STREET DOGS: Highlights of Ray Dalio’s July letter
Dalio is the founder of investment firm Bridgewater Associates, one of the world’s largest hedge funds
From Exploring Markets, what Ray Dalio sees: Four things are noteworthy: 1. The US economy is at or near its best, with no major economic risks on the horizon for the next year or two. 2. Long-term problems (high debt and nondebt obligations, limited abilities by central banks to stimulate) are likely to create a squeeze. 3. Social and political conflicts are near their worst for the last few decades. 4. Conflicts get worse when economies worsen. Three things that drive economies: the normal business/short-term debt cycle, which typically takes five to 10 years; the long-term debt cycle; and productivity. There are two levers to control them: monetary policy and fiscal policy. And there are the risk premiums of assets that vary as a function of changes in monetary and fiscal policies that drive the wealth effect. Over the long term, what raises living standards is productivity — the amount that is produced per person — which increases with new ideas and production efficiency. Produ...
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