Monetary and fiscal policy is unsustainable and the next recession will be “really frightening,” legendary US investor and hedge fund manager, Paul Tudor Jones, told Goldman Sachs CEO Lloyd Blankfein in an interview on Monday.
“I don’t think monetary policy is sustainable, and clearly fiscal policy – are you kidding me?!,” said Jones.
The billionaire told Blankfein that artificial interest rates have become normal and they need to get back to the levels of the past 250 years.
Linking the rates, which Jones called “crazy”, to the price of assets, he said: “I think right now when you look at any asset price, you have to be thinking that this is a highly dubious sustainable asset price.”
Jones called for a return to normality, causing assets to gradually reduce in value. The alternative he said would be a “frightening” sharp collapse.
“Just imagine the next recession comes. Oh my God! It’s going to be interesting. The next recession is going to be really frightening because we don’t have any stabilisers.”
He said government would struggle to control a recession today because it’s already using the fiscal tools it has available to manage the current economy so there would be few reserve actions left.
“The one thing I would say that I’ve learned in the past 40 years [with boom and busts],” said Jones, “it’s the same old story so often.”
Jones is a billionaire investor, hedge fund manager and philanthropist estimated to have a net worth of $4.7 billion by Forbes. The June 18 interview can be found here.
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