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Ray Dalio on Global Economy/Market Outlook and Debt


On October 19, “Future is Here: Global Leaders on the Changing World” lecture series welcomed its fourth speaker Ray Dalio, founder of Bridgewater Associates.

In his speech on “Global Economy/Market Outlook and Debt Cycles”, Ray Dalio stated that short-term debt cycle and long-term debt cycle will appear as economy functions. The short-term debt cycle, known as the business cycle, typically takes 8 to 10 years, during which monetary policies and other instruments are used for periodic adjustments. The long-term debt cycle, however, will take a much longer period, even hundreds of years. In addition to productivity, the long-term debt cycle is resulted from the interaction of political, economic, and social factors. Ray Dalio divided the debt cycle into seven stages: early stage, bubble stage, the top, the “Depression”, the “Beautiful Deleveraging”, “Pushing on a String”, and normalization.

Ray Dalio elaborated on his analysis of China’s big challenges and his understanding of the trade tension between China and the United States. He said that since the reform and opening up, China has achieved “miracle” in economic and social development, which could be attributed to China's firm push for reform, orderly development and national responsibility. He believed China is capable of coping with such challenges and crises as debt restructuring, capital markets restructuring, economic restructuring, balance of payments, geopolitical turmoil, etc. In his view, the trade dispute between China and the United States is essentially a confrontation in terms of national strength, during which sustaining stability and unity outweighs anything else for China.

After the talk, Zhu Min made a conclusion on Ray’s speech. In terms of debt cycle, history is constantly repeating itself. Certain rules, mechanisms, and forces will lead to historic recurrences. Therefore, learning from the past can help to prepare for the future. Secondly, stability and unity are currently of paramount importance for China.

 “The Future is Here: Global Leaders on the Changing World” Lecture Series is organized by Tsinghua PBC School of Finance (PBCSF) and National Institute of Financial Research (NIFR), Tsinghua University, inviting world-renowned leaders and academics to share their views on the frontier trend of world development. Previous speakers include Maurice Obstfeld, Chief Economist of the International Monetary Fund, and Peter Maurer, President of the ICRC, Harvey Schwartz, former President and Co-COO of Goldman Sachs Group. In lectures to follow, speakers may include Jacob Frenkel, Chairman of JP Morgan Chase International, Douglas Peterson, CEO of S&P Global and Masahiko Uotani, CEO of Shiseido.


>Tsinghua National Institute of Financial Research