by Jimmy Mengel, Outsider Club:
On March 3, 2016, Ray Dalio — Founder, Chairman & Co-CIO of the world’s largest hedge fund Bridgewater Associates — was here in Austin, Texas to speak at the University of Texas Board of Directors 20th Anniversary event.
In typical Ray Dalio fashion he went over the ineffectiveness of current monetary policy, the business cycle — the typical five-to-eight year cycle — and the differences between a short-term debt cycle and a long-term debt cycle — one he feels we’re at the end of — which goes on for 50-75 years.
The speech was important because it highlighted the very few options central bankers around the world have available to them and the potential consequences.
As investors and speculators, it’s much simpler to make profitable investment decisions if we’re able to identify the important trends before the herd does.
Japan has undergone one of the most aggressive monetary policy experiments in the history of the world in an effort to stimulate its economy to no avail: A multi-decade experiment of zero interest-rate policy where it begged for 2% inflation without success.
Dalio also spoke of Europe’s zero and negative interest-rate policy and the failure that policy has been for the real economy there.
He explained the many recent experiments here in the U.S. and how that helped stabilize asset prices — mostly to the benefit of asset owners but to the detriment of savers.
But it was his comments afterwards that were particularly interesting.
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