Former Treasury Secretary Larry Summers has suggested for more than a year that the U.S. economy might be suffering from "secular stagnation" — a prolonged period of weakness marked by a surplus of savings over investment.
Former Federal Reserve Chairman Ben Bernanke recently took issue with Summers' view in his blog, offering a more positive take on the economy.
Ray Dalio, head of the world's biggest hedge fund management firm, Bridgewater Associates, sides with Summers. "We [the United States, Europe and Japan] are in a period of secular stagnation,"
Dalio wrote in a note to investors obtained by CNBC.
With interest rates so close to zero, central banks have little room to ease further, he explained. The result will be less lending, less investment and thus less economic growth. The Fed has kept its federal funds rate at a record low of zero to 0.25 percent since December 2008.
The economy grew only 2.2 percent in the fourth quarter, and the Atlanta Fed's forecasting model puts first-quarter growth at just 0.1 percent.
"Interest rate declines and debts increasing faster than incomes to pull demand and economic activity higher are largely a thing of the past," Dalio wrote.
Speaking of Summers, both he and fellow former Treasury Secretary Hank Paulson believe the economy needs to expand faster.
"The good news is we're growing, we're creating jobs, property values are rising. The bad news is we're not growing quickly enough and there's tremendous income disparity," Paulson told
CNNMoney.
"The greatest threat is our own political inability to deal with the sorts of things we need to deal with to strengthen and revitalize our economy," Paulson noted.
Summers believes the government must invest more in infrastructure to pull us out of the muck. "We are doing less investment in infrastructure than at any time since the Second World War on a net basis," Summers told CNNMoney.
"[This] is a moment for us, as a country, to do what a business would do, which is to take advantage of low borrowing costs to invest in our future. This is not the right moment for a lurch to austerity."
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