Dalio: "There Are No More Tools In The Tool Kit" - Complete Charlie Rose Transcript With The Head Of The World's Biggest Hedge Fund

Tyler Durden's picture

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CapitalistRock's picture

And that is exactly why you better save with gold instead of fiat paper.

paarsons's picture

I'm not too sure about your reasoning.

These psychopaths can keep the ball in the air for a long long time.

In the end, however, I still expect deflation to win out.

But what the fuck do I know?


CapitalistRock's picture

You are correct only if the expansion of the money supply is limited with something like gold. But it's. It. We have a fiat currency that is beng used to monetize the debt every day. That's what you are doing by keeping interest rates artificially low, paying banks interest on excess reserves with printed money, and buying bonds to expand the fed's balance sheet.

Measured in gold we are in a pretty wicked deflation. If you meant deflation of the economy and not the currency, then you are correct. Measured in dollars we will experience inflation in the years ahead.

Harlequin001's picture

The problem with the system is that the system just doesn't work. We've reached this impasse now because of the currency pegging policies of Asia's central banks throughout late nineties and the earlier part of this decade.

When you have a currency peg you prevent a currency from falling thereby reducing the impact of inflation, which subsequently removes the need for increasing wages. If wages can't increase then you have a finite sum with which you can make repayments. Hit that and everyone stops borrowing regardless of stimulus.

Ain't no way now this 'dead horse' of an economy is getting up and walking. Bush, Snow and Greenspan saw to that...

narnia's picture

the balance of trade with countries with a currency peg are just a small part of a much bigger problem.  

the decades of promises built on terribly manipulated & flawed pricing of substantially less valueable assets are not capable of being deleveraged orderly.  it's hopeless.  eventually people will give up on ignoring reality, recognize the promises for what they are & the confidence game will be up.   

spontaneous order is part of our nature & biology.  we will survive this shock & be better because of it.

Harlequin001's picture

many of us won't, but I fear you have missed the point. Credit only workd whilst it is expanding. When it stops its unwinding is total unless you can spur it with more credit through lower rates. The currency pegs put a lid on rising wages which is the only way you can make ever increasing payments on ever more credit.

Now that borrowers are tapped out the unwind will be total.

spiral_eyes's picture

No more tools in the toolkit?

Tell that to Benny. He's nothing if not daring — and he will try every permutation of Keynesian market manipulation in the universe, starting with QEing the S&P and Russell and killing interest on excess reserves, continuing with dumping painted tungsten bars onto the open market to reduce y-o-y gold yields ("QE Gold") and concluding with heading the Global Reserve and introducing a new global currency.

Bitchez need to study more Keynesian economics, to get a handle on the true extent of the print-money-create-wealth bullshit parade.

bernorange's picture

Jim Rickards also warned over the weekend that he sees a very high risk of a dollar collapse.  Karl Denninger wrote recently a rant that included a little back of the envelope math giving the US roughly 6 years before full economic doom.

JW n FL's picture



Ray is scared shitless.. and with good reason.. We are Coming for him and you both, you bunch of fucking spineless, greedy cowards! Your day has come!!

Selling debt offshore so that you can pretend that really is owed somewhere else and that is why "We the People" must suffer?

FUCK THAT!! You scum have NO FUCKING PROBLEM Printing Money out of thin air for Yourselves!

SO! Start Printing out of thin air for "US"! "We the People" that provide the work product that secures your quality of life deserve.. We deserve to be treated well if for no other fact than we have treated YOU! well.

The Short Sighted Quarterly Bonus Craze!

America's Addiction to Sweet Light Crude! (when the majority left in the World is Heavy Sour and prohibitively expensive to drill for and refine! and damn sure isnt $50 a bbl)

The exodus of Manufacturing Jobs and thusly the Exodus of America's Tax Base (the tax base that really pays taxes, not the 30% tax base that has so many loop holes a blind man could easily only pay 5% instead of the 30% that is sung about by ALL!)

Change comes from within, change comes when the blanket of ignorance is lifted to reveal the factual nature of the Robbery that has been occurring over and over and FUCKING OVER AGAIN for the last 5 or 6 decades!

Dont forget to call your Lobby Group! because this change is coming.. and if not the Tea Party or Occupy Wall Street.. then some other new, better, non-co-opted group of regular people will educate enough of their fellow sheep! to ensure that the change does take root, that it does have the traction needed to run over the status quo!

ALL of You that would like nothing more than to enjoy the spoils of your participation in the Grande' Scheme of Corruption will be sadly disappointed in your inability to find a safe haven..

The Truth is Coming..

It only takes one small candle to break the darkness..

You had your time of Greed, You had your time of spreading Hunger and Hate.. You had your time to shine in the sun.... and you wasted it, on yourselves.



narnia's picture

it's just one of many factors.  other factors include the public sector growth putting a squeeze on the private sector, the regulatory/tax/compliance scheme, the $ reserve status, bubble subsidies, etc.

the credit underneath this currency bubble has expanded to match the direct & indirect taxation to finance this death star, which has no value.   

improvment in quality of life for people has just as much to do with the output they need & want costing less as a higher wage.  

WarriorClass's picture

Herman Cain was head of the Kansas City Federal Reserve. He is a bankster that was all for TARP and theft of Americans for his Bankster friends. He also denied there was a housing bubble and economic collapse until 2008, so on top of being a theiving bankster, he is an idiot as well.
See for yourself:


Cain is an idiot.

Yen Cross's picture

 The Emhpasis  is appreciated.  That long ass post was an " EULOGY" , Quit wasting my time!!

Oracle of Kypseli's picture

This long discussion about being able to bring all the planets in aligment, bring all politicians into a civil and honest debate, expect all the other parts of the equation to behave accordingly and avoid black swans for the next ten years, so that you can muddle through just like Japan, can be summarized with one word. "Impossible."

There will be pain.

Collapse is inevitable.

Yes! Government can keep the juggling balls in the air for long time, but the number of balls that must be juggled is increasing exponentially. The proverbial flight of that butterfly on the other side of the earth will eventually upset the balance.

Buy gold, silver, farms, food, water, seeds, guns and ammo. However, it's important to know that you do not wish for anything to happen just because you are prepared. Hope that you would never have to use them.

In the meanwhile, enjoy life as much as you can and teach your children to by self sufficient (his advice in the interview).


disabledvet's picture

I'm still trying to figure out if anything of any substance was said. Not that i don't want to be accused by someone in the hedge fund community...LET ALONE THE MEDIA...of "talking behind someone's back" (?)....anywho this says to me "we're retarded speculators too...but we happen to make tons of money at it." To me the "news" on this front was watching billionaires being forced into Chapter 7 liquidation as reported on in the Wall Street Journal. The key phrase that i took away is "financialization" and (what was left unsaid) how this relates to public finance. The fact of the matter is no government can make rational predictions of any future if the financial classes are one year worth a billion dollars and literally the next are flat broke and flipping burgers at McDonalds. Stay long energy, the war machine and patriotism. Everything else dies since "all debts are extinguished upon death." Unless of course you're a bank. Doesn't anyone else find this odd? The only debts that aren't extinguished upon death are the banks'? Happy trading!

Snidley Whipsnae's picture

disabledvet, et al... "I'm still trying to figure out if anything of any substance was said."

One of the first points that Dalio touched on was the aspect of the modern economy that causes machines to replace humans in the workplace...and, that in the 'new economy' that many people simply will not find jobs because their jobs are being performed by new machines.

Too little time was spent on this subject... mostly because Charlie Rose is a ego maniac that loves the sound of his own voice and continously talks over whoever he is interviewing... I read the transcript rather than subject myself to Rose's painful audio interview.

Too little time was given to 'machines vs humans' in the workplace for another good reason, as Dalio pointed out in so many words: This is a paradox! Capitalism requires competition, competition means whoever gets the best finished product out the door for the least amount of expenditure wins the game! Voila... machines do it for less on the assembly line. Example: An auto assembly plant that once required 5,000 - 10,000 laborers now requires 400 -800 workers. Think about what that means when multiplied across all manufacturing processes and, eventually, across the world. Eventually, China, India, etc, will face the same problem only they will have billions of excess laborers instead of millions, as in the West.

I have read considerable material concerning Dalio. He runs his firm exactly as he described and requires all his top people to do complete research of all their propositions prior to putting forward thoughts in company meetings. He also requires each employee to describe the limitis of the 'knowable' in their presentation. His meeting are candid and he advises all to leave their egos at the door. The thin skinned need not enter.

Like it or not, we are entering a new age where much less manufacturing labor will be required. Of course, the service industries will still require labor but, one day, even Mac a Doo will have machines preparing and assembling burgers.

I'm not a Marxist (hell, even Marx claimed he wasn't a Marxist) but Marx did point out that the machine vs human labor problem would arise. It's here and it's going to get worse for laborers.

So, what to do with billions of excess laborers? The worlds politicians/bankers can't even decide if some bank bonds need haircuts... How will they ever approach the decision about excess labor? More food stamps, unemployment compensation, etc?

pvzh's picture

How will they ever approach the decision about excess labor? More food stamps, unemployment compensation, etc?

That is easy. All that you described, plus couple it with sterilizations, legalization of drugs, wars, infections (persuade people that vaccines are bad for them "unnatural", poisonous, etc.), etc. The same old stuff "tried and true".

Alex Kintner's picture

I agree 100%. And Automation becomes a feedback system for ensured decline. People thrown out of work replaced by automation cannot buy goods. Thus, the need to produce fewer goods and a shrinking marketplace. Thus more job losses. Iterate the cycle until food riots begin. 

I know a guy who maintains Automation machinery that produces plastic bottles. He makes $10/hour and it's actually a fairly skilled job. Even those who maintain a job will have to live on a poverty wage.

pvzh's picture

"People thrown out of work replaced by automation cannot buy goods.", but machines needs other "goods". It is very painful economic readjustment similar to industrial and agricultural revolution. Decrease in labour demand make it cheaper, so it can be employed for some other uses later.

Machines in themselves are not a problem. Peak easy energy is the problem because it will come down to what is "easier" and "cheaper" to use labourer or machine. If no new energy source comes online reasonably quickly, labourers will "win". There would be plenty of work tiling fields, towing stuff to a nearest town, making chains and whips. Well, at least everybody (the ones who make it) will be "fed" and "employed".

jonan's picture

god help us the day that 100% employment is a requirement for the survival of the human race...

jonan's picture

aren't jobs created by the companies who create the machines which automate? or am i missing something here?

MachoMan's picture

Are we certain that this automation vs. human labor is necessarily true across all manufacturing and all time?  It seems to me that we could very well get in a situation where labor was cheaper than machinery maintenance...  whether this be from energy constraints, supply chain disruptions, etc.  Obviously this would take a different regulatory environment, but I forsee this type of regulatory environment in our near future (governments have to deleverage as well).

It's certainly played a key role in the last 30+ years (probably since the dawn of civilization, but there seems to have been some type of event horizon more recently in our past)...  there is no doubt that our present unemployment is at least in part structural and at least in part due to the efficiency of mechanization.  But is this a trend where we just take the ruler out and draw a straight line down?  No whipback?  No normalization?  No protest against mechanization?  Seems like the theory may work in an all else equal sort of world, but I'm not sure we're there...

CrazyCooter's picture

The rationale, of deflation vs inflation, is which serves the .01% of the population the most?

Deflation means debt destruction and debt is the very core of the wealthy, thus it can not be destroyed. Debt is synonymous with wealth, at least for the .01%.

Please debate your counter point.



fonestar's picture

That is until the .1% realize infinite debt-mass in singularity at the epicenter of their (red) hole, resulting in a quantum explosion giving rise to a new (logical) universe.

And then everyone just realizes that those crazy Austrians and goldbugs weren't so crazy after all.  Everyone lives happily ever after.



fonestar's picture

Yeah monetary deflation for sure!  I mean, if they don't stop the purchasing power of my dollars from rising pretty soon I'm gonna buy up everything in sight!



DormRoom's picture

there is no shelter.


He talks about deleveraging, and alluded to the Triffin Dilemma (China-US imbalances), but doesn't discuss flows. The US is in a Keynesian liquidity trap ("no more tools in the toolkit"). 


So the only safe places are assets/deposits in emerging-creditor nations.  But if everyone buys up those assets up all @ once (flow), and given their is only a finite number of assets, you'll have  massive currency inflows, which will stoke hyperinflation in those creditor nations. And those economies will blow up.


But if investors shift to commodities (primarily food/energy) as a safe haven, all at once, you'll get hyper-stagflation, as input cost inflation erode productivity, and producers are forced to reduce labour, when output drops, to maintain margins--if that.  Moreover structurally higher  food/energy cost will erode disposable income from labour, dragging demand.

If everyone moves away from the USD as the reserve currency (which they are/will), and looks for another store of value, the flows out of USD will break all economies.


The flows out USD will likely be faster than asset price discovery, as values are likely arbitrarily adjusted ,  so price will be very volatile, undermining confidence, until an anchor is agreed upon, by those socieites that haven't collapsed in the interim.


world governments are trying to manage panic-response, which will force agents to act all at once.  And it's this herd flight response, that they fear, especially out of USD, EURO, and YEN.


The new normal: hyperstagflation in developed-debtors nations. hyper-inflation in emergin-creditor nations.  The long run is here, for those who started the debt bubble in the 80s. 


Or a great depression will purge prices, and correct misallocation of capital that have been distorted by bubbles, and debt.



CrazyCooter's picture

Dalio is a douche bag. I am not sure debating anything he has to say will yield intellectual gains.

Just point and mock like the rest of us.



Harlequin001's picture

He's talking his book. Clearly he wants a solution that doesn't impact him or his fund.

Pay 3% more tax; who's he kidding? Try telling that to someone on food stamps.

Perhaps he would be good enough to tell us what happens to the wider economy if people spend 3% less and why this is a better option to default, which makes the bonds in his hedge fund near worthless...

History will record that none of these so called fund managers ever 'made' any money, that they simply sat on other people's assets whilst Greenspan et al simply devalued currency...

wang's picture

 two self-indulgent mofos -


CHARLIE ROSE: Failure teaches you more than success?

RAY DALIO: Of course. One of my favorite books is "Einstein`s Mistakes."

CHARLIE ROSE: Right. And because it showed you that even Einstein, the most brilliant person of the century in common judgment made mistakes?

RAY DALIO: The great fallacy of all -- I think of all of mankind practically -- I mean that`s a big statement -- but the great fallacy is that people know more than what they do and there`s a discovery process and so when you look at -- that`s the process for learning.

The process for learning is to say "I don`t know." Like, I`m -- I`m totally comfortable being incompetent. If I -- if I -- I like being incompetent. I don`t mind being an incompetent. If I don`t -- how -- how much can you be competent about?

And so that whole notion of do you like learning? Do you like finding out what`s true and building on it without an ego? And that becomes the problem. How many statements do you listen to people that begin "I think this, I think that," where they should be asking "I wonder."

ElvisDog's picture

Couldn't agree more. How is Dalio any different from Buffett? Another rich, liberal dickwad who has no connection with how the unwashed masses live. He's got his pile of money, and now he wants to sit on high and pontificate to the little people on how we should all just gather together in a room and work things out. His admiration for the U.S. Dept. of Education is a big tell on who he really is - another Soros-Buffett type wealthy statist that talks on one side of his mouth about giving more than half his money away while at the same time continuing to rake in billions of dollars from his financial engineering.

lewy14's picture

Cooter, I agree Ray comes across as a db - I've heard smart things from him; this interview was not one of them.

That said, I don't think DormRoom was debating him, but adding substance. Which I for one found informative. (Suspiciously, because it confirmed my own thinking. Damn confirmation bias.)

Charlie Rose was aiming to extract his libdem talking points from Dalio and succeeded by playing to his vanity. 

Snidley Whipsnae's picture

Charlie Rose is an azz hat and could make even Einstein look bad.

Read the transcript... Avoid all Rose audio/video interviews.

Dalio is an extremely intelligent fund manager and is doing the best he can IN THE ENVIRONMENT THAT HE WAS BORN INTO.

Dalio didn't create the Fed and central banks but he does realize how much they have distorted the world economy.

hack3434's picture

Hugo Salina Price has a  clever solution for that "cash flow imblance" (read stupid money bidding up everything to the stratosphere).


Oracle of Kypseli's picture

If the silver coin solution as described is adopted, is there enough silver there to satisfy both the industrial use and the money use? I doubt it. Especially if several nations adopt it.

pvzh's picture

is there enough silver there to satisfy both the industrial use and the money use?

It is not a question of amount of silver, but the price of silver. At $30 an ounce there is not enough silver for anything, but at $3000 an ounce. There will be plenty for coins and justified industrial use (no more silver for clothes and solar panels for Canadian houses etc.).

akak's picture

Excellent response.

When discussing a market commodity, it is never sufficient to talk about "enough" in isolation --- one must also consider "at what price?"

devo's picture

The tool left is hyper-inflation. Can anyone address this? My feeling is the Fed will take this out on the middle class and working poor.




Big Slick's picture

There's absolutely no track record to suggest that the Fed would do such a thing! 

cranky-old-geezer's picture



Since you didn't indicate sarcasm I'll assume you really believe that.

What is 98% loss of purchasing power since 1913, and 1/3 loss of purchasing power since '08?  Inflation or hyperinflation?

No track record of the Fed doing hyperinflation?  Do you dirve a car down the road looking in the rear-view mirror? 

Not happened doesn't mean in can't happen.



Yen Cross's picture

 Cranky old Geezer... Take it from me..  A lot of businees goes on down there!  


    She should be thankfull for you! 

cranky-old-geezer's picture



If I had a she like that avatar, I'd be doing a lot less commenting here, and a lot more "he'n & she'n" as they say :)

topcallingtroll's picture

You would eventually get bored with it.

Over the last six months or so I have collected a small harem with a little extra on the side. I thought for sure I had ended my posting days on zero hedge and said my good byes.

It wasnt a month before I was back.

I am so fucked out I have actually been dreading weekends. I am getting older and they all expect me to perform instantly like a young guy. Mid forties may look mid thirties with botox and chemical peel, but I aint a spring chicken. You wanna upset a lady? They think it to be an insult if you cant get hard, especially if she knows you performed adequately the night before and that afternoon. I have to carry around cialis now cuz i just cant go two or three times a day.

You will get tired of puusy if you are drowning in it. And if you are a true zerohead you will ultimately get your priorities back in order.

ZH first.
Sex later if you still have enough time.

Calmyourself's picture

Life's a bitch, someones gotta do it..

MsCreant's picture

He was just thinking about 1 (one). Not a harem. Your advice may not apply.

Big Slick's picture

Apologies Geezer - I forgot to indicate the sarcasm.  (Where is that button again??)  Thanks for keeping me on my toes.  PS - I like the icon

CapitalistRock's picture

A dollar today buys what 2.5 cents did in 1913 when the fed was created. Prior to the creation of the fed annual inflation averaged just 0.5%.

So yes, the fed is very good at robbing your savings. That is exactly why the banks created a central bank.

cranky-old-geezer's picture



The tool left is hyper-inflation. Can anyone address this?

There's just not enough supply of credit at 1% interest in normal markets to keep funding $1.5 trillon deficit spending each year, so printing currency to buy some portion of that new debt is a foregone conclusion. 

Printing currency and buying government debt puts that currency right into the circulated money supply, expanding it relative to GDP.  That's Econ 101 textbook inflation.

At what point does inflation become hyperinflation?  10% annual?  15% annual?  20% annual? 30% annual?

We're running about 10% right now give or take.  That's the "on balance sheet" part.

The "off balance sheet" part (TALF, LSAP, currency swaps, foreign bank bailouts, IMF contributions, etc) is printed currency too, but usually not included in domestic money supply numbers because it's not considered to be in domestic circulation, but it's still out there floating around to one degree or another, boosting real world inflation by roughly 30%, yieling 13% net annual inflation in this case.

Again, at what point does it become hyperinflation? 

Everybody has their own view on that.  Some say 10%, some say 20%, some say 30%, some higher, some in between, like 15%.

CrazyCooter's picture

This guy (Dalio) is a douche bag. There are far more interesting people to think about with far more insightful opinions. He offers nothing useful, insightful, or just plain interesting.

Not saying points made are invalid, just don't frame them in terms of this corn hole.

Ralph Foster, at the tail end of his book, defined "national notes that became worthless in each decade" as 75% loss of purchasing power over ten years. As I get older, I respect this and accept losing 75% of my life savings as a "set back". It is a pretty long and sobering list.

Hyper-inflation, while serious, is kind of a side issue ... your paper holds value or it doesnt. If it doesn't then you better be able to protect yourself against loss, be it 3% a year (typical inflation) or 75% over ten years. If the US ran 10% a year inflation on a ZIRP policy, I would be completely fucking ruined despite my best efforts.

I am sure the Govt could afford a lot more debt in the process, but the cost is not worth it IMHO. But hey, I am just a citizen, right?



devo's picture

Thanks for the response. I was wondering if I was missing something here. The world isn't going to end because the central banks will just (hyper) inflate...essentially a hidden tax/bailout placed onto the working class. For this reason, I don't see Greece as an issue. The worse their debt, the higher global inflation. Greek debt is a working poor/middle class problem. At least that's how I see it. Just wanted to know if my view is cycnical or distorted.

Based on my own calculations of daily finances, I have inflation at about 20% right now. That includes hidden inflation, which in my observation is the most pervasive and insideous type we're seeing right now. Insideous because the average American doesn't realize their box of Cheerios is filled with a third more air or the box is an eight smaller. I notice. It's bad. I'm paying for Greece with every box I purchase. My solution is to buy in bulk and use less of everything, even make some items from scratch. Eventually enough people will do that and corporate profits will fall off a cliff. That's the only way we see deleveraging--when the middle class speaks with their dollars and purchasing decisions.


cranky-old-geezer's picture



Ray's definition of deleveraging (which I don't quite agree with) is being forced on Main Street due to lower overall per capita salaries and wages across the economy from being in an economic depression (not recession).

Inflation (and resulting higher prices) is a separate issue technically.  For example you could have inflation and resulting higher prices in a growing economy, which incidentally is standard Fed monetary policy, slight inflation constantly, irrespective of growing or shrinking economy.  They call it "growth".  And it is in nominal terms but not in constant dollar terms or relative to gold for example.  It's false growth.  Fake growth.

All the so-called "growth" since 1980 has been this fake inflationary "growth".  The economy has actually been shrinking since 1980 in constant dollar terms as manufacturing slowly moves offshore and those high-wage union jobs disappear. Granted, I.T. sector and financial sector growth have offset some of that shrinkage, but not all of it.

Lower avg per capita salaries & wages in an economic depression combined with inflation and resulting higher prices puts a double squeeze on consumers, the ole 1 - 2 punch you might say.

That's what we're seeing now, as you mentioned.

And I agree, Greece really isn't an issue.  ECB could print till the cows come home, flooding Greece with a hundred trillion Euros. But it would collapse the Euro.  There's no free lunch.

Seems to me Greece is more about not triggering derivative payouts, which would blow the entire EZ ponzi scheme apart.

devo's picture

What is ironic is that you'd think inflation would drop (i.e. deflation) if manufacturing was moving offshore. Maybe that's why the Fed purposely inflates. At least that is intuitive to me, since capacticy utilization plays a large roll in inflation and U.S. manufacturing capacity is lower. Capacity meaning, if factory x is at 100% and factory y is at 100% capacity and there is still demand, they can then raise prices to z degree and demand will not drop. This would cause inflation. But, a much more healthy inflation (than printing money) since it's likely coupled with (a) jobs and (b) wage inflation (at least theoretically). The poor would lose out in that scenario (though social programs could be better funded), but right now the poor and middle class both lose, and that is overall worse for society.

I agree that Greece is about not triggering derivatives. It's also about winning political votes and avoiding anarchy. The sheeple are mobilizing.