- - Ray Dalio Warns All Fiat Currencies Are In 'Trouble,' Says 'Money Is Debt' and Predicts a Major Devaluation Cycle

Rishabh MishraJanuary 1, 2026 at 5:00 AM

0

Billionaire investor Ray Dalio issued a stark warning regarding the future of global finance during a recent address at the Oxford Union, asserting that all major fiat currencies are “in trouble” due to unsustainable debt loads.

The Mechanics Of Devaluation

The Bridgewater Associates founder predicts the world is entering a period of significant currency devaluation comparable to the 1930s and 1970s.

Dalio's central thesis rests on the concept that “money is debt.” He explained to the Oxford audience that fiat currency is essentially a promise to receive payment.

Don't Miss:

If there was a new fund backed by Jeff Bezos offering a 7-9% target yield with monthly dividends would you invest in it?

Have $100k+ to invest? Charlie Munger says that's the toughest milestone — don't stall now. Get matched with a fiduciary advisor and keep building

When governments accrue insurmountable debt—such as the United States’ current $38 trillion burden—they are eventually forced to devalue the currency to service those liabilities.

“If you devalue money, you devalue debt,” Dalio stated. He argued that developed nations are now trapped in a cycle where they cannot raise taxes or cut spending enough to balance their books without causing social upheaval.

Consequently, policymakers will inevitably choose to print more money, diluting its value.

A Structural Trap

According to Dalio, this dynamic is not unique to the U.S.; it is also playing out in the UK and France.

He noted that the political cost of austerity is too high, citing the UK's recent turnover of four prime ministers in five years as evidence of the instability caused by economic pressure.

With tax hikes driving wealth away and spending cuts hurting the vulnerable, the system leans toward inflation as the path of least resistance.

Trending: Americans With a Financial Plan Can 4X Their Wealth — Get Your Personalized Plan from a CFP Pro

The Pivot To Gold

As confidence in fiat currencies erodes, Dalio highlighted a shift in global reserves. He pointed out that central banks are increasingly selling debt-based assets (like government bonds) and buying gold.

Describing gold as the “oldest money” and a non-liability asset, he suggested that this rotation marks a defensive move against the coming devaluation of paper money.

While the U.S. Dollar Index Spot has declined 9.63% year-to-date, Gold Spot U.S. Dollar has scaled fresh highs this year at $4,550.11 per ounce, rising 67.25% over the year.

Here's a list of some ETFs tracking the dollar index that investors could consider.

Dollar ETFs

YTD Performance

One-Year Performance

Invesco DB U.S. Dollar Index Bullish Fund (NYSE:UUP)

-9.07%

-7.89%

WisdomTree Bloomberg U.S. Dollar Bullish Fund (NYSE:USDU)

-7.66%

-6.79%

Invesco DB U.S. Dollar Index Bearish Fund (NYSE:UDN)

10.25%

9.06%

See Also: Buffett's Secret to Wealth? Private Real Estate—Get Institutional Access Yourself

US Benchmarks To End 2025 On A Positive Note

Year-to-date, the S&P 500 was 17.67% higher, whereas the Nasdaq Composite and Dow Jones gained 21.75% and 14.32%, respectively.

However, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, were lower in premarket on Tuesday. The SPY was down 0.0073% at $687.80, while the QQQ declined 0.0081% to $620.82, according to Benzinga Pro data.

The futures of Dow Jones, S&P 500, and Nasdaq 100 indices were lower on Tuesday.

Read Next: Wall Street's $12B Real Estate Manager Is Opening Its Doors to Individual Investors — Without the Crowdfunding Middlemen

Image via Shutterstock

"ACTIVE INVESTORS' SECRET WEAPON" Supercharge Your Stock Market Game with the #1 "news & everything else" trading tool: Benzinga Pro - Click here to start Your 14-Day Trial Now!

Get the latest stock analysis from Benzinga:

APPLE (AAPL): Free Stock Analysis Report

TESLA (TSLA): Free Stock Analysis Report

This article Ray Dalio Warns All Fiat Currencies Are In 'Trouble,' Says 'Money Is Debt' and Predicts a Major Devaluation Cycle originally appeared on Benzinga.com

© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Original Article on Source

Source: “AOL Money”