Ray Dalio "Will Pay a High Price for Inflation Control"

"It is naive to expect improvement from interest rate hikes"
"Fed will likely choose a middle path resembling stagflation"

Ray Dalio. (Photo by CNBC)

[Asia Economy Reporter Kim Hyunjung] Billionaire investor Ray Dalio, known as the 'Steve Jobs' of the investment industry, said that the United States will pay a heavy price for controlling inflation.

According to Bloomberg on the 21st (local time), Dalio stated on LinkedIn that "It is naive and inconsistent with how the economy works to think that the Federal Reserve (Fed) raising interest rates and 'the situation will improve once inflation is controlled'." He is the founder and co-Chief Investment Officer (CIO) of Bridgewater Associates, the world's largest hedge fund.

He emphasized that while tightening can reduce consumer spending and partially control inflation, it does not mean the situation is improving. Dalio explained, "It is merely shifting to a method that pressures by reducing purchasing power in an inflationary environment."

He added, "There is nothing the Fed can do to stop inflation without weakening the economy," and further explained, "With government deficits increasing debt ratios, private credit growth may shrink, and the economy could weaken."

He also predicted, "In the long term, the Fed is likely to adopt a middle path resembling stagflation (rising prices amid economic recession)."

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