Global economy in big sag: Hedge fund billionaire

WASHINGTON • Billionaire hedge fund founder Ray Dalio said the global economy is in a "big sag" marked by political extremes that recall the 1930s.

Mr Dalio, whose investment management firm Bridgewater Associates is the world's biggest hedge fund, weighed in on topics from global borrowing levels to the US election, where he said a Democratic victory might lead to a reversal of President Donald Trump's corporate tax cut.

"Big, unique things" are happening in a global economy awash with money, he said on a panel in Washington.

The impetus of measures such as interest-rate reductions and tax cuts is fading, "but we don't have a circumstance to cause a classic crash-type event at the end of the cycle", he added.

"You don't have the same tightening of monetary policy, you don't have the same debt rollover," he said. "But you have a lot of long-term debt maturities and you have a lot of obligations", such as pensions and healthcare, "that are a burden".

"So this cycle is fading and we're now in the world in what I would call a great sag," Mr Dalio said on the panel on Thursday at the annual meetings of the International Monetary Fund and World Bank.

Asked about data suggesting that US consumer demand may be softening, he said one reason for slower growth is the large wealth gap that leads to an education gap, which he portrayed as a burden on growth.

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A version of this article appeared in the print edition of The Straits Times on October 19, 2019, with the headline 'Global economy in big sag: Hedge fund billionaire'. Print Edition | Subscribe