high and that directly reflects the politics of our country.

This open letter is an invitation for us, more especially ANC and Alliance partners, to think critically about who we are as a society and perhaps champion ways in which we can restore some of the values that we have lost.

No more buyers for the escapism Top Billing is selling

Of all the feasts and feats of Top Billing in the past 23 years, there are perhaps not enough Gucci slides that can quite help it dodge its flip and …Opinion1 month ago

One of the worst things that colonialism, apartheid and capitalism did to our people was to destroy the black family structures. And one of our loopholes as the ANC from 1994 onwards was not to restore our values of ubuntu and revive the black family unit.

Twenty-five years into democracy, it is in our hands as ANC to dissociate ourselves with capitalism because capitalism is an evil that causes the corruption we are seeing now.

It is capitalist ideas that are behind killings of our comrades.

Capitalism is an inherently evil system that thrives on hate, jealousy and inhumanity.

Viwe Sidali, Duncan Village, East London

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