Ray Dalio

There is a political and social order within countries.

There is an international geopolitical order.

There is acts of nature throughout history.

Droughts, floods, and pandemics have been more disruptive, killed more people than wars and can't be ignored as a factor.

And number five, technology.

And all of those are operating, and they operate in a cycle.

So on the first, there is a debt cycle that I will describe, and people should consider the merit of that.

I have done very well in a macro way of –

anticipating the 2008 financial crisis, European debt crises, and so on by understanding this.

Okay.

The way it works is that the credit system is like a circulatory system that brings nutrients, buying power, to different parts of the economy.

And if that money is borrowed and

used to create productivity that produces income.

Then there's debt service.

You make the debt service payments and you do better and you make profits and it's a healthy system.

On the other hand, debts and debt service rise relative to income.

you see the debt service is like plaque in the circulatory system in that it squeezes out spending.

So in other words, income minus debt service becomes less.

And so as a result, it squeezes out spending.

And there's a supply and a demand.