{"id":30128,"date":"2018-01-25T07:40:19","date_gmt":"2018-01-25T12:40:19","guid":{"rendered":"http:\/\/olduvai.ca\/?p=30128"},"modified":"2018-01-25T07:40:19","modified_gmt":"2018-01-25T12:40:19","slug":"why-the-next-downturn-will-not-look-like-2008","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=30128","title":{"rendered":"Why the Next Downturn \u201cWill Not Look Like 2008\u201d"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"https:\/\/wolfstreet.com\/2018\/01\/24\/why-the-next-downturn-will-not-look-like-2008\/\">Why the Next Downturn \u201cWill Not Look Like 2008\u201d<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p><strong>Nine years of scorched-earth monetary policies come home to roost.<\/strong><\/p>\n<p>There are always cycles. The current cycle started at the bottom of the Great Recession and will last \u201cuntil central banks put on the brakes,\u201d said Ray Dalio, founder of Bridgewater Associates, in an <a href=\"https:\/\/www.bloomberg.com\/news\/videos\/2018-01-24\/dalio-says-it-feels-stupid-to-own-cash-in-this-kind-of-environment\" target=\"_blank\" rel=\"noopener\">interview<\/a> with Bloomberg. \u201cWe\u2019re in a perfect situation, inflation is not a problem, growth is good, but we have to keep in mind the part of the cycle we\u2019re in.\u201d<\/p>\n<p>We\u2019re \u201cin the late stage of the cycle, a period that might last two years,\u201d he said without specifying how far we\u2019re already into that late stage. We do know that the Fed is gingerly taking the foot off the gas though it hasn\u2019t yet slammed on the brakes.<\/p>\n<p>\u201cWhen the operating rate gets high enough, when central banks think they should put on the brakes,\u201d he said, \u201cthat\u2019s part of the cycle.\u201d<\/p>\n<p>\u201cFrom 2008 until the central banks put on the brake we have one kind of environment. So now we are closer to its capacity constraints\u2026 and we\u2019re still going to have a lot of stimulation\u2026 in particular short-term stimulation,\u201d and there is \u201ca lot of cash on the sidelines\u201d by investors, banks, consumers, and companies. \u201cAnd they can feel that they\u2019re being left out. It <em>feels<\/em> stupid to own cash in this kind of environment.\u201d<\/p>\n<p>He thinks this environment \u201cis going to be great for earnings and great for stimulation of growth.\u201d But \u201cwe have to look beyond that: What is monetary policy going to be in that?\u201d<\/p>\n<p>This short-term stimulus is producing a \u201cspurt,\u201d and this \u201cwill be a 12-to-18-month spurt,\u201d and while that spurt is taking place, and while people feel stupid about holding cash, the central banks \u201cwill have to tighten monetary policy.\u201d<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Why the Next Downturn \u201cWill Not Look Like 2008\u201d Nine years of scorched-earth monetary policies come home to roost. There are always cycles. The current cycle started at the bottom of the Great Recession and will last \u201cuntil central banks put on the brakes,\u201d said Ray Dalio, founder of Bridgewater Associates, in an interview with [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[83,124,1752,11848,303,534,7888,3650,4254,4255],"class_list":["post-30128","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bloomberg","tag-central-banks","tag-economic-contraction","tag-economic-downturn","tag-fed","tag-monetary-policy","tag-ray-dalio","tag-us-federal-reserve","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/30128","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=30128"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/30128\/revisions"}],"predecessor-version":[{"id":30129,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/30128\/revisions\/30129"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=30128"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=30128"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=30128"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}