![]() ![]() Dalio categorizes big debt crises into two types - deflationary and inflationary - and provides economic and market data for both.ĭeflationary debt cycles typically occur when the majority of debt is denominated in a country’s own currency. These episodes cover both developed and emerging economies. He analyzes 48 historical episodes of debt crises when GDP growth fell by 3% or more. ![]() Dalio sets out six stages, from the seeds of the crisis to its resolution. Principles for Navigating Big Debt Crises provides a framework for understanding the mechanics of these crises. ![]() In a December 2018 report, Ray Dalio comments, “It appears to me that we are in the late stages of both the short-term and long-term debt cycles.” What are the investment implications?Īccording to Dalio, credit cycles are “nothing more than a logically-driven series of events that recur in patterns.” Big debt crises occur when the scale of debt reaches a level where interest rate cuts alone are insufficient to prevent a depression. Bridgewater.ĭebt-to-GDP levels around the world have been rising for two generations. Principles for Navigating Big Debt Crises. Posted In: Book Reviews, Drivers of Value, Economics, History & Geopolitics ![]()
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