Bridgewater Founder Ray Dalio Raises Inflation Concerns Over Federal Spending
By Lauren Weber
Ambitious government spending raises the risks of inflation and
a devaluation of the U.S. dollar, Ray Dalio, founder and
co-chairman of Bridgewater Associates, said Tuesday during The Wall
Street Journal's Future of Everything Festival.
Mr. Dalio said the Biden administration's economic agenda, which
includes the $1.9 trillion Covid-19 relief bill signed in March and
a proposal for $2.3 trillion in infrastructure spending, risks
creating a bubble with too much money flowing into the economy. He
also predicted there wouldn't be enough demand from bond buyers to
purchase new government debt, which would lead the Federal Reserve
to continue its expansionary policies.
"The big issue is the amounts of money that have been produced
and put into the system," Mr. Dalio said. Such risks have to "be
balanced carefully. Productivity is the key" to keeping the economy
from overheating, he said. Mr. Dalio said he has spoken with Biden
administration officials but declined to reveal details about those
He described current stock-market valuations as a bubble, though
not one driven by debt.
"There's two types of bubbles," Mr. Dalio said. "There's the
debt bubble when the debt time comes back and you can't pay for it,
and then you have the bubble bursting. And the other kind of bubble
is the one where there's just so much money and they don't tighten
it as much, and you lose the value of money. I think we're more in
the second type of bubble."
Less concerning, he said, are the enhanced federal unemployment
benefits that some business leaders and lawmakers have criticized
as overly generous and discouraging Americans from returning to the
workforce. While those payments "have been greater than the
benefits, in some cases, of working," he said that ending the
$300-a-week supplemental payments before September, when they are
set to run out, amounted to "splitting hairs."
Mr. Dalio, who helped build Bridgewater into the largest
hedge-fund firm in the world, is known for promoting algorithms and
software to automate elements of both trading and workplace
culture. But the applications of advanced technologies remain
limited, he said, adding that artificial intelligence is currently
striving for the intelligence level of "a five-year-old."
While automation tools can raise productivity, he said, such
technology "also has implications for jobs and employment, and that
system has not been worked through," he said. Those issues are
policy questions, not ones for individual companies to try to
solve, he said. "Can you make the pie grow well and then divide it
well so that it provides equal opportunity? That's a policy
question which hasn't yet been taken on."
Asked about Robinhood Markets Inc. -- the popular online
brokerage that many individual investors recently used to trade
GameStop and other shares, squeezing hedge funds in the process --
Mr. Dalio said the trading app had, on the whole, changed the world
of investing for the better.
"It's information. It allows you to play the game. And there's
nothing like doing it in amounts you can afford," he said. "It's a
real plus, but it has some drawbacks, too."
Write to Lauren Weber at email@example.com
(END) Dow Jones Newswires
May 11, 2021 13:31 ET (17:31 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.