Ray Dalio, one of the most successful hedge fund managers of all time, says we may be seeing an end to central banks’ ability to stimulate the economy through inflation.
The global economic slump and deflation is coming from reaching the end of a long-term debt super-cycle—something that normally lasts 50 to 75 years, Dalio wrote in an op-ed for the Financial Times.
Founder of Bridgewater Pure Alpha, an $82B fund, Dalio says investors can’t be convinced to take on debt for risky assets while returns sit at historically low levels.
This lack of incentive for risk-taking throws a wrench in central banks’ plans to spike prices for these assets through low interest rates and quantitative easing.
Under Dalio’s view, central banks won’t have any tools to halt the next financial crisis or recession. [FT]
