Ray Dalio: 'I don't think we're going to have a radical change in the economy'

Ray Dalio, the founder of the hedge fund giant Bridgewater Associates, is cautious about the effects of coming changes to fiscal policy and regulations.

During the campaign and early days of his administration, President Donald Trump has promised sweeping changes to economic policy, including an overhaul of the tax code, a huge investment in infrastructure, and the slashing of regulations.

One of the goals of all those far-reaching policies is to dramatically increase the rate of gross-domestic-product growth to somewhere between 3% and 4%, well above the growth of 1% to 2% seen in recent years.

"I think that we know there will be a degree of stimulation that was greater than existed before, some of which will come from actual fiscal policies like spending, infrastructure, and those things," - Dalio said.

"We're now in a time where we actually have to see what other kind of policy changes take place in the form of, let's say, fiscal policy. So we're looking at how Donald Trump is able to work within the Republican Party, and the Republican Party and its factions are able to work within Congress, and how those various different ideologies work themselves out, whether that will produce meaningful change or won't produce meaningful change."

"I don't think we're going to have a radical change in the economy, in terms of policies. But with these deregulations and some of these things, and a more business-friendly policy, I would expect on the margin it would be stimulative and beneficial for the economy. Not in a big way, I think."

On the subject of taxes and tax reform, Dalio pointed out that the main effect of lower tax rates on businesses was that they simply would have more money. "Wall Street is focused on very clear, incremental changes," he said. "If you change corporate tax rates, then by that change in corporate tax rates, the stocks are worth more.

Source: Business Insider

Jr Trader Petar Milanov

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