Ray Dalio: Central Banks’ Reversals Signal the End of One Era and the Beginning of Another

Ray Dalio of Bridgewater Associates published his latest global macro investing thoughts on LinkedIn. Dalio focuses heavily on central banks and the credit cycle. He has coined the term beautiful deleveraging and continues to see no imminent crisis. However, he believes high debt levels are creating a "squeeze" on the economy longer term.

Ray Dalio: Central Banks’ Reversals Signal the End of One Era and the Beginning of Another

Generally speaking (depending on the country), it is appropriate for central banks to lessen the aggressiveness of their unconventional policies because these policies have successfully brought about beautiful deleveragings. In my opinion, at this point of transition, we should savor this accomplishment and thank the policy makers who fought to bring about these policies. They had to fight hard to do it and have been more maligned than appreciated. Let’s thank them.

As you know, looking ahead, we don’t project a big debt bubble bursting any time soon (because of the balance sheet repairs that have taken place), though we do see an increasingly intensifying “Big Squeeze” (see the Big Picture).