Dalio Says Governments Must Encourage Spending to Boost Growth
- Quantitative easing will have a beneficial yet limited effect
- Bridgewater founder warns that investment returns will be low
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Ray Dalio, the head of the world’s largest hedge fund, said central banks have lost much of their power to revive slowing economies, and governments will eventually have to resort to policies that encourage spending.
Central banks may initially use quantitative easing and negative interest rates to halt the current slide in financial markets, but those policies won’t suffice to stimulate spending, Dalio wrote in a research report published Thursday. Rather than trying to influence the behavior of investors and savers, the next step in policy will probably target spending directly, he wrote.