Hedge Fund Billionaire Says U.S. Is Sliding Towards 1930s-Style Autocracy

“I am just describing the cause and effect relationships that are driving what is happening,” Dalio said to FT. “And by the way, during such times most people are silent because they are afraid of retaliation if they criticise.”

This is one of the first direct rebukes of Trumpism from Wall Street outside the tariffs, and like many things in Dalio’s career, it could hearken a sea change of elite thought more than him trying to lead it, all alongside his trademark doomer branding. But as much as I want to stress that doom has been his brand since before there was a President Donald Trump, I don’t think the 1930s parallels are that far off. I would just drag them one decade back, because to my Cassandra bias, Dalio’s ten year and hundred-year cycle theory looks like the long train is running right on time.

Gilded excess animated the 1920s, as the stock market reached new all-time highs on the back of pure euphoria and greed, alongside a greater access to the market than the tiny tickets it spawned on. Historic inequality propped up an economy where people were already struggling to get by, and when the greed and debt became too much to bear, the economy melted down. The New Deal was like an economic defibrillator after the Crash of 1929, spurring investment in long neglected communities rooted in a more equitable vision of the future, and it was an implicit threat against Dalio-esque oligarchs of the time. FDR basically told the oligarchy that a broad-based investment in a new America is the only way to stop the American people from reenacting the French Revolution on their front lawns.

Dalio should be commended for speaking up, and for the investors in his circles undoubtedly prodding him to do what they are too afraid to do, but it is what happens after this inevitable collapse that will define their legacies, because they have a hand in the status quo that led us to this moment. “Capital aligns itself with fascism” is a historical fact at the major macro level on the scale of Nazi Germany, but when smaller, less powerful countries install autocratic regimes, capital very clearly votes against fascism with their feet. That’s why it’s called capital fight, the thing New York capitalists keep threatening to do and not doing every time a Democrat gets elected.

Fascism is bad for making money. Fascists tend to install capital controls, and seize companies like Intel. Capital preferring fascism to socialism is more of a Freud thing, as they don’t like fascism either. The market needs to have at least freedom of capital and enough freedom of labor to support a robust market, as well as a direction on what interest rates the Fed is thinking they will set in five years, not wondering who the Fed Chair is going to be from day to day. Everything I was taught in finance school about risk and patience and soberly assessing the world with the numbers it gives you says that of course Trump’s tariffs are depressing economic growth and long-term investment like hiring, the latter of which obviously is harmed by Trump’s racist deportation regime, as evidenced by recent Dallas Fed Surveys. So why hasn’t anyone far more educated and wealthier than me spoken up before the doomer did? Don’t these people like money?

Trump. Is. Bad. For. Business. Yes, this is a fascist movement straight out of the 1930s, but it is taking place in the most unequal economy since the 1920s. Serious fascism came after the economic crash, and if Ray Dalio thinks that 2020 serves as the big crash his 1930s-1940s analogy requires, he should listen to more Ray Dalio, and see how the bond market and debt rating companies are worried about the out of control debt cycle Ray Dalio loves to talk about. The murder bill the GOP just passed will exacerbate it, and should Trump’s trade war continue to push us in a stagflationary direction, then Ray Dalio’s doomer prophecies may eventually wind up being right, just a decade too early in both directions.