In this video I review “Big Debt Crises” by Ray Dalio. Ray is a legendary investor and former Chief Investment Officer at Bridgewater and Associates (the largest hedge fund in the United States). With years of investment experience and expertise, Ray has recently embarked on the “3rd stage of his life” in which he hopes to teach others what it is he has learned over the course of his life and career.
The book, “big Debt Crises” offers us an archetype and framework for thinking about debt crises, in particular, inflationary and deflationary debt crises.
I discuss in this video my major take aways from the book.
Isn't it funny, we had runs on banks on gold standard, and now with fiat being treated as it is on gold standard, and due to friedman's monetarist ideas of policy for supply side – we now have runs on deregulated black box shadow banks. And when either happens there is a hard halt on credit and the defaults start spiraling. Once again, the American worker and small business will pay for wall st to play.
From my understanding, deflationary depressions are worse and longer due to hoarding and spiral downward. Some say the last recession had deflationary pressures, but rising rents, healthcare, and increase in some prices do to business debt offset those. Are you familiar with Fisher/Keynes " debt deflation" and Minsky moment, hard to say what will happen this time, but with everyone moving to "dollar milkshake", it worries me we will not be as lucky next time. Ray Dalio has some interesting ideas on MP3/MMT in seeking alpha, may 6, 2019 about how fisacal policy will be needed now that diminishing returns of both monetary and fiscal has reach its last gasp after 40 yrs, instead of one offsetting the other (yin/yang).
https://seekingalpha.com/article/4260457-time-look-carefully-monetary-policy-3-mp3-modern-monetary-theory-mmt
The fed chair Bernanke went on 60 min, guess when, right before financial crisis to tell everyone that all is well. When Powell did it, that could be looked at as an indicator, that all is not well.
I liked your summary, but you showing your ignorance about money flows of the dollar and the relative market cap of US money flows also Gold vs Bitcoin…not even close….bitcoin to me if an idea but that's it!!! for the ignorant….Gold has been around for centuries and cannot be hacked.
Dalioism is going to be a religion one day! Read his economic policy documents in his Principles app if you haven't already. I think you'll enjoy learning about how he opened China up from communism to its present day capitalism in the 80's which leads us today's trade war.
"They can't increase the interest rate without destroying the economy." The way you said that really captured all the nuances that make financial crises so complex.