we are with ray dalio of bridgewater. we have left, i want to talk about you and bridgewater. you have been around for a while, as tom noted, and you have suggested to people that you are starting to step back. a lot of people are saying, this man with his ability should stay in the game. what are your plans? ray: by the way, it has been 40 years. michael: i was just trying to be nice. ray: what i am talking about is stepping back in management, not stepping back investments. i am an addict, i started at 12. i can't stop, i love the game. right? there is some confusion as to what the stepping back is. i will always be playing the game. michael: do you have a succession plan in place? ray: bob prince, who has worked with me for 27 years, i think he is 55. greg jensen has worked with me for 17 years, and he just turned 40. and this team, i have a lot of people who have been there a long time and we have all played the game. we are used to doing it. i could step down and it wouldn't matter, really. tom: alan mullally has an

ray dalio: the same thing happens over and over again. anything that happens economically i learned happen over and over again. it is a very simple machine i think. it is the same for an individual. a country is no more than the collection of its individuals or the companies. so there are three main factors. productivity. which produces income. you can spend at the end of the day what you earn. and what you earn is a function of your productivity. for a country, it is the same as for individuals. you work hard, you are well educated. you can be more productive if you work harder or you can be more productive if you are more creative. so that is that. over a short amount of time, you can spend the amount of money which is different from what you earn. that's because we have debt. tom: that is called children. [laughter] continue. ray: ok, thank you. so we have debt cycles and there are two major debt cycle. there is a short-term debt cycle we are used to. the business cycle. recession, that eases. what they do is they increase the spread b

announcer: ray dalio is acclaimed in the world of finance. he founded the world's biggest hedge fund, bridgewater associates, investing nearly $170 billion. the self-made money manager predicted the lasting impact of the financial crisis. and his alpha fund has outperformed for decades. we sat down with dalio for an in-depth conversation on his investment strategy. his view on monetary policy. ray: i don't believe they can raise rates faster than is discounted in the curve. for the large part. announcer: analyzing the global economy. ray: i think china is going to be just fine. just to be clear. but it is going to be weaker. announcer: and what his future holds. ray: i can't stop. i love the game. announcer: on this special edition of bloomberg "surveillance." ♪ tom: good evening, everyone. tom keene and michael mckee. we are here for one of our most anticipated events in the history of bloomberg "surveillance." and bloomberg on the economy. let's set up where we are first. should we do that first? i think we should. this is 114 acres north o

♪ ♪ announcer: ray dalio is you activated the url so described last 10 years. it has surpassed my expectations and we were simply trying to solve a problem for ourselves and our friends. we observed our own problems and came up with a special way to share these videos on the web and on the potential for everyone else as well. the first youtube video was you going to the zoo. >> that video and many others we were testing the system. we starteder that, receiving a few other uploads from around the world. he was one of the three of is the start of the site and there is steve chen. unfortunately, he decided to leave the company before he -- we launch the service or had a chance to raise funding. >> grow up in pennsylvania and went to indiana design, what kind of kid were you? >> i wasn't the most academic child but i was curious about things. me, youd art and for don't need to be an engineer to have a startup, you have to be someone with ideas. chad: i read about a small startup beaming money through palm pilots. at the time, the company was called confinity. and t

ray dalio, where are we right now with that equilibria? ray: the united states is a niche -- midpoint of its short-term cycle. as a result, we are talking about whether the fed can talk -- tighten it or not. we are your the end of a long-term debt cycle. tot cycle of being able raise -- you have interest rates going to 0%. you have spreads that have come down. those spreads that have come down means that asset prices have gone up. is very expected return low. bonds are at two point 25%, you know you will get for the next 10 years. 2.25% on your bonds. the equity price premiums look like 3.5%, 4% on that. all of the asset classes now are aligned with normal risk premiums. that sort of thing. that is why interest rates rise faster than the discounts in the markets. tom: for this room, which i might point out, those of you on television radio, and .xceptionally competent group with that said, within the framework of your machine, do you presume a jump condition as central banks come out of this, or can they manage it with smooth vectors and a

. ♪ announcer: ray dalio is acclaimed in the world of finance.ded the world's biggest hedge fund, bridgewater associates, investing nearly $170 billion. the self-made money manager predicted the lasting impact of the financial crisis. and his alpha fund has outperformed for decades. we sat down with dalio for an in-depth conversation on his investment strategy. his view on monetary policy. ray: i don't believe they can raise rates faster than is discounted in the curve. for the large part. announcer: analyzing the global economy. ray: i think china is going to be just fine.

we sat down with dalio for conversation on his investment strategy. his view on monetary policy. >> i don't believe they can raise rates faster than is discounted in the curve. >> analyzing the global economy. >> i think china is going to be just fine. just to be clear. it will be weaker. >> and what his future holds. >> i can't stop. i love the game. >> on this special edition of bloomberg surveillance. ♪ good evening. we are here for one of our most anticipated events in the history of bloomberg "surveillance." let's set up where we are. this is 114 acres north of new york city. it is a benchmark. we have steve back there with our audience, we say thank you. we need to get started. michael: if you sold in may and went away, it is time to come back. >> why don't we get started on the economic machine. >> that is what you have based your entire career on. your study of the economy, not just investing. tell us about your concept of the machine and how you got to that. ray: the same thing happens over and over again. these things happen economically. le

." ♪ >> ray dalio is acclaimed in the world of finance.the world's biggest hedge fund, bridgewater associates, investing nearly $170 billion. the self-made money manager predicted the lasting impact of the financial crisis. and his also -- alpha fund has outperformed for decades. we sat down with dalio for conversation on his investment strategy. his view on monetary policy. ray: i don't believe they can raise rates faster than is discounted in the curve. for the large part. >> analyzing the global economy. ray: i think china is going to be just fine.

we sat down with dalio for an in-depth conversation on his investment strategy.i don't believe they can raise rates faster than discounted on the curve. >> analyzing the global economy.

mike: this primetime edition of bloomberg surveillance on radio and television worldwide with ray daliofounder of bridgewater associates. what then do we do? what does a central bank do when it is at that zero bound? when you're at the end of that long-term credit cycle. ray: the thing that you do is you realize that the risks are asymmetrical. you can tighten monetary policy. there is enough debt, enough sensitivity. you wait more to see, because the risks are asymmetrical. that's the main thing. the risks on the downside are different than the risks on the upside. mike: do you think qe works anymore? ray: it will work less than it does last time just like each time it worked a lot less. i am saying we cannot have a big rate rise. the term structure on assets, because of the amount of debt, what it has with the dollar with deflationary pressures. we will have a downturn. the downturn should be worrisome because we do not have the spreads. qe, you're asking if it will work. it is the purchase of those assets to get those premiums up. when you keep pushing, buying more bonds. if there is

we sat down with dalio for his view on monetary policy.an is discounted in the curve. for the large part. announcer: analyzing the global economy. ray: i think china is going to be just fine.

. ♪ ♪ ♪ announcer: ray dalio is

for a down with dalio conversation on his investment strategy. his view on monetary policy.ieve they can raise rates faster than is discounted in the curve. >> analyzing the global economy.

we sat down with dalio for conversation on his investment strategy.hey can raise rates faster than is discounted in the curve. >> analyzing the global economy. >> i think china is going to be just fine. just to be c.