yego.me
💡 Stop wasting time. Read Youtube instead of watch. Download Chrome Extension

Ray Dalio on THE DEBT CYCLES


2m read
·Nov 8, 2024

In these cycles, there are short-term cycles that build up to create a long-term cycle. So, uh, for example, we're used to, uh, what's commonly called the business cycle or the short-term debt cycle, in which there's a recession when economic weakness and low inflation occur. Then, the Central Bank provides credit, which stimulates activity, and then you have the pickup in the good times in the economy. But then it raises inflation and tightness, and so on, and then that great type money, and then you go through the contraction again, and so on.

Since 1945, there have been 12 and a half of those cycles. On average, they're about seven years long, give or take about three years. So if you say, okay, where are we in that cycle? We're in the business cycle. We're about halfway through. We're in the part of the cycle where the tightening of monetary policy to fight inflation begins to cause the cracks, and that's where we are.

Okay, now those add up to a big cycle because debt rises relative to incomes through that. Because everybody wants to hire up, they just keep doing that. So we have a lot of debt assets and debt liabilities. You know, we think of there’s a debt that you owe, but one man’s debt is another man’s assets.

So you have to keep interest rates high enough that it compensates states for inflation for holding it. Because if you don't, nobody's going to then want to lend, and you have a problem. But you have to have interest rates not so high that they crack the economy.

Having a lot of debt assets and a lot of debt liabilities, that balancing act is not easy. And so because we had the imbalance, the central banks of the world had to come in there and be buyers. They had to print money and buy that debt to make a balance at an acceptable interest rate.

More Articles

View All
How India Influenced South African Cuisine | Gordon Ramsay: Uncharted
[Narrator] Gordon Ramsay is heading to Kwazulu-Natal, South Africa, to learn the secrets of Zulu cuisine. But how the region developed some of its signature dishes reveals a deeper and darker history. In just one stroll through a spice market in Durban, S…
Calculating velocity using energy | Modeling Energy | High School Physics | Khan Academy
So we have a spring here that has a spring constant of 4 newtons per meter. What we then do is take a 10 gram mass and we put it on top of the spring, and we push down to compress the spring by 10 centimeters. We then let go, and what I’m curious about is…
Ratios with tape diagrams
We’re told Kenzie makes quilts with some blue squares and some green squares. The ratio of blue squares to green squares is shown in the diagram. The table shows the number of blue squares and the number of green squares that Kenzie will make on two of he…
Feeling Tired, Irritable, Stressed Out? Try Nature | Short Film Showcase
Do you find yourself longing for the apocalypse? I did. I was looking for a reason to live. Hi! Are you feeling tired, irritable, stressed out? Well, you might consider nature. From the people that brought you “Getting Outside” comes prescription-strengt…
Peter Lynch: How to Invest in an Overvalued Market
One thing you’re trying to do is say all these public companies out there, here’s the company I really like. The fundamentals are terrific, their earnings are doing well, the competitors are doing poorly. I think this company’s doing terrific, and all of …
Introduction to entropy | Applications of thermodynamics | AP Chemistry | Khan Academy
The concept of entropy is related to the idea of microstates. To think about microstates, let’s consider one mole of an ideal gas. Remember, n represents moles at a specific pressure, volume, and temperature. If the system of gas particles is at equilibri…