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Ray Dalio thinks the ability of central banks to reverse an economic downturn is coming to an end as the global economy enters what he says are the late stages of the long-term debt cycle.
“Interest rates get so low that lowering them enough to stimulate growth doesn’t work well,” the billionaire founder of investment management firm Bridgewater Associates wrote in an essay published on LinkedIn on Wednesday.
Money printing and buying financial assets won’t work either, Dalio said, as it doesn’t produce adequate credit in the real economy and creates the need for large budget deficits and then their monetization.
Dalio says the last time similar forces were creating a similar dynamic was from 1935 to 1945.
Grant’s Interest Rate Observer Founder and Editor James Grant and CNBC’s Rick Santelli discuss how radical policy begets radical policy.
A Bank of Japan board member warned of potential dangers if the central bank’s already massive stimulus is ramped up…