Ray Dalio: Expect more QE

The founder of the world's biggest hedge fund, Ray Dalio, sees another round of US money-printing on the cards.

Ray Dalio, chief executive and founder of Bridgewater Associates, the world's largest hedge fund, believes the Federal Reserve's next move will be to launch another round of quantitative easing (QE). Dalio has a good track record, having predicted the global financial crisis back in 2007. Now, with asset prices highly inflated and central bankers' abilities to ease monetary policy reduced, he's worried what will happen in the next downturn.

Dalio sees no reason for the Fed to raise rates. He believes the central bank is focusing on the wrong areas, looking at the cyclical short-term debt cycle when it should care more about the 'secular' long-term one. It's like the lead-up to the 2008 crisis: the Fed "just gave attention to the GDP gap and missed the whole bubble and we had an economic collapse". Now "the risks of the world being at, or near, the end of its long-term debt cycle are significant" and shouldn't be ignored.

With deflation much more of a threat than inflation, Dalio expects the Fed to have to resort to further money-printing. "Raising rates is a restrictive policy... countries around the world shouldn't be tightening monetary policy, they should be easing it."

Recommended

James Anderson: innovation is still the key to returns
Investment strategy

James Anderson: innovation is still the key to returns

James Anderson, the man behind the Scottish Mortgage investment trust, tells Merryn Somerset Webb what he’d buy now
13 May 2022
A simple investment lesson from Warren Buffett that even children can learn
Investment strategy

A simple investment lesson from Warren Buffett that even children can learn

Warren Buffett has an incredible investment record. And at the core of his strategy there is one very simple principle. Rupert Hargreaves explains wha…
6 May 2022
Here’s why markets welcomed America’s big interest rate rise
Stockmarkets

Here’s why markets welcomed America’s big interest rate rise

The US Federal Reserve raised interest rates by half a percentage point – the biggest hike in 20 years. So why did markets rise? John Stepek explains …
5 May 2022
James Anderson: the trouble with the fund management industry
Funds

James Anderson: the trouble with the fund management industry

Merryn talks to Baillie Gifford's James Anderson about his career at Scottish Mortgage; the roles and responsibilities of the wider fund management in…
22 Apr 2022

Most Popular

The world’s hottest housing markets are faltering – is the UK next?
House prices

The world’s hottest housing markets are faltering – is the UK next?

As interest rates rise, house prices in the world’s most overpriced markets are starting to fall. The UK’s turn will come, says John Stepek. But will …
23 May 2022
The Federal Reserve wants markets to fall – here’s what that means for investors
Stockmarkets

The Federal Reserve wants markets to fall – here’s what that means for investors

The Federal Reserve’s primary mandate is to keep inflation down, and lower asset prices help with that. So, asks Dominic Frisby – just how low will st…
25 May 2022
Should you be worried about energy windfall tax proposals?
Energy

Should you be worried about energy windfall tax proposals?

Calls have been growing for a windfall tax on UK oil and gas producers. It's a popular idea, but is it a good one? And what does it mean for investors…
24 May 2022