“It’s the end of the supercycle. It’s the end of the great debt cycle.” –Ray Dalio
by Jesse Felder
The Felder Report
Over the weekend, I sat down with Stig and Preston of The Investors Podcast. One of the questions they asked me was, “what are the three biggest risks you see right now?” I responded:
1. The Chinese Debt Bubble
2. The Bank of Japan’s Extremely Aggressive Monetary Policies
3. The US Corporate Debt Bubble
All three of these things now have something rather glaring in common: They have all stopped working.
In the case of the Chinese Debt Bubble, we have seen a renewed surge in the amount of debt being created with very little or no effect on the economy. Note the divergence recently between growth in bank credit and M2: