RAY DALIO EXPLAINS: THE LONG TERM DEBT CYCLE

Over long periods of time, debts tend to rise faster than incomes, creating the long-term debt cycle. Even as people become more indebted, lenders freely extend credit because during economic booms, incomes rise, asset values soar, and the stock market thrives. People borrow more to buy financial assets, pushing prices higher and creating a bubble. So long as incomes keep rising, the debt burden stays manageable. But this cannot continue forever. Over decades, debt burdens slowly accumulate until debt repayments grow faster than incomes. This forces people to cut back on spending, causing incomes to fall and borrowing to dry up—eventually reversing the entire cycle. #RayDalio #Economy #LongTermDebtCycle #Finance

Added 17 Oct 2026