As previously explained, the differences between deleveragings depend on the amounts and paces of 1) debt reduction, 2) austerity, 3) transferring wealth from the haves to the have-nots, and 4) debt monetization. Each one of these four paths reduces debt/income ratios, but they have different effects on inflation and growth. Debt reduction (i.e., defaults and restructurings) and austerity are both deflationary and depressing while debt monetization is inflationary and stimulative. Ugly deleveragings get these out of balance while beautiful ones properly balance them. In other words, the key is in getting the mix right.
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About Ray Dalio
Ray Dalio was a contemporary American investor and hedge fund manager. Raymond Thomas Dalio is an American billionaire and hedge fund manager, who has been co-chief investment officer of Bridgewater Associates since 1985. He founded Bridgewater in 1975 in his New York City two-bedroom apartment. Read more on Wikipedia →