04 Jan Key Words: Head of largest hedge fund says economic downturn could leave U.S. ‘at each other’s throats’
Ray Dalio is worried that an economic recession could foment unrest in a polarized America, resulting in segments of the population feeling marginalized in the face of stagnant wages and tax cuts for the wealthy.
‘If we do have an economic downturn, I worry we will be at each other’s throats.’
The founder of Bridgewater Associates, widely viewed as the largest hedge fund on the planet with assets of about $150 billion, made his comments during a recent interview with The Wall Street Journal.
Dalio makes the case during the interview, reiterating some long-held views, that the Federal Reserve’s policies have fostered outsize risk-taking and lofty valuations in the stock market, with the S&P 500 index SPX, +0.64% the Dow Jones Industrial Average DJIA, +0.40% and the Nasdaq Composite Index COMP, +0.84% setting repeated records over the past the year amid ultralow interest rates.
The hedge-fund manager believes that despite less regulation, corporate tax cuts will leave out the bottom 60% of U.S. households, fostering resentment. The investor says recent fiscal stimulus espoused by President Donald Trump won’t result in economic growth and that rich returns in the future will be hard to come by.