Ray Dalio Needn’t Worry That Markets Aren’t Free

Ray Dalio is onto something — but his overall concerns are largely misplaced. Yes, the huge expansion of central banks’ balance sheets in response to the Covid-19 crisis means that central planning, rather than market forces, is largely driving financial markets. This doesn’t necessarily mean, as the founder of the world’s largest hedge fund worried aloud last week, that capital markets “are not free.”

It’s beyond dispute that the government-coordinated shutdowns have (in most cases appropriately) put public-health concerns ahead of free enterprise. It’s also true that these shutdowns have caused huge strains in liquidity across the world economy.