Tue, May 30, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Bridgewater’s Ray Dalio bestows global economics master-class

Tuesday, September 18, 2012

Benedicte Gravrand, Opalesque Geneva: When Ray Dalio, founder and co-CIO at Bridgewater Associates, the largest hedge fund firm in the U.S., spoke at the Council on Foreign Relations recently, he reminded the audience he was not born yesterday. The 2008 crisis is just one of many, he says, even if it does not feel that way to those who encounter such an event for the first time in their life. Then he went on to describe "how the economic machine works."

The basis is in the transaction, he explains, a purchase done either with money or with credit, the latter being a liability. He believes demand is better measured in terms of spending rather than the traditional quantity of goods. Credit will count in GDP. Credit is created and this leads to cycles – not through the velocity, but "out of thin air." Buying with earnings and with credit has a positive effect (money spent is money earned) and the cycle becomes self-reinforcing. Debt rises faster than income, but cannot do so forever. Lower interest rates make credit cheaper, so purchasing is easier, and added to cash flow, it produces more wealth.

When you cannot lower interest rates any more, "that part of the cycle ends." This is when deleveraging starts; and when one can no longer rise debt relative to one’s income. This is when the cycle reverses. If debt growth moves from 10% down to 5%, this has a ......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - China's HNA wants to invest in Value Partners, Risk parity investors reap rewards from rebalancing act, SoftBank's $100 billion tech fund rankles VCs as valuations soar[more]

    China's HNA wants to invest in Value Partners From Reuters.com: HNA Group has alighted on a logical, if pricey, target in Hong Kong. The deal-hungry Chinese travel conglomerate known for overpaying wants to invest in Value Partners, one of Asia's few sizeable independent asset managers,

  2. Opalesque Exclusive: Investors warm to ESG, but seek standardization[more]

    Bailey McCann, Opalesque New York: Asset managers and asset owners plan to double their investment in Environmental, Social and Governance (ESG) driven strategies over the next two years, according to a survey from BNP Paribas Securities Services. The report, "Great Expectations: ESG - what's nex

  3. Opalesque Roundtable: France's hidden strengths in AI and machine learning[more]

    Komfie Manalo, Opalesque Asia: All nations offer their strengths and weaknesses, but one that is undisputed is the quality of the French scientists, claimed Guillaume Vidal, co-founder of French technology startup Walnut Algorithms at the

  4. AI-based hedge fund brings machine learning investing to masses[more]

    Komfie Manalo, Opalesque Asia: Machine learning-based hedge fund firm Greyfeather Capital is trying to bring artificial intelligence investing to the masses with its plan to expand beyond the limited reach of the alternative investments space. "We're excited to bring AI technology to traditio

  5. Outlook - Iconic hedge fund manager Seth Klarman says investors are missing huge risks, Paul Singer warns of a world at risk[more]

    Iconic hedge fund manager Seth Klarman says investors are missing huge risks From Businessinsider.com: An iconic hedge fund manager says investors are misperceiving risks in the markets - at a time when markets are hitting historic highs. Baupost Group's Seth Klarman laid out his concern