Paul Singer, the hedge fund billionaire and head of activist firm Elliott Management, believes a credit collapse and deep recession may be needed to restore financial markets, according to an interview in The Wall Street Journal.
Following a decade of central bank policy underpinned by low interest rates, Singer said the current market turbulence may only be the start following the Federal Reserve’s decision to raise rates, adding this is “an extraordinarily dangerous and confusing period.”
He warned the Fed and other central banks could respond to the next downturn by slashing interest rates, and potentially resuming large-scale asset purchases.
Singer added that a credit collapse would not be as bad as hyperinflation in terms of destruction wrought upon societies. “Capitalism, which is economic freedom, can survive a credit crisis. We don’t think it can survive hyperinflation.”
He also dismissed cryptocurrencies as “completely lacking in any value.”
