The hedge fund run by one of the Republican Party’s top donors warned that the U.S. recovery is suspect and based on the manipulation of government, in an investor letter harshly criticizing the federal government and Federal Reserve.
“We do not think this optimism is warranted, and we think a lot of the data is cooked or misleading,” Paul Singer’s firm, Elliott Management, said in a letter to investors reported by Bloomberg. “A good deal of the economic and jobs growth since the crisis has been fake growth, with very little chance of being self-reinforcing and sustainable.”
The letter warned that the Obama administration’s economic policies and the Federal Reserve’s efforts to stimulate the economy through quantitative easing have boosted stock markets without generating strong underlying economic growth, and have increased the odds of a crisis.
“Nobody can predict how long governments can get away with fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers and fake income growth. … When confidence is lost, that loss can be severe, sudden and simultaneous across a number of markets and sectors,” the letter warned.
In particular, the letter challenged government measurements of inflation, which show that prices have risen by less than 2 percent in recent years despite the Fed’s stimulus efforts. Consumers and producers are facing inflation that isn’t captured by the government’s preferred gauges, according to Elliott.
Singer, the founder and CEO of Elliott, is among the top funders of outside groups that support Republican candidates. He has spent nearly $9 million on this year’s midterm elections, according to the Sunlight Foundation. He has donated to groups such as the super PAC American Crossroads, which was started by former White House strategist Karl Rove.
Singer, a major Republican promoter of same-sex marriage, also has supported pro-same-sex marriage GOP candidates through his American Unity PAC. He was a supporter of Mitt Romney in the 2012 presidential election.
