Prior to 2008, I had studied these relationships for debt crises with my colleagues at Bridgewater, and because we understood these relationships, we were able to navigate the crisis well when many others struggled.
In the second, I look at how three big debt crises worked in depth - the 2008 financial crisis, the US Great Depression of the 1930s, and Germany's inflationary depression of the 1920s.
In part three, I show all the major debt crises that happened over the last 100 years - all 48 of them - in brief form so that you can see how the template applied to all of these cases.
Getting the balance right between having too much debt and too little debt is never done perfectly.
There are two major types of debt crises - deflationary and inflationary - with the inflationary ones typically occurring in countries that have significant debt dominated in foreign currency.
Most debt crises can be well-managed if 1) the debts denominated in one's own currency and 2) the policy makers both know how to handle the crisis and have the authority to do so.
In general, central bankers could do better jobs of smoothing the cycles and preventing big debt crises if, rather than having a single mandate to control inflation or a dual mandate to control inflation and growth, they have a three-part mandate that includes preventing investment bubbles by curtailing the excess debt growth that is funding them.
https://www.zerohedge.com/news/2018-09-10/ray-dalio-warns-history-repeats-understanding-big-debt-crises-part-1
In the second, I look at how three big debt crises worked in depth - the 2008 financial crisis, the US Great Depression of the 1930s, and Germany's inflationary depression of the 1920s.
In part three, I show all the major debt crises that happened over the last 100 years - all 48 of them - in brief form so that you can see how the template applied to all of these cases.
Getting the balance right between having too much debt and too little debt is never done perfectly.
There are two major types of debt crises - deflationary and inflationary - with the inflationary ones typically occurring in countries that have significant debt dominated in foreign currency.
Most debt crises can be well-managed if 1) the debts denominated in one's own currency and 2) the policy makers both know how to handle the crisis and have the authority to do so.
In general, central bankers could do better jobs of smoothing the cycles and preventing big debt crises if, rather than having a single mandate to control inflation or a dual mandate to control inflation and growth, they have a three-part mandate that includes preventing investment bubbles by curtailing the excess debt growth that is funding them.
https://www.zerohedge.com/news/2018-09-10/ray-dalio-warns-history-repeats-understanding-big-debt-crises-part-1
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