One of the world’s most prominent hedge fund billionaires has warned that rising inequality is turning the United States into an autocratic state, and condemned business leaders for failing to speak out against Donald Trump’s policies.
Ray Dalio, founder of Bridgewater Associates, said “gaps in wealth” and a collapse in trust were driving “more extreme” policies in the US. Speaking to the Financial Times, the veteran financier said many Western countries were affected by growing inequality, leading voters to turn increasingly to autocratic leaders.
“I think that what is happening now politically and socially is analogous to what happened around the world in the 1930-40 period,” he said. “Classically, increased wealth and value gaps lead to increased populism of the right and populism of the left and irreconcilable differences between them that can’t be resolved through the democratic process.”
Dalio also expressed alarm at Trump’s interference in the decisions of the central bank and the buying of shares in corporations to further his “Made in America” programme. He warned that a significant rise in US government borrowing could cause a “debt-induced heart attack” within about three years.
“The great excesses that are now projected as a result of the new budget will likely cause a debt-induced heart attack in the relatively near future,” he said. He added that attacks on the Federal Reserve “would undermine the confidence in the Fed defending the value of money”.
Dalio, worth about $19bn, said during such times most people are silent because they are afraid of retaliation if they criticise. He started Bridgewater in 1975 and built the firm to manage about $170bn of investor funds.
