Florida-based hedge fund Elliott Management recently warned clients in a letter obtained by media outlets that the world is “on the path to hyperinflation” and a financial crisis so severe that it could even lead to societal collapse.
The letter, as reported by the Financial Times and Business Insider, urged clients to remain vigilant as the global economy and financial markets face “extremely challenging” circumstances in which investors will find it hard to turn a profit.
Elliott, which is one of the world’s biggest hedge funds, with some $56 billion in assets under management, warned of “frightening and seriously negative possibilities” on the horizon while putting much of the blame for the looming crisis on ultra-loose central bank policies.
The letter said that central bankers had been “dishonest” about the causes of high inflation now gripping many countries when policymakers blamed price spikes on supply-chain dislocations rather than the pandemic-era flood of easy money.
Reinforcing the view that the current bout of inflation wasn’t a supply-side phenomenon, a team of economists found in a recent study that around 60 percent of inflation in the United States was caused by a stimulus-fueled surge in demand, though supply-chain bottlenecks made it worse.
While noting that it’s not a foregone conclusion, the hedge fund warned that the world is on the road to hyperinflation, which could result in “global societal collapse or international strife.”
Elliott also warned of more big drops in major stock markets and the possibility of a “seriously adverse unwind of the everything bubble.”
The Epoch Times has reached out to Elliott Management with a request for confirmation of the contents of the letter and comment on its projections, but did not receive a response from the hedge fund.
With its dire prediction, Elliott joins other prominent voices who have warned that the global economy is headed for a worse outcome than the Wall Street consensus view for a period of sluggish growth followed by a relatively short and shallow recession.
By Tom Ozimek
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