Ray Dalio Discusses Major Financial Crises (Podcast)
Masters in Business
00:00
The Beautiful Deleveraging
In a normal cycle, when you have the downward move to get it moving on the positive side, they lower interest rates enough so that the present value discount rate for asset prices goes up. When interest rates hit 0, the game changes, because monetary policy cannot operate that way. And then what that means is the game then has to be that you print money and you buy financial assets. Zirp and Q-E do that all over the world. Since then, they bought about $16 trillion. That causes financial markets to go up and produces plenty of liquidity. But post-class deal now, everybody's in the same hot tub together.
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