“We are now in an era of universal basic income.”

That quote from last month didn’t come from a Silicon Valley utopian futurist, a Scandinavian bureaucrat or a card-carrying member of the Democratic Socialists of America.

It was from one of the richest men on Earth, Ray Dalio, the billionaire founder of Bridgewater Associates, the largest hedge fund in the world. His firm has $160 billion in assets under management.

Dalio famously predicted the 2007-09 financial crisis. Beyond that, he has a history of nailing market calls.

This guy knows how to make money. He’s as capitalist as it gets.

But recently, Dalio has been sounding a bit, dare I say it, socialist.

In an April 16 interview at NPR, Dalio was talking about the $1,200 “recovery rebates” most of us got last month as part of the $2.1 trillion novel coronavirus stimulus package.

“It’s the quick and easy way for getting a certain amount of purchasing power in the hands of … people. And of course, it’s a transfer of wealth and that should exist,” he said. “And I think there’s a wonderful opportunity here if we can operate well to restructure the way the system is working in a way to increase the size of the pie and divide it well.”

With more than 20% of Americans out of work, we’ll likely need more of this “universal basic income” (UBI). However, Dalio believes those checks should continue even after the Covid-19 crisis ends.

As we’ve been discussing here, the pandemic is supercharging the disparities between the very rich and everyone else. And Dalio thinks UBI could be used — along with other fixes — to narrow the “widening income/wealth/opportunity gaps that pose existential threats to the United States.”

He’s right. UBI could be a fix. But … it’s not the solution.

Here’s what could be.

An Old Idea With New Life

UBI is the idea that governments guarantee their citizens a minimum income. But not through bureaucracy-plagued jobs programs or food stamps or welfare. In a UBI program, the government would simply send regular checks, for the same amount, to everyone. No strings attached.

UBI is an old idea.

For thousands of years, many tribal societies have organized themselves around some form of it. Thomas Paine proposed something like UBI — and Napoleon Bonaparte almost put Paine’s idea into action.

We saw more calls for it as the Industrial Revolution took hold and former farmers and immigrants flocked to cities to work in factories and warehouses.

Now, in recent decades, more and more UBI supporters have come out of the woodwork as the wealth gap has exploded.

In 1980, the richest 1% of Americans owned about 30% of all household wealth in the country and the bottom 90% owned about 24% of all household wealth.

But by 2012, the share of all household financial wealth owned by the top 1% had skyrocketed to more than 60% … and the share owned by the bottom 90% had plummeted below 10%.

That’s one of the reasons why Andrew Yang made UBI the centerpiece of his presidential campaign.

As for myself, I support UBI, at least conceptually, as a “safety net” that doesn’t flow through a maze of government programs. It would be just money, period.

I like the idea because of what it isn’t — the sort of clandestine bailout for incompetent corporations and folks with Washington and Wall Street connections. In other words, what happened in 2008-09.

At least this time around we seem to be getting a mix.

We sent out those $1,200 checks to just about everyone … but we also handed out hundreds of billions of dollars to large corporations that deserve to fail, just like we did a decade ago.

Maybe we’ll get it right next time.

Yet Another Existential Crisis — And the Wealth Gap

Even after the coronavirus crisis passes, the wealth gap will still be with us.

After all, Yang promoted UBI as a solution to not just the wealth gap, but also to another existential crisis that won’t go away anytime soon: automation and the potentially “jobless” future.

In a paper by Oxford academics Carl Benedikt Frey and Michael Osborne, they estimated that 47% of American jobs are at high risk of automation by the mid-2030s. According to another Oxford study, up to 20 million manufacturing jobs worldwide will be lost to robots by 2030.

Now, I’m not saying the sky is falling here.

Americans will survive these existential threats. Maybe through UBI. But to me, survival isn’t good enough. We want to thrive.

So, UBI may be a good idea … a good fix.

But it is not the solution.

I recently brought along a film crew to produce a special video presentation so I could show you what exactly is fueling the wealth gap.

In it, I show investors how they can set themselves up for generational wealth by working around the wealth gap.

Take a few minutes to check it out, here.

Regards,

Eric Fry

P.S. If you pay attention to the news, you might think the coronavirus and the horse race between Joe Biden and Donald Trump are the only big stories out there.  However, the media is totally missing what is by far a bigger election year story.

You see, an alarming new trend taking shape in America is making a lot of people really wealthy … and at the same time making others poorer. I believe this will be the No. 1 factor affecting your money over the next few years. If you haven’t seen this or heard about what’s happening in your hometown, I strongly encourage you to learn what’s going on. I can show you exactly what’s happening.

Eric Fry is an award-winning stock picker with numerous “10-bagger” calls — in good markets AND bad. How? By finding potent global megatrends … before they take off. And when it comes to bear markets, you’ll want to have his “blueprint” in hand before stocks go south. Eric does not own the aforementioned securities.