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What’s Happening with the Economy? The Great Wealth Transfer

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  • Aug 2, 2023
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There was a big government-engineered shift in wealth from 1) the public sector (the central government and central bank) and 2) holders of government bonds to 3) the private sector... Show More

There was a big government-engineered shift in wealth from 1) the public sector (the central government and central bank) and 2) holders of government bonds to 3) the private sector (i.e., households and businesses). This made the private sector relatively insensitive to the Fed’s very rapid tightening to a more normal monetary policy. As a result of this coordinated government maneuver, the household sector’s balance sheets and income statements are in good shape, while the government’s are in bad shape.

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Jason Scott Montoya @JasonSMontoya · Aug 2, 2023
  • Curated in Ray Dalio's Principles for Navigating Big Debt Crises
Jason Scott Montoya @JasonSMontoya · Aug 2, 2023
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"I believe the next significant increase in monetization will probably signal the last and probably biggest leg of the long-term debt cycle’s reduction in the values and burdens of debts. Said more simply, central governments took on a lot more debt (so their balance sheets deteriorated) and central banks printed a lot more money (which caused inflation to rise) and bought a lot of the debt to get money into the hands of the private sector which, as a result, is now in relatively good shape financially. "
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