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Bridgewater's Dalio warns of a 'perfect storm' for economy

Economy Oct 11, 2022 11:32AM ET
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© Reuters. Ray Dalio, Bridgewater's Co-Chairman and Co-Chief Investment Officer speaks during the Skybridge Capital SALT New York 2021 conference in New York City, U.S., September 15, 2021. REUTERS/Brendan McDermid

By Carolina Mandl

GREENWICH, Conn. (Reuters) - Ray Dalio, the billionaire investor who built Bridgewater Associates into one of the world's biggest hedge funds, said a "perfect storm" is forming that will spread economic pain as the U.S. Federal Reserve raises interest rates.

Dalio, who handed over control of the $150 billion firm to a new generation of investors this month, said government stimulus programs during the pandemic have created a bubble.

Domestic tension in the U.S. population caused by "irreconcilable differences" and a yawning wealth gap, combined with international conflicts, are contributing to the perfect storm, he said.

"The Fed and the government together gave enormous amounts of debt and credit and created a lurch forward. A giant lurch forward and created a bubble. Now they're putting on the brakes. So now we're going to create a giant lurch backward," Dalio said at the Greenwich Economic Forum.

To fight inflation, Dalio said the Fed will continue raising rates. "And there'll be real pain, of course," he added.

Interest rates above 4.5% could tip the economy into a downturn, he said. "I don't know whether that's 4.5% or the economy could not take an interest rate much higher than that before it's going to be negative."

Last week, Bridgewater announced that Dalio had handed over control of the $150 billion hedge fund firm to a new generation, although he remains a meaningful owner of it.

The 73-year-old investor will keep his seat on Bridgewater's operating board of director and will mentor the firm's chief investment officers.

Bridgewater's Dalio warns of a 'perfect storm' for economy
 

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Comments (1)
Tyler Phillis
Tyler Phillis Oct 11, 2022 12:10PM ET
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Any time I hear or read about the “wealth gap” I see someone making an excuse for their lack of due diligence. Ray SHOULD know better; the “wealth gap” is only a problem in authoritarian slave state. In free market Capitalist societies it is an incentive to work hard and create wealth. Ray and all non-Capitalists and pseudo-Capitalists refuse to understand the difference between wealth created and loot stolen.
LM LM
Nikonos Oct 11, 2022 12:10PM ET
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Your indoctrination is a true gratification to all propaganda efforts employed by the super rich to have the plebs be convinced that it's if THEY are rich.
 
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