Ray Dalio: “This is not a recession; this is a breakdown.”

I’m not sure I am capable of Dalio’s level of pessimism, but the man with $160 billion of assets under management thinks we are in a 1930s-style event and that “cash is trash.” I have a sense that money is pouring back into the financial markets, not because of optimism, but because he’s right about cash as a store of value going forward and everyone knows it.

I would at the very least look at the Federal Reserve’s alphabet soup of support programs – financing the federal deficit, backstopping Wall Street, backstopping moderately large corporations, backstopping state and local governments – which all amount to replacing half of the United States’ GDP with monopoly money, and agree that people are pretty fucking delusional if they think a financial restructuring of this scale is going to be “over” by the end of the year. This kind of extreme stuff is characteristic of the Great Depression approach to economics. You aren’t totally insane if you are worried about extreme outcomes. You also aren’t totally insane if you worry that these SPV-type facilities have now been used twice in the span of 12 years, because that’s how often our political class is manufacturing spectacular crises now.

Dalio’s remarks:

  • We’re not going to go back the way it was,” said Bridgewater Associates founder Ray Dalio in the virtual TED talk. “We’re going to restructure our economy and restructure our financial system” over the next couple of years in order to recover…
  • Dalio’s biggest worry is that restructuring will not be done in a civil bipartisan way to “both increase the size of the pie and divide it well,” warning of partisan politics preventing effective solutions, “damaging”—rather than repairing—the economy…
  • Dalio flagged the opportunity for entrepreneurship as the catalyst for recovery: “The greatest force through time is human inventiveness. The greatest force of that is reinventiveness.”

I mean, yeah. The politics of a financial restructuring of this scale should unnerve anyone and everyone. We are looking at a situation where the Federal Reserve and Trump’s Treasury Department have effectively (and illegally, I might add) merged to print and distribute money to whomever they deem fit. You might think that’s brilliant if you are a MAGA-at-all-costs fanboy, but would you still feel the same if Democrats were in power? You want to see the Federal Reserve (under new-and-improved leadership) print $90 trillion to finance the Green New Deal? You were okay with them printing many, many trillions so you could hide from pneumonia, so why not? Anything goes now, right? You think Democrats can’t build up enough fake hysteria over climate change to match your fake hysteria over pneumonia? I, for one, think they can. And it will be your playbook they eventually do it with. All kinds of batshit stuff can happen going forward when everyone agrees it was a good idea to meld monetary and fiscal policy into one giant economic clusterfuck.

Right now, a large number of conservatives are stupid-drunk on the idea that President Trump will be in power forever. They don’t care about the New Financial Establishment they are constructing and how it might be abused.

And that’s before you get to other sources of insanity, like Jared Kushner’s health care Patriot Act, where the state builds a massive surveillance system to manage health care risks across the population. A rational person might start to question how in-line Jared and Ivanka’s views on health care (or anything) are with the Republican mindset. You know, the mindset that hates the real Patriot Act and maybe doesn’t want to see it bleed over into every dimension of American life.

I have never thought Trump was the monster the left constantly caricatures him as, and I still don’t. But he is surrounded by very real monsters who have laid waste to the institutions of this country virtually overnight. I would submit to you that if you are okay with all this, that’s fine, but maybe stop calling yourself a conservative. Because approximately 0% of what has happened in the last few weeks applies to conservative ideology. Not in finance and economics, not with respect to constitutional rights, not with respect to the power of the federal government, not anything.

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