The world could face the worst financial crisis since World War II as hyperinflation looms, hedge fund says

• Hyperinflation could tip the global economy into the worst financial crisis since World War II, Elliott Management says.
• The fund said the end of cheap borrowing will spur financial extremes in a letter viewed by the Financial Times.

Hyperinflation could spur the most significant financial crisis since World War II, according to a letter to investors from Elliott Management.

The letter sent a stark warning to clients that as the era of cheap borrowing ends, investors will find it increasingly difficult to turn a profit amid an "extremely challenging" macroeconomic environment. The Financial Times first reported the content of the letter.

And "investors should not assume they have 'seen everything'" just because they've navigated through previous bouts of financial distress like the 2008 subprime mortgage crisis. 2022 has already been a dismal year for markets, with global equities seeing a loss of $28 trillion according to data compiled by Bloomberg.

Elliott largely blamed central banks for the worsening financial picture, and added that most have been "dishonest" toward the true culprit of record-high inflation and have instead attributed price pressures to supply chain disruptions as opposed to loose monetary policy.

The looming bout of hyperinflation could lead to "global societal collapse and civil or international strife," the letter said. Elliott also added that markets still have room to sink lower and find a bottom, while "frightening and seriously negative possibilities" remain on the horizon.