Bridgewater Co-CIO: “The Boom-Bust Cycle Is Over”
Just in case anyone was worried that the smart money was quietly getting ready to stop dancing after Bridgewater’s Co-CIO Greg Jensen told the FT in an interview last week that it’s time to buy gold (which he sees rising to $2,000 because the Fed and other central banks would let inflation run hot for a while and “there will no longer be an attempt by any of the developed world’s major central banks to normalize interest rates”) ahead of the Fed cutting rates to zero and that “equities are frothy” as “most of the world is long equity markets”, today Bridgewater’s other Co-CIO came out with a controversial statement that appears to convey a polar opposite message to Jensen’s warning.
Bob Prince, who alongside Greg Jensen helps oversee the world’s biggest hedge fund at Bridgewater Associates as its other Co-CIO, said “the boom-bust economic cycle is over.”
Speaking to Bloomberg TV in Davos, Prince suggested that the tightening of central banks all around the world “wasn’t intended to cause the downturn, wasn’t intended to cause what it did” – and yet that’s precisely what the shrinking of the Fed’s balance sheet did hence the record expansion over the past four months – and shockingly said that “the lessons were learned from that and I think it was really a marker that we’ve probably seen the end of the boom-bust cycle.”
Prince was referring not only to the boom-bust cycle created by central banks, which first ease then tighten, resulting in bubbles and eventually crashes, as described in “Every Fed Tightening Cycle Creates A Crisis“…
… but also to the broader cycle of economic expansion and contraction that repeats itself.
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