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Ray Dalio: Damage From Coronavirus Will Be ‘Much Greater’ Than Reported
The Bridgewater Associates founder warned that policymakers and other leaders could be downplaying the situation to prevent panic.
Billionaire hedge fund manager Ray Dalio believes that policymakers and other leaders could be downplaying the impact of the coronavirus outbreak, a pandemic that he expects to result in “many trillions of dollars” in lost profits and “enormous” spending on relief efforts.
“I believe that the health, economic, and market impact of the coronavirus will be much greater than most people are now conveying,” the Bridgewater Associates founder said in a LinkedIn post Wednesday evening.
According to Dalio, the realities of the ongoing pandemic are “so bad that conveying them accurately could provoke panic.” To prevent that panic, he argued that “some leaders and knowledgeable researchers who are in the position to know are inclined to withhold the facts.”
At the same time, Dalio reiterated his attacks on reporters, writing that there are “rumormongers who try to incite panic for their own benefits,” including “writers for prominent publications who feed sensationalism.” These individuals, according to Dalio, are “the worst of the worse and should be punished severely.” He did not specify what those punishments should be, however.
“As a result of people operating in this way, it is nearly impossible to know what is true,” the hedge fund manager wrote. Dalio, for his part, claimed that he will “always be trustworthy,” insisting that if he said something, “you can believe it’s true.”
Dalio, of course, is not an epidemiologist or public health official, and he has repeatedly called himself a “dumb shit” when it comes to viruses. That said, the hedge fund manager has taken to LinkedIn several times in recent weeks to weigh in on what he sees as the likely economic impacts of the coronavirus outbreak, including a March 3 post suggesting that efforts to slow the spread of the disease would “probably cause a big short-term economic decline followed by a rebound.”
[II Deep Dive: Ray Dalio Says We ‘Don’t Have a Clue’ How Coronavirus Will Impact Markets]
Now, as the number of confirmed infections continues to climb, leading to increased travel restrictions and closure of “non-essential” businesses in parts of the U.S., Dalio said he believes profit losses are “likely to be many trillions of dollars, so that governments protecting just the companies would cost a significant percentage of that amount of money.” He added that “enormous” monetary relief will also be needed to protect individuals impacted by the virus.
These “massive amounts of spending” will require governments to borrow an “enormous amount of money at a time when lenders don’t have much money to lend,” Dalio said. “That will drive up interest rates, which would be even more devastating for everyone.”
As a result, Dalio wrote, central banks will need to decide whether to let interest rates go up or “print money and buy a lot of government debt to hold interest rates down the way they did in the war years.”
“Now all eyes are on central banks to see if they will do that,” he concluded.