“Can reserve-currency countries that don’t have significant foreign-currency debt have inflationary depressions?
While they are much less likely to have inflationary contractions that are as severe, they can have inflationary depressions, though they emerge more slowly and later in the deleveraging process, after a sustained and repeated overuse of stimulation to reverse deflationary deleveraging.
Any country, including one with a reserve currency, can experience some movement out of its currency, which changes the severity of the trade-off between inflation and growth described earlier. If a reserve-currency country permits much higher inflation in order to keep growth stronger by printing lots of money, it can further undermine demand for its currency, erode its reserve currency status (e.g., make investors view it as less of a store hold of wealth), and turn its deleveraging into an inflationary one.”
〰️Ray Dalio’s from his 2018 book, “Big Debt Crises.”
〽️The United States is in a deflationary crisis for 1-4 years due to austerity and debt defaults/restructurings.
The government is printing money to reverse the deflationary crisis which can lead to an inflationary crisis afterward. 🤬
Who is Ray Dalio?
Raymond Thomas Dalio is an American billionaire hedge fund manager and philanthropist who has served as co-chief investment officer of Bridgewater Associates since 1985.