Tags: Dalio | world | debt | large

Hedge-Fund Expert Dalio: 10 Years of Doom Loom

Wednesday, 26 Oct 2011 08:26 AM

Bridgewater Associates founder Ray Dalio says the world debt is so large it will take 10 years to de-leverage it — and “there are no more tools in the tool kit” to postpone the inevitable reckoning.

Individuals, says Dalio, face the same problem as debt-burdened governments.

"So if you resolve the budget deficit, you do not resolve the private sector debt issue," Dalio tells Charlie Rose.

"Both of those things mean we’re both overly indebted ... the amount that we owe and have promised in its various forms can’t be paid."
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We should be able to grow at a rate that’s comparable to our income growth, says Dalio, "if ... we work this through and everything is orderly. That means something between like 1.5 percent or 2 percent we should be growing at maybe about the 2 percent vicinity."

He said that the "problem with the 2 percent vicinity is that the employment rate remains the same or can trend higher."

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"That produces social pressures, that produces tension which itself means that you can have a situation analogous to that which is existing in Greece and more social pressure you create the more tension that is existing and emerging in various ways, not just a Wall Street piece."

According to Dalio, the basic problem with deciding between austerity and stimulus is that there’s not a quality conversation on the subject.

Federal Reserve Bank of New York President William C. Dudley said during a recent speech that the Fed hasn't "run out of bullets" and has additional stimulus options, including extending its commitment to keep interest rates low and embarking on a third round of asset purchases.

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Bridgewater Associates founder Ray Dalio says the world debt is so large it will take 10 years to de-leverage it and there are no more tools in the tool kit to postpone the inevitable reckoning. Individuals, says Dalio, face the same problem as debt-burdened...
Dalio,world,debt,large
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2011-26-26
Wednesday, 26 Oct 2011 08:26 AM
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