Ray Dalio: An Economic Downturn Could Lead to Depression-Like Conditions

August 30, 2019 | Hedge Funds, News

The Bridgewater founder painted a grim picture of current economic conditions

The Ray Dalio Depression chatter is picking up again. In a LinkedIn post, the hedge fund manager said three factors could hammer investors. He cited high global debt, weak central banks, and trade wars as reasons we could see Depression-like conditions.

Dalio had earlier warned of a “paradigm shift” in the current economic environment that could catch investors on the wrong foot. Dalio recommended investing in gold.

Deflationary forces and central banks

The hedge fund manager warned of deflationary conditions sparked by a surge in production capacity. Dalio said central banks had to tackle this situation by lowering interest rates amidst very dovish monetary conditions.

These factors would “lead to enormous deficits that would be monetized, creating the blow-off in bonds that is the reciprocal of the 1980-82 blow-off in gold,” he said.

Deja vu? Ray Dalio Depression chatter

Dalio said we should draw a parallel from conditions that prevailed in 1935-45, and study the “mechanics of what happened then (and in other analogous times before then) to understand the mechanics of what is happening now.”

In a disconcerting warning Dalio wrote:” “If/when there is an economic downturn, that will produce serious problems in ways that are analogous to the ways that the confluence of those three influences produced serious problems in the late 1930s.”

Dalio’s flagship fund falters

Dalio’s Pure Alpha fund is down 6% thus far during the current year. That compares rather unfavorably with MSCI World Index’s 13% return.

The fund made a call, so far proved incorrect, that interest rates would rise.

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Latest Alternative Investment News

Alternative Investments/AI: AI Becomes NVIDIA’s Largest Business; ETFs Holding NVDA

Three very significant events took place in 2020. First, the aggregate market cap of the computer chip industry overtook that of the oil industry. The top 30 semi-conductor companies are…

Digital Assets: Grayscale Nabs $700M Of Inflows In A Day
January 18, 2021     Digital Assets, News

On Friday, January 15, $700 million flowed into the asset manager’s various crypto products. “Yesterday, raised north of $700 million into its family of products…momentum from Q4 seems to be…

Venture Capital: SoftBank And Hughes Invest $400M In Satellite Internet Operator OneWeb
January 18, 2021     Latest News, News, Venture Capital

A consortium of investors including India’s Bharti Global and the UK government acquired OneWeb in bankruptcy proceedings. The latest investment, comprising $350 million from SoftBank (TYO:9984) and Echostar (NASDAQ: SATS)…

FinTech: “Absolutely, We Should Be Scared S—less” – Jamie Dimon On Fintech Threat
January 18, 2021     FinTech, Latest News, News

On a conference call on Friday, JPMorgan Chase (NYSE: JPM) CEO Jamie Dimon made no secret of his apprehensions about the threat from fast-growing fintechs and tech giants across the…