He said Billionaire Ray Dalio, founder of Bridgewater, the world’s largest hedge fund, A “devastating hurricane” is forming that would spread economic pain globally, in light of the hard-line policy of the US Federal Reserve, noting that government stimulus programs during the Corona pandemic created a bubble.
Dalio, who recently relinquished control of his $150 billion company to a new generation of investors, added that domestic tensions among the US population caused by “irreconcilable differences” and a growing wealth gap, as well as international conflicts, All of them contribute to the formation of the “Perfect Storm”, according to “Archyde.com”, which was reviewed by “Al Arabiya.net”.
At the Greenwich Economic Forum, Dalio said: “The Fed and the government together gave out massive amounts of debt and credit, adding to a giant ‘front loading’ that led to the current bubble.”
He explained that “the situation has now turned to trying to stop this huge load by pressing the brakes hard, which will result in a giant rebound back.”
The term “front loading” is used to describe attempts to push the economy to grow, and it is likened to loading a truck in the front part only, which creates a state of imbalance, and is difficult to stop.
To fight inflation, Dalio said the Fed will continue to raise interest rates, adding, “There will be real pain of course,” noting that interest rates above 4.5% could push the economy into deflation.