Source: Zero Hedge
Ray Dalio’s fatalism took another quantum step higher this afternoon.
Having made his displeasure with Trump – of whom he initially spoke quite fondly when he predicted it would be “glorious to be rich” – clear, the founder of Bridgewater (for whom James Comey worked before joining the FBI) has repeatedly hinted that the market, one of Trump’s preferred indicators of “policy success”, will not only crash but the ensuing downturn would have grave and profound social consequences.
First, one month ago in “Ray Dalio Goes Dr. Doom: “When The Next Downturn Comes, It’s Going To Be Bad”, Dalio lamented that “we fear that whatever the magnitude of the downturn that eventually comes, whenever it eventually comes, it will likely produce much greater social and political conflict than currently exists.”
Then, in another post earlier this week, Dalio dropped all nuance, and said that “more I see Donald Trump moving toward conflict rather than cooperation, the more I worry about him harming his presidency and its effects on most of us.”
This increasingly gloomy outlook culminated in the latest Dalio blog on Friday afternoon, in which, discussing the causality between politics and economics, Dalio writes that for the first time since the 1930s, we now live in a time when politics supersedes economics, and “becomes the most important driver. History has shown us that these times are when there is great economic, social, and political polarity within a country and there is the selection of populist leaders to fight for “the common man” in a battle against “the elites.”
clearly, the “1930s” reference is to Adolf Hitler and World War II, because as Dalio then explains the rise of populist conditions “typically lead to a strong-minded, confrontational fighter being brought to power to represent the underserved constituency, typically by pursuing more nationalistic, protectionist, and militaristic policies, which typically leads to more domestic and international conflicts.”
One doesn’t have to be a rocket surgeon to guess who Dalio is referring to.
And the tongue-in-cheeck punchline: “in some cases it led to democracies becoming dictatorships, and wars.” Tongue-in-cheek, because the explicit mention of the 1930s, and his suggestion that “now is just like then”, insinuates that the US in particular, and the world in general, is headed for another global conflict (read war) in which “a strong-minded, confrontational fighter” takes control.
Dalio then passively tries to mitigate the impact of his stark suggestion in the very next paragraph: “I am not saying that we are on that path, but I am saying that it has to be watched out for because if it is in the works, it is a really big deal.” Indeed it is, and while Dalio’s point is loud and clear – and is likely accurate – what would have been far more useful, and courageous, would be a discussion of the permissive conditions that allowed the ascent of Trump, pardon, the “a strong-minded, confrontational fighter”, that allowed allowed Europe’s unprecedented anti-establishment wave, that allowed Brexit, and which all start and end with one entity: the Federal Reserve in the US, and central banks around the globe. The same central banks who in their quest to “boost confidence” and create a wealth effect, have unleashed the greatest asset bubble in history, resulting in the greatest global wealth and income divide, the world has ever seen.
Everything follows from there.
Categories: Financial/Societal Collapse and Dependence