Bridgewater's Ray Dalio: "Only So Much You Can Squeeze Out Of A Debt Cycle... We Are There!"

Tyler Durden's picture

Confirming his previous op-ed, the founder of the world's largest hedge fund warned that the current environment is analogous to the 1935 to 1945 period in America...


 We have "reached the limits" of [central banks] "ability to stimulate" the economy " and raise global asset prices."

Three simple minutes of painful reality from the world's biggest hedge fund manager... "it's probably nothing"

As Dalio states,

"there's only so much you can squeeze out of a debt cycle... we are there... you can't lower interest rates materially, and you are also at the limit on QE (because spreads are limited)."


"Globally, those forces that were behind us are no longer there... we are at the end of a debt cycle... and everybody will have a lower growth rate than we are used to."

As Dalio previously concluded in his Op-Ed: he admits that QE has reached its limits...


What I am contending is that there are limits to spending growth financed by a combination of debt and money. When these limits are reached, it marks the end of the upward phase of the long-term debt cycle. In 1935, this scenario was dubbed “pushing on a string”. This scenario reflects the reduced ability of the world’s reserve currency central banks to be effective at easing when both interest can’t be lowered and risk premia are too low to have quantitative easing be effective.


* * *

[Now] the expected returns of bonds (and most asset classes) are relatively low in relation to the expected returns of cash.


As a result, it is difficult to push the prices of these assets up and it is easy to have them fall. And when they fall, there is a negative impact on economic growth.


When this configuration exists — and it is also the case that debt and debt service costs are high in relation to income, so that debt levels cannot be increased without reducing spending — stimulating demand is more difficult, and restraining demand is easier, than is normally the case.

Not at all what the crowd at CNBC's 'Delivering Alpha' wanted to hear.

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Duane Norman's picture

Problem is, Dalio has been losing for the past few years.  Maybe he's just deflecting from his own failures? 

Even though the markets are manipulated, someone with as much info as him should be crushing it. 

PAPA ROACH's picture

Central banks should have spent all that wasted time and money buying out 30 to %50 of outstanding mortgages. You know, something for everyone, especially the common man that drives consumption. You want growth back? Serve the lower 90% rather than the top 10%.

BennyBoy's picture


Fuck you Treasury Timmy you lyin' fuck.


Bemused Observer's picture

Yes. Instead of using the money to decrease the debt load, they used it to enable payments to continue a while longer on the original debt. Pretty stupid.

Id fight Gandhi's picture

He has been losing but he's the kind of person you need to stop and listen to.



GUS100CORRINA's picture
When Bridgewater's Ray Dalio states:  "Only So Much You Can Squeeze Out Of A Debt Cycle... We Are There!", that is an understatement. Let's looks at the debt and derivatives list piled up for the last 8 years. Please note that this is only a partial list and does not include personal or credit card debt.


1.) Student Loan Debt - 2 Trillion

2.) America's debt - UP over 100% in 8 years,

3.) America's unfunded liabilities - 150 Trillion plus and climbing rapidly

4.) Corporate Debt - Up over 100% in 8 years.

5.) Bank Derivative Expsosure - Up over 300% in 8 years.

6.) State and Municiple Pension Shortfall - 6 Trillion plus

7.) Fed Balance Sheet - At 4.5 Trillion - Up Over 400% in 8 years

8.) US Government Cannot Account for 6.5 Trillion in its books.


May America R.I.P. Good night Irene!!!!

Hitlery_4_Dictator's picture

To Ray. Shut up faggot.

SharkBit's picture

These ass hats don't know shit.  Just BTFD and let the ponzi keep on a rollin.  Just remember to spend on needless shit so everything keeps growing.  Gotta grow, grow, grow so I can get rich.  Thanks for fucking up the world you greedy bastards.

Iconoclast421's picture

What a jackass. With central banks around the world poised to buy up stocks like a drunken Warren Buffett, it is the height of hubris to claim we are near the end of a cycle. Only the select few know for sure how committed central banks will be. And no one truly knows exactly how much pillaging they will be able to get away with.

buzzsaw99's picture

worst analysis ever.

Consuelo's picture



"As Dalio previously concluded in his Op-Ed: he admits that QE has reached its limits..."



Uh - Ray...?   Respectfully, you have only been witness to the 'opening act' of what QE is capable of doing.   Stick around...

buzzsaw99's picture

no shit. hey ray, were 47 central bankers from around the world buying equities back in 1930? were there structural deficits that will only get worse as time goes by? asset prices? what the fuck would you know about assets prices when the currency itself is handed out to billionaires on a silver platter?  he knows nothing.

vesna's picture

Squeeze your ass and get more shit Dalio

Albertarocks's picture

Geithner sounded almost fatalistic.  I mean it sounded like he was trying hard to disguise the fact that he shits his pants on a daily basis.  He sounds like he's genuinely scared of the future.  And he should be, he knows what it holds and he helped create it.

ACES FULL's picture

The bankers will blame the politicians and vice versa. Timmy was just planting a seed.

Albertarocks's picture

Does Monsanto know about this?  Because if they didn't supply him with that seed Timmay is up shit creek.

RagaMuffin's picture

Does raise the question as to whether the difference between a hedge fund and a cult is the size of the AUM

JonNadler's picture

so he's short the market?

alangreedspank's picture

So does that mean he's short the long bond ?

fbazzrea's picture

couldn't help but laugh at your pic! 

is that what boys do for fun when they're bored? lol

taketheredpill's picture



Stop watching at 1:40 before Timmy starts droning and your brain slowly starts to melt...

Snaffew's picture

so what does this mean for the monetary basis of all currencies...GOLD?  Shouldn't gold be surging?  You can't dramatically increase supply in this precious metal, but you can certainly increase demand.  Check me If I'm wrong, but wouldn't that make gold prices appreciate in value?  I must be crazy/

gregga777's picture

Assuming that any of these hereditary inbred subnormal IQ elite morons survive the revolution they should all be housed in zoos around the United States. Then every American can visit the zoo to show their deep and abiding contempt for all of the (formerly) privileged, pampered and protected elite morons who brought so much suffering down on the American People. But, hopefully Janet Yellen, Benjamin Shalom Bernanke and Allan Greenspan will end up swinging from lampposts.

vesna's picture

Look Dalio what your fellow fegot says$70-trillion-in-cash-on-sidelines-that-could-boost-stocks-425894

g3h's picture

Not true. Coordinated G20 action is going to be the last resort.

The only problem is the U. S. will probably have to relinquish some of its power to China.

fbazzrea's picture

some?? lol

sort of like relinquishing some of your power to your mortgage company when you default on your home loan?

MoonSun's picture

Maybe you can't stimulate growth by further lowering interest rates, but you can definitely devalue currency so that stocks still go further up.

wankstain's picture

like the uk and brexit, for a while....and then....

chickadee's picture

I have had the same thesis for years. So far it has been proven incorrect.

CJgipper's picture

Don't fight the fed.  The only thesis that matters.