Ray Dalio says the financial system will need 'big restructurings' soon as debt burdens become unsustainable
that debt levels have become unsustainably high, setting up the financial system for major changes.
"Given these conditions, it appears that interest rates that are high enough to fight inflation and provide lender-creditors with adequate real returns will be unbearably high for borrower-debtors," Dalio said."This means the system is close to the point where big restructurings will be needed. Of course, which debtors and creditors are affected will vary."
Each of the five forces, Dalio said, are now converging in magnitudes not seen in decades. Meanwhile, within the larger cycle, there's a smaller, short-term cycle defined by economic weakness, with central banks creating high inflation and eventually recessions.
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