Money and Finance
- Bridgewater On The Fed's Dilemma
Via Zero Hedge: In the old days central banks moved interest rates to run monetary policy. By watching the flows, we could see how lowering interest rates stimulated the economy by 1) reducing debt service burdens which improved cash flows and spending,...
- The Secret Of Bridgewater's Success Is In Its Understanding Of The Recession
Found via Canadian Value Investor. The Bridgewater view may be summarized like this:Business and market cycles occur every 5 to 8 years, and may be addressed by policy makers with a typical mix of fiscal and monetary policy.What Bridgewater calls Long...
- More Ray Dalio Quotes
More Ray Dalio quotes from Jack Schwager’s book Hedge Fund Market Wizards. I think the last couple of long paragraph quotes below are especially important in regards to the current situation in the U.S. “We don’t use stops. We trade approximately...
- Bridgewater Q2 Letter: Outlook And Markets Discussion
Via Zero Hedge. The developed world remains mired in the deleveraging phase of the long-term debt cycle. The European deleveraging has been badly managed and is escalating, bringing Europe closer to either a debt implosion or a monetization and currency...
- Credit Crisis - Robert Rodriguez, Fpa Funds
To begin with, I believe FPA Capital Fund and FPA New Income are well structured to weather this credit-crisis storm. FPA Capital stands with nearly 43% in liquidity that we believe should help it withstand the crisis and provide us with the necessary...
Money and Finance
Ray Dalio on monetary policy during deleveragings
As quoted by Jack Schwager in his book Hedge Fund Market Wizards:
“Unlike in recessions, when cutting interest rates and creating more money can rectify this imbalance, in deleveragings monetary policy is ineffective in creating credit. In other words, in recessions (when monetary policy is effective) the imbalance between the amount of money and the need for it to service debt can be rectified because interest rates can be cut enough to (1) ease debt service burdens, (2) stimulate economic activity because monthly debt service payments are high relative to incomes, and (3) produce a positive wealth effect; however, in deleveragings, this can’t happen. In deflationary depressions/ deleveragings, monetary policy is typically ineffective in creating credit because interest rates hit 0 percent and can’t be lowered further, so other, less-effective ways of increasing money are followed. Credit growth is difficult to stimulate because borrowers remain overindebted, making sensible lending impossible. In inflationary deleveragings, monetary policy is ineffective in creating credit because increased money growth goes into other currencies and inflation hedge assets because investors fear that their lending will be paid back with money of depreciated value.”
……………..
Related links:
An In-Depth Look at Deleveragings
How the Economic Machine Works
- Bridgewater On The Fed's Dilemma
Via Zero Hedge: In the old days central banks moved interest rates to run monetary policy. By watching the flows, we could see how lowering interest rates stimulated the economy by 1) reducing debt service burdens which improved cash flows and spending,...
- The Secret Of Bridgewater's Success Is In Its Understanding Of The Recession
Found via Canadian Value Investor. The Bridgewater view may be summarized like this:Business and market cycles occur every 5 to 8 years, and may be addressed by policy makers with a typical mix of fiscal and monetary policy.What Bridgewater calls Long...
- More Ray Dalio Quotes
More Ray Dalio quotes from Jack Schwager’s book Hedge Fund Market Wizards. I think the last couple of long paragraph quotes below are especially important in regards to the current situation in the U.S. “We don’t use stops. We trade approximately...
- Bridgewater Q2 Letter: Outlook And Markets Discussion
Via Zero Hedge. The developed world remains mired in the deleveraging phase of the long-term debt cycle. The European deleveraging has been badly managed and is escalating, bringing Europe closer to either a debt implosion or a monetization and currency...
- Credit Crisis - Robert Rodriguez, Fpa Funds
To begin with, I believe FPA Capital Fund and FPA New Income are well structured to weather this credit-crisis storm. FPA Capital stands with nearly 43% in liquidity that we believe should help it withstand the crisis and provide us with the necessary...