Hedge fund giant Elliott warns looming hyperinflation could lead to ‘global societal collapse’

The firm, led by billionaire Paul Singer and Jonathan Pollock, told its clients that “investors should not assume they have ‘seen everything’” because they have been through the peaks and troughs of the 1987 crash, the dot-com boom and the 2008 global financial crisis and previous bear and bull markets.

They added that the “extraordinary” period of cheap money is coming to an end and has “made possible a set of outcomes that would be at or beyond the boundaries of the entire post-WWII period.”

The letter said the world is “on the path to hyperinflation”, which could lead to “global societal collapse and civil or international strife.”

They estimated that markets have not fallen enough yet and equity markets could drop more than 50% would be “normal,” adding that they couldn’t predict when that would happen. The S&P 500
SPX,
-0.52%
has dropped 19% from its peak at the beginning of the year.

Elliott executives warned clients that the idea that “‘we will not panic because we have seen this before’ does not comport with the current facts.”

They blamed central bank policymakers for the current global economic situation, saying they had been “dishonest” about the reason for high inflation. They said lawmakers had shirked responsibility by blaming it on supply chain disruption caused by the pandemic instead of loose monetary policy imposed two years ago during the COVID-19 peak.

Read how activists at Elliott Management were in conversation with executives at PayPal after revealing a stake in the firm.

The FT reported that the hedge fund is posting 6.4% returns so far this year and has only lost money for two years in its 45-year history.