Top Hedge Fund Issues Disturbing Warning
(UnitedVoice.com) – The COVID-19 pandemic led to widespread economic shutdowns, not just in the US, but across the world. Some countries locked down for months, grinding vital industries to a halt. In many of those places, the number of deaths from the virus still soared despite the measures put into place.
As the world entered a recovery phase, inflation rose in the US and Europe. A hedge-fund giant is now warning the economic problems facing the global market could lead to a massive collapse.
On November 2, Financial Times published excerpts of a letter Elliot Management sent to its investors recently. The fund warned investors the global economy is on the path toward hyperinflation, which occurs when prices increase uncontrolled to the tune of 50% or more per month. If that happens, the firm conveyed concerns that out-of-control price increases could lead to the biggest financial crisis in 80 years.
The letter stated the current condition of global finance has “made possible a set of outcomes that would be at or beyond the boundaries of the entire post-WWII period.” The firm warned it could lead to a societal collapse and blamed the situation on “dishonest” lawmakers who have lied about how bad the inflation crisis is globally.
The warning from the hedge fund owned by billionaire Paul Singer comes at a volatile time for the US. Federal Reserve Chairman Jerome Powell announced the fourth consecutive benchmark rate increase of three-fourths of a percentage point on Wednesday, November 2. The chairman admitted the rate increases were not significantly moving the needle on inflation and said more increases are coming.
New numbers showed the country gained 261,000 jobs in October, exceeding economists’ prediction that there would be a 205,000 increase. However, the unemployment rate rose from 3.5% to 3.7%. Market Watch reported Powell has expressed concerns that there are still too many job openings and not enough people to fill them.
The US economy is also still hurdling toward a recession. During the announcement about the increased Fed rate, Powell discussed the possibility of an economic soft landing versus a crash, meaning rate increases have slowed the economy enough to bring inflation rates down but not enough to cause a rapid downturn. The chairman believes a soft landing with a controlled downturn is possible, but the economy is tightening.
Those are just some of the problems in the US; the rest of the global economy isn’t looking much better. Do you think the hedge fund is right to worry about what’s happening?
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