–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

“Such moves would signal the beginning of the very last and most disruptive stage of the long-term debt cycle. So, watch central bankers’ actions – i.e., see if they increase their bond buying when interest rates are rising led by long-term interest rates and when the markets and economy are strong – because that action would signal that they are experiencing supply/demand problems. Also, watch the rates of change in the injections of these stimulants in relation to the effects they are having on the economy’s vigor because the more stimulants that are being applied per unit of growth, the less effective they are and the more serious the situation is. I know this all sounds crazy to you. It sounds pretty crazy to me, too. However, I have seen this confluence of circumstances leading to this sort of dynamic many times in my study of markets and economies over the last several hundred years and I experienced this dynamic myself (in 1970-80).”

Ray Dalio
Bridgewater Securities

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––