Ray Dalio: Fed’s next move toward QE, not tightening
Source: CNBC
http://thecrux.com/ray-dalio-feds-next- ... ightening/
Ray Dalio, the head of the world’s largest hedge fund, said investors should expect low returns and volatile financial markets, but not another financial crisis like the one in 2008.
“The next big move I believe will have to be toward quantitative easing, rather than a big tightening,” he said in the interview.
The recent developments have surprised the Fed, because it is not paying enough attention to the long-term debt cycle, he said.
“There’s only so much you can squeeze out of the debt cycle,” and “We are there.”
He added that we are getting close to “pushing on a string.”
“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,”
“Japan is closest to its limits, Europe is a step behind it, the US is a step or two behind Europe, and China is a few steps behind the United States.”
The coming squeeze will happen as the baby boomer generation leaves the workforce and begins collecting retirement and healthcare benefits like Social Security and Medicare.
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