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Dalio & Tudor Jones Warn: “We Will Kill Each Other” If Our Broken Economic System Isn’t Fixed
Dalio & Tudor Jones Warn: “We Will Kill Each Other” If Our Broken Economic System Isn’t Fixed
Two hedge fund icons – Bridgewater founder Ray Dalio and Paul Tudor Jones – joined Yahoo Finance for the 2nd annual Greenwich Investment Forum earlier this month. Speaking directly after Connecticut Gov. New Lamont, with whom Dalio is working to bolster Connecticut’s schools via a $100 million gift – the largest charitable gift the state has ever received, PTJ and Dalio focused their “Fireside Chat” on the flaws of Fed policy, the dangers of America’s ballooning budget deficit, and the steps that must be take to “stop us from killing each other” in a violent revolution, as Dalio warned.
PTJ spoke first, starting with a few words about President Trump, praising him as “the greatest salesman” to ever enter the American political arena. After all, didn’t Trump convince the Republican Party – once the party of fiscal piety – that 5% budget deficits 10 years into an economic rebound are necessary to protect the economy. Similarly, didn’t he also convince the Fed – “through great moral suasion” – that returning to real negative rates with unemployment at 50-year lows was a necessity?
Both Dalio and PTJ agree that, while clearly stimulative in the short-term (obviously just take a look at the S&P 500), these decisions will set up the US economy for one of the most punishing downturns in history, which is why PTJ always laughs when Jerome Powell is quizzed about financial conditions and whether he sees bubbles anywhere. Because at this point, the whole market is a bubble.
“Clearly, the low interest rate policy we’re pursuing is creating an excess and that excess is in our public deficits. Which, at the current pace, in less than ten years we will have exceeded the threshold where Greece had its issues,” PTJ said.
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Legendary Global Investor Warns Of Frightening Recession: “We Don’t Have Any Stabilizers Left”
Legendary Global Investor Warns Of Frightening Recession: “We Don’t Have Any Stabilizers Left”
Key asset markets in the United States have reached extremely overbought levels, including everything from stocks to real estate. And while most Americans are feeling positive about economic growth in the near-term, legendary global investor Paul Tudor Jones cautions that the long-term outlook for America is very bleak.
You look at prices of stocks, real estate, anything… We’re going to have to mean revert to a normal real rate of interest with a normal term premium that’s existed for 250 years. We’re going to have to get back to that. We’re going to have to get back to a sustainable fiscal policy and that probably means the price of assets goes down in the very long run.
The next recession is really frightening because we don’t have any stabilizers… We’ll have monetary policy, which will exhaust really quickly, but we don’t have any fiscal stabilizers.
If the next recession is anything like the last one, we can expect massive price destruction across the board, large-scale job losses, and millions of people seeking assistance to help with food, housing and medical expenses via emergency programs.
Moreover, as we’ve previously warned, the trigger for the next crisis could come in many forms, one of the most likely of which is a total loss of confidence in the U.S. dollar.
That being said, physical assets that actually have value rather than hype will be the order of the day.
We need only look to Venezuela to understand what that means in an economic collapse, where even the most basic of necessities like food, medical supplies and toiletries are in short supply.
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Paul Tudor Jones Warns Disastrous “Wealth Disparity” Will End In “Rev
Paul Tudor Jones Warns Disastrous “Wealth Disparity” Will End In “Revolution, Taxes, Or War”
Having previously warned of the “disastrous market mania,” and told Janet Yellen to “be terrified” in April, legendary trader Paul Tudor Jones has a new message for CEOs, urging them to stop embracing the profit-above-all-else ethic creating massive wealth-inequality, or face the “tearing down of our civilization via war, revolution, or taxes.”
“One of the key things that always ends up tearing down great civilizations and countries is wealth disparity. It’s not sustainable,” explained the billionaire hedge fund manager at the Forbes Under 30 Summit in Boston, telling corporate chiefs that they have gone too far in embracing economist Milton Friedman’s profit-above-all-else ethic and they need to change how they do business.
Corporations have paid too much attention to prioritizing shareholders, said Jones, who’s backing a nonprofit called JUST Capital that will rank companies on how well they treat their employees, consumers, communities and investors.
Bloomberg reports that Jones said that even Friedman would rethink his ideas if he could see how divided the U.S. has become in terms of wealth, and worries about the outcome…
“The way wealth disparity has been historically dealt with is either wars, revolution or taxes. My guess is in the future it’ll be one of those three in this country.”
At the time of Friedman’s 1970 article, “The Social Responsibility of Business Is to Increase Its Profits,” the maximum federal individual tax rate was 70 percent, versus about 40 percent today. The wealth gap was one-fifth of what it is today, said Jones.
Friedman believed corporate executives should make as much money as possible while “conforming to the basic rules of the society.”
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Paul Tudor Jones Warns This “Disastrous Market Mania” Will End “By Revolution, Taxes, Or War”
Paul Tudor Jones Warns This “Disastrous Market Mania” Will End “By Revolution, Taxes, Or War”
“This gap between the 1% and the rest of America, and between the US and the rest of the world, cannot and will not persist,” warns renowned trader Paul Tudor Jones during his recent TED Talks speech, as he addressed the question – can capital be just? Hoping to expand the “narrow definitions of capitalism,” that threaten the underpinnings of society, Tudor Jones exclaims, “we’re in the middle of a disastrous market mania,” adding “one of worst of my life.” Perhaps most ominously, he concludes, historically this ends “by revolution, higher taxes or wars. None are on my bucket list.”
Can capital be just? As a firm believer in capitalism and the free market, Paul Tudor Jones II believes that it can be. Tudor is the founder of the Tudor Investment Corporation and the Tudor Group, which trade in the fixed-income, equity, currency and commodity markets. He thinks it is time to expand the “narrow definitions of capitalism” that threaten the underpinnings of our society and develop a new model for corporate profit that includes justness and responsibility.
It’s a good time for companies: in the US, corporate revenues are at their highest point in 40 years. The problem, Tudor points out, is that as profit margins grow, so does income inequality. And income inequality is closely linked to lower life expectancy, literacy and math proficiency, infant mortality, homicides, imprisonment, teenage births, trust among ourselves, obesity, and, finally, social mobility. In these measures, the US is off the charts.
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This Isn’t Your Grandfather’s (1960s) Inflation Scare
March 14, 2018
This Isn’t Your Grandfather’s (1960s) Inflation Scare
As soon as the GOP followed its long-promised tax cuts with damn-the-deficit spending increases (who cares about the kids, right?), you knew to be ready for the Lyndon B. Johnson reminders.
And it’s worth remembering that LBJ pushed federal spending higher, pushed his central bank chairman against the wall (figuratively and, by several accounts, also literally) and eventually pushed inflation to post–Korean War highs.
Inflation kept climbing into Richard Nixon’s presidency, pausing for breath only during a brief 1970 recession (although without falling as Keynesian economists predicted) and then again during an attempt at wage and price controls that ended badly. Nixon’s controls disrupted commerce, angered businesses and consumers, and helped clear a path for the spiraling inflation of the mid- and late-1970s.
So naturally, when Donald Trump and the Republicans pulled off the biggest stimulus years into an expansion since LBJ’s guns, butter and batter the Fed chief, it should make us think twice about inflation risks—I’m not saying we shouldn’t do that.
But do the 1960s really tell us much about the inflation outlook today, or should that outlook reflect a different world, different economy and different conclusions?
I would say it’s more the latter, and I’ll give five reasons why.
1—Technology
I’ll make my first reason brief, because the deflationary effects of technology are both transparent and widely discussed, even if model-wielding economists often ignore them. When some of your country’s largest and most impactful companies are set up to help consumers pay lower prices, that should help to, well, contain prices.
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