Categories: Base Metals / Energy / General Market Commentary / Precious Metals
Topics: General Base Metals / General Energy / General Market Commentary / General Precious Metals

Ray Dalio Says Populism May Be a Bigger Deal Than Monetary and Fiscal Policy

Ray Dalio Says Populism May Be a Bigger Deal Than Monetary and Fiscal Policy

-- Populism is at highest level since the late 1930s, he says

-- Debuts Developed World Populism Index to show historical trend

 

Billionaire Ray Dalio, further assessing the impact of President Donald Trump’s surprise election, warned that global populism will be an economic force more powerful than monetary and fiscal policies over the next year.

In an 81-page paper published Wednesday that details the history of populists in 10 countries from Franklin Roosevelt to Hugo Chavez, Dalio analyzed the phenomenon in an effort to make sense of today’s current political environment.

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“We believe that populism’s role in shaping economic conditions will probably be more powerful than classic monetary and fiscal policies,” Dalio and three Bridgewater Associates colleagues wrote in a “Daily Observations” report obtained by Bloomberg. “We will learn a lot more over the next year or so as those populists now in office will signal how classically populist they will be and a number of elections will determine how many more populists enter office.”

Populism today is at its highest level since the late 1930s, said Dalio, 67. In the paper, Dalio debuts the Developed World Populism Index which he says he created to measure global populism. It’s a weighted index of the share of votes received by anti-establishment parties or candidates in national elections for major developed countries since 1900.

 

How Do You Know a Populist When You See One?: QuickTake Q&A

The report includes an analysis of 14 populist leaders from the past, without detailing those currently in office “because the stories of ones in power or possibly coming to power are still being written,” Dalio said.

The report was written with Bridgewater’s Steven Kryger, Jason Rogers and Gardner Davis. It concludes that, in monitoring the early stages of a populist regime, “the most important thing to watch is how conflict is handled -- whether the opposing forces can coexist to make progress or whether they increasingly ‘go to war’ to block and hurt each other and cause gridlock.”

Bridgewater notes that populism is commonly brought about by gaps in wealth and opportunity, as well as xenophobia and frustration with government inefficiencies. Those factors lead to the emergence of a strong leader to serve the common man, as well as protectionism, nationalism, militarism, conflict and greater attempts to influence and control the media.

Populism has been a key focus of Dalio’s in recent months, as it’s emerged in countries including the U.S., U.K., Italy and the Philippines. In mid-January at the World Economic Forum in Davos, he said that the rise of populism threatens multinational corporations and is the biggest force in the world today.

To continue reading please click link https://www.bloomberg.com/news/articles/2017-03-22/dalio-says-populism-may-be-stronger-than-fiscal-monetary-policy