Ray Dalio, founder of Bridgewater Associates, the world's largest hedge fund, has finally changed his mind about cash for more than two years.

On Monday, Oct. 3, EDT, Dalio posted on social media that, as economist Keynes said, if the facts change, so will his views. Following this line of thinking, when the facts change, he also changes his view of cash as an asset.

"I no longer think cash is rubbish. With existing interest rates and the Fed shrinking its balance sheet, it is now almost neutral-neither a very good deal nor a very bad deal. In other words, short-term interest rates are now appropriate. "

Mr Dalio's comments mean that he has changed his view on cash for more than two years after the Fed has aggressively raised interest rates and markets expect them to continue to do so.

In January 2020, Dario shouted "cash is rubbish" at the Global Economic Forum in Davos. After the outbreak of COVID-19, the Federal Reserve launched an unprecedented large-scale easing stimulus, and Dalio has repeatedly said that he will face more inflation in the future. Last September Mr Dalio reiterated that cash is rubbish and that inflation could be good for assets such as real estate, stocks and cryptocurrencies.

At the Davos Forum at the end of May this year, Dario again"Cash is still junk," he said. "Unfortunately, that doesn't mean it's much better for investors to put their money in stocks or bonds, because stocks are relatively junk."

Mr Dalio said at the time that while US stocks had been sold off relentlessly for months, there were still plenty of bubbles to be removed from the market before a balance could be achieved. When the Fed tightens money increasingly, the situation for bonds is not optimistic. When inflation seriously affects real returns, investors had better choose real estate, gold and other physical assets.

At the end of May, Mr Dalio pessimistically predicted that the Fed would not achieve a soft landing as expected. Last month Dalio issued another warning about the outlook for US stocks in the face of a sharp rise in interest rates by the Federal Reserve.

Dalio said last month that investors may still be too complacent about long-term inflation, which is expected to remain around 4.5% to 5% over the next decade, with inflation likely to "rise significantly" in the event of economic shocks. The Fed "simply raises interest rates to around 4.5% to cause the US stock market to fall by a further 20 per cent".

After the Fed raised interest rates by 75 basis points for the third time in a row on Wednesday, Wall Street mentioned that Dalio warned that the US economy was showing iconic signs of recession and expected the US economic situation to deteriorate further over the next two years.

Mr Dalio said the US economy had more room for further pain given that the Fed raised interest rates to curb record inflation and other factors such as the conflict between Russia and Ukraine had troubled the energy market. "I think things will get worse in 2023 and 2024, which will have an impact on the election."