Found via Canadian Value Investor.
- 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 Wave Debt or Deleveraging Cycles occur once in a lifetime, every 50 to 70 years, and do not typically respond to existing fiscal and monetary policies.
- On the contrary, Deleveraging Cycles are characterized by massive wealth destruction and shifts, dramatic changes in monetary regimes, and unsettled political environments, including wars. They tend to have very slow recoveries (about 10 years) and end with debt restructuring and repudiation, inflationary policies, and substantial increases in risk premiums.
- The Great Recession that began in 2008 is the first US Deleveraging Cycle since the Great Depression. As such, it is immune to the usual policy responses, and can be expected to continue its path of wealth destruction through debt restructuring and inflationary redistribution of wealth up to 2018!