There was No “De-Leveraging”

Ray Dalio of Bridgewater is fond of calling our government bailout a “beautiful deleveraging” (–ray-dalio-bridgewater.pdf) probably because he bet correctly that the flood of liquidity would lift all boats in the short run. But, I have been arguing the point in the attached blogpost from BlackRock since the crisis began. The growth in total debt is a major long-term problem that few have sufficiently considered. It will be much harder to get bailed out in the next crisis, and the next crisis will come sooner than most expect (they always do).

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