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Ray Dalio on Financial Repression & the Suburbanites
Topic Started: 9 Oct 2016, 09:17 PM (814 Views)
Terry
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Fascinating excerpts:

....the debt bubble which was not eliminated during the financial crisis of 2008, has since grown to staggering proportions, and notes that "the biggest issue is that there is only so much one can squeeze out of a debt cycle and most countries are approaching those limits."

"when we do our projections we see an intensifying financing squeeze emerging from a combination of slow income growth, low investment returns and an acceleration in liabilities coming due both because of the relatively high levels of debt and because of large pension and health care liabilities. The pension and health care liabilities that are coming due are much larger than the debt liabilities in most countries because of demographics – i.e., due to the baby-boom generation moving from working and paying taxes to getting their retirement and health care benefits."

"holders of debt believe that they are holding an asset that they can sell for money to use to buy things, so they believe that they will have that spending power without having to work. Similarly, retirees expect that they will get the retirement and health care benefits that they were promised without working. So, all of these people expect to get a huge amount of spending power without producing anything. At the same time, workers expect to get spending power that is equal in value to what they are giving. They all can’t be satisfied."

"If interest rates rise just a little bit more than is discounted in the curve it will have a big negative effect on bonds and all asset prices, as they are all very sensitive to the discount rate used to calculate the present value of their future cash flows. That is because with interest rates having declined, the effective durations of all assets have lengthened, so they are more price-sensitive."

a 100bp shock to interest rates would translate into a $1trn market value loss. That is using the more conservative estimate of the bond market. Using the broader, and more accurate, bond market sizing of $40trn, the market value loss estimate would be $2.4 trillion
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van
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Governments will just Ctrl+P like they always done.
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Terry
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van
9 Oct 2016, 09:22 PM
Governments will just Ctrl+P like they always done.
They have no choice. It's the outcomes we're interested in.

A. Will the price of money will be forever suppressed by monetarism?
B. What are the externalities of the bubbles are popping?
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createdby
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Everything points to gold. Monetarism, Keynesianism, Austrian it doesn't matter.

The velocity of money will pick up with all the printed debt.
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Blondie girl
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Unrealism and greed makes people do bonkers stuff, which gets people to take unnecessary risks. Whatever the investment mode there is risk and there is no guarantee what anything can be held is forever valuable.


Terry
9 Oct 2016, 09:17 PM
Fascinating excerpts:

....the debt bubble which was not eliminated during the financial crisis of 2008, has since grown to staggering proportions, and notes that "the biggest issue is that there is only so much one can squeeze out of a debt cycle and most countries are approaching those limits."

"when we do our projections we see an intensifying financing squeeze emerging from a combination of slow income growth, low investment returns and an acceleration in liabilities coming due both because of the relatively high levels of debt and because of large pension and health care liabilities. The pension and health care liabilities that are coming due are much larger than the debt liabilities in most countries because of demographics – i.e., due to the baby-boom generation moving from working and paying taxes to getting their retirement and health care benefits."

"holders of debt believe that they are holding an asset that they can sell for money to use to buy things, so they believe that they will have that spending power without having to work. Similarly, retirees expect that they will get the retirement and health care benefits that they were promised without working. So, all of these people expect to get a huge amount of spending power without producing anything. At the same time, workers expect to get spending power that is equal in value to what they are giving. They all can’t be satisfied."

"If interest rates rise just a little bit more than is discounted in the curve it will have a big negative effect on bonds and all asset prices, as they are all very sensitive to the discount rate used to calculate the present value of their future cash flows. That is because with interest rates having declined, the effective durations of all assets have lengthened, so they are more price-sensitive."

a 100bp shock to interest rates would translate into a $1trn market value loss. That is using the more conservative estimate of the bond market. Using the broader, and more accurate, bond market sizing of $40trn, the market value loss estimate would be $2.4 trillion
Oh and what does that Ray Dalio do?
He has his own agenda to tell with being the shiny stuff holder and hedge fund manager.

LMAO
Edited by Blondie girl, 12 Oct 2016, 03:02 PM.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$
It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged
Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do.
Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
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b_b
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createdby
12 Oct 2016, 01:12 PM
Everything points to gold. Monetarism, Keynesianism, Austrian it doesn't matter.

The velocity of money will pick up with all the printed debt.
A typical monetarist comment - pity it’s wrong.
(S – I) + (T - G) + (M - X) = 0
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Terry
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b_b
12 Oct 2016, 03:13 PM
A typical monetarist comment - pity it’s wrong.
Everyone is wrong from a Scientologist's POV
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