All of which brings us to Wednesday's highlight which was the latest scathing essay published by Bridgewater's billionaire Chairman, Ray Dalio, titled "The Three Big Issues and the 1930s Analogue" in which he joins the pile up of Fed criticism, and echoes what BofA said, warning
While Dalio does not explicitly repeat Carney's warning that extended periods of low rates lead to financial crisis and war, he does get to the same place in a circular fashion, saying that "if/when there is an economic downturn, that will produce serious problems in ways that are analogous to the ways that the confluence of those three influences produced serious problems in the late 1930s."
We hope that everyone is familiar with what those "serious problems" were.
Dalio writes that "the most important things that are happening (which last happened in the late 1930s) are
Is monetary policy able to counteract any of the above considerations? According to Dalio, the answer is no, as "we are classically in the late stages of the long term debt cycle when central banks’ power to ease in order to reverse an economic downturn is coming to an end because":
As a result, Dalio concludes, "there is a lot to be learned by understanding the mechanics of what happened then (and in other analogous times before then) in order to understand the mechanics of what is happening now. It is also worth understanding how paradigm shifts work and how to diversify well to protect oneself against them."
Considering that the period Dalio says is most comparable to the current "paradigm shift" culminated with world war that resulted in the deaths of tens of millions, we are very curious what Dalio would recommended to "protect oneself" from what is coming. Or is a "beautiful world war" just the inevitable next step when "beautiful deleveraging" fails?