Ray Dalio: Dollarpocalypse Now, or Not?

Today’s Agenda

Ray Dalio: Dollarpocalypse Now, or Not?

Dollar Death Watch

(Bloomberg Opinion) -- Just as international trade is no longer conducted in Spanish pieces of eight or Dutch guilders, some day U.S. dollars will be history too, and we’ll use the yuan or Federation credits or Ankh-Morpork dollars or something.

Along the way there will be some horrific moments for the greenback. Ray Dalio, manager of the massive and not-at-all cultish hedge fund Bridgewater Associates, today warned one such moment might come as soon as 2020. He sees the deadly combo of a slowing economy and a mountainous federal budget deficit and unfunded obligations forcing the government to borrow a bunch of money, right when nobody really wants to lend it any, forcing the Fed to print dollars and crushing their value. Of course, people have warned of such nightmare scenarios for a long, long time, notes Brian Chappatta. Some day they will be right! But in the meantime, Brian writes, there’s no substitute for the dollar in the global financial system. 

One strong candidate to replace the buck is the euro, writes Leonid Bershidsky. He argues the common European currency has been “punching considerably below its weight” – but mainly because it is not backed by a real union. Until the EU truly gels, the euro will chase the dollar. But the growing rift with the U.S. is a good opportunity for Europe to get its act together, Leonid writes.

Maybe Bitcoin will replace the dollar. But not any time soon. Lionel Laurent notes the cryptocurrency was born in 2008, in the heat of the financial crisis. Ten years later, crypto’s having its own crisis. A closely followed index has recently cratered worse than the dot-com crash. Adding insult to injury, boring old banks and regulators are coming to its rescue. “[S]omething has died,” Lionel writes. And it ain’t the dollar. 

Apple Has New Phones, Old Problems

Assuming you went anywhere near the Internet today, you surely know Apple released a bunch of new phones and gadgets this afternoon. And holy guacamole, are they expensive! The highest-dollar phone of the new batch will run you a cool $1,099. Shira Ovide writes this is a smart way for Apple to deal with the ugly reality of this chart:

Ray Dalio: Dollarpocalypse Now, or Not?

If phone sales are slowing to a crawl, or even going into reverse, then one way to keep revenue growing is to keep charging more and more for them. And it’s working for Apple so far, Shira notes – but it can’t last: “If Apple wants to continue its history as an innovation and growth engine, it needs a blockbuster new product category.” Read the whole thing.

Schools Shouldn’t Be Prisons

A new school year used to be an exciting time of fresh pencils and Trapper Keepers and jeans. Now it also involves learning your active-shooter lockdown procedure and making sure the new gym teacher can handle a Glock. Because our nation’s leaders aren’t regulating guns, our nation’s educators are spending way too much time figuring out how to turn schools into fortresses, write Bloomberg’s editors: “Perhaps if there were more responsible people in public life, schools would have less need to operate like prisons.” Read the whole thing.

China’s Peril and Promise

Faced with a trade war and an economy struggling with the effects of a lending crackdown, China is reverting to the 150-year-old habit of leaning on its state-owned businesses to boost the economy. It’s working, sort of, but such policies hurt private businesses, aren’t sustainable and don’t help the economy’s long-term prospects, warns Anjani Trivedi.  

China’s government has also overhauled oil-production rules in an apparent bid to challenge the U.S. as a fracking nirvana. But China’s geology makes pulling crude out of the ground just too expensive for companies – unless they get giant government subsidies, writes David Fickling. Again, this seems to not be a good long-term approach.

But there’s no doubt China is fast becoming a world leader in research and development, writes Peter Orszag. Recent U.S. efforts to crack down on Chinese students training in the U.S. are short-sighted – but also too late, Peter writes.

Long Live Martin Shkreli

Martin Shkreli isn’t in the drug-price-hiking business any more, but other drug companies are carrying on his proud tradition, notes Max Nisen. Missouri drugmaker Nostrum Laboratories last month raised the price of an antibiotic that first hit the market during the Eisenhower administration from $474.75 to $2,392 per bottle and declared doing so a “moral requirement,” the FT reports. It’s the latest, and maybe most egregious, example of how the pharma industry’s practices haven’t really changed all that much, despite President Donald Trump’s many threats to do something about high drug prices. Read the whole thing.

Chart Attack

NIO Inc., China’s answer to Tesla Inc., flopped in its debut on the New York Stock Exchange, even after its IPO had priced at the bottom of its expected range. It didn’t raise enough money to quench its cash thirst, writes Anjani Trivedi.

Ray Dalio: Dollarpocalypse Now, or Not?

The new J. Crew Group Inc. CEO seems to have turned things around – but it may be too late, writes Sarah Halzack:

Ray Dalio: Dollarpocalypse Now, or Not?

Quick Hits

Ben Carson’s HUD may actually do something meaningful to boost affordable housing. – Noah Smith

On the lookout for creeping inflation? Keep an eye on companies leaning less on discounts and promotions to lure customers. – Conor Sen 

Trump’s got to avoid making the same “red-line” mistake in Syria that Barack Obama did. – Hal Brands 

The U.S. must avoid the temptation to meddle in Venezuela’s affairs, disastrous though they may be. – James Stavridis 

This economic recovery has enjoyed an unusual jump in blue-collar jobs. – Justin Fox

General Electric Co. could go a long way to trimming its debt load by selling its jet-leasing unit. – Brooke Sutherland

ICYMI

Jeff Fager followed Les Moonves in  getting the boot from CBS. Jamie Dimon is smarter than Donald Trump, says Jamie Dimon. Vape ‘em while you got ‘em.

Kickers

Let one little rat get in your soup and it costs you $190 million in market valuation. (Trigger warning for photo of soup rat.)

FINALLY, someone has invented a zero-gravity champagne bottle. (h/t Scott Duke Kominers)

The closest known exoplanet to Earth might be fairly habitable by humans.

Local author who wrote about how to murder husbands is accused of murdering her husband.

This might be the oldest drawing ever found.

Note: What were you doing #WhenLehmanCollapsed? Bloomberg Opinion would like you to share your story on Twitter. By using this hashtag, you’ll give an up-close and personal picture of what happened 10 years ago at the beginning of the financial crisis. The campaign will run from 9/12 – 9/15, and a selection of tweets will be featured by Bloomberg's social media accounts.

Also, please send rat soup, suggestions and kicker ideas to Mark Gongloff at mgongloff1@bloomberg.net.

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Mark Gongloff is an editor with Bloomberg Opinion. He previously was a managing editor of Fortune.com, ran the Huffington Post's business and technology coverage, and was a columnist, reporter and editor for the Wall Street Journal.

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