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Big Debt Crises

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4.42  ·  Rating details ·  516 ratings  ·  40 reviews
“Ray Dalio’s excellent study provides an innovative way of thinking about debt crises and the policy response.” - Ben Bernanke

“Ray Dalio’s book is must reading for anyone who aspires to prevent or manage through the next financial crisis.” - Larry Summers

“A terrific piece of work from one of the world’s top investors who has devoted his life to understanding markets and
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Kindle Edition, 456 pages
Published September 10th 2018 by Bridgewater
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4.42  · 
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 ·  516 ratings  ·  40 reviews


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Samuel Peck
Sep 17, 2018 rated it it was amazing  ·  review of another edition
Regular readers of Bridgewater's Daily Observations will be familiar with the thinking and sections presented here. Bridgewater's/Dalio's framework for thinking through debt cycles is historically grounded and pretty rigorous, and serves as a good reference and guide when thinking about markets - both in the past and future. The writing is easy to read, and the book does not need to be read from cover to cover - there are many parts and appendices that can be skimmed through or skipped and reser ...more
Edric Subur
Dec 27, 2018 rated it liked it
Key takeaways:

* Debt isn’t necessarily bad. In fact, having too little debt creates economic problems in the form of forgone opportunities. The key is to ensure productive utilization of the borrowed money to produce income needed to service that debt

* Crisis and debt cycles are inevitable due to human nature. During the bubble, people are blinded by the present market boom and driven by greed to participate. This continues until debt burden gets too big. Creditors worry, increase restriction an
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Justin
Oct 11, 2018 rated it really liked it
I received this book, for free, in exchange for an honest review.

This book is an excellent book for a specific audience.
This book needs to be read slowly and deliberately.
It is a work of great intelligence and research with a corresponding level of reading difficulty.
Much of the information was above my head and could only be understood if I were to devote months to read this. As a background, I have an intermediate level of finance/investing knowledge which is far better than average. That bein
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Tomas Krakauskas
Mar 11, 2019 rated it it was amazing
Definitely TOP5 book about finance/economics I have ever read. For investors who want to get a deep understanding about causes for deflationary and inflationary financial crisis and processes that countries are facing during it this is a great manual. I especially enjoyed 2nd part of the book where anatomy of three devastating crisis (Weimar Republic 1920s, US 1929, US 2008) is presented in very detailed way by providing almost day by day chronology of event with iliustrations from newspapers an ...more
Akhil Jain
Sep 29, 2018 rated it really liked it
Fav highlights:
• To anticipate a debt crisis well, one has to look at the specific debt-service abilities of the individual entities, which are lost in these averages. More specifically, a high level of debt or debt service to income is less problematic if the average is well distributed across the economy than if it is concentrated—especially if it is concentrated in key entities. While some people think that the amount of money in existence remains the same and simply moves from riskier asset
...more
João Cortez
Jan 06, 2019 rated it really liked it
Another great book from Ray Dalio. He presents a sound framework for understanding inflationary and deflationary debt cycles, and then analysis in details the German Debt Crisis of 1918-1924 as well as the US Debt Crisis of 1928-1937 and 2007-2011. There's also a chapter of 48 case studies with computer generated text. The book is very interesting but rather long and I wish the author would also explore and present the debt crisis from the perspective of the Austrian School of Economics.
Steve
Oct 29, 2018 rated it liked it  ·  review of another edition
Mr. Dalio, or rather his research team, have done a remarkably good job synthesizing a large data set of financial booms and busts.

I feel he falls into causal reductionism in attempting to describe systemic responses to financial crises. Admittedly, for those many states that suffer from chronic broken record syndrome, like Argentina, this analysis is useful. If we reduce our focus to the US, my only investment concern, his analysis is of little relevance.

There's abundant prima facie reasons to
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Denis Vasilev
Sep 27, 2018 rated it really liked it
В целом несложный фреймворк для исследования финансовых кризисов. Есть и отчеты по российским.
Stefan Bruun
Oct 18, 2018 rated it it was amazing
Probably the best book I've read on economics. Very easy to follow and thoroughly documented. I'd recommend it to anyone interested in finance or economics.
Maru Kun
Sep 24, 2018 marked it as to-read  ·  review of another edition
Shelves: investment-made
Looks like a very interesting book on financial crises from a source that might not be the first that the layman would want to turn to but which speaks with an authority based on actual practical experience rather than from political ideology.

A complementary review in the FT is here while a link to get the book for free is here.

Here is a quote from the FT review which in turn quotes the book. So a decade of austerity in the UK has been counterproductive has it? Well color me surprised, but inter
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Andrew Han
Sep 14, 2018 rated it really liked it
Previously this book was known as the Economic Principles, which included a separate section on what makes countries successful. This new book starts with Dalio's template on the different types of deleveragings (beautiful, deflationary, and inflationary), the underlying mechanics of different policy responses, and how investors reacted. The second part includes in-depth, week-by-week case studies on the Weimar hyperinflation, the Great Depression, and the 2008 financial crisis. The final part i ...more
Alex McLain
Feb 06, 2019 rated it it was amazing  ·  review of another edition
Shelves: favorites
If you have money in the stock market or real estate, the debt cycle is an important thing to understand. These books are an incredibly detailed overview of how the debt cycle works, how countries can manage the cycle, and in-depth case studies on three major debt crises from history. If you're like me and don't have a formal background in finance or economics the books may feel a bit dense. I recommend going slow in this case and spending time absorbing the concepts. Doing this really helped me ...more
Tony Cavicchi
Ray Dalio crunched the data to back up his formula for debt crises. He identifies economic downturns as caused by bubbles created by debt outpacing its creative value, causing a credit contraction. Debt crises can be deflationary or inflationary. Countries have to make hard choices, but can get out of crises when their debts are mostly denominated in their own currency. When debts are in FX, then much more long-term pain ensues. Dalio includes detailed case studies to illustrate his claims. A th ...more
Dick
Dec 18, 2018 rated it it was amazing  ·  review of another edition
This is simply one of the best book I have read on macroeconomic. It provides a framework, through very detailed historical case studies, for understanding why the engine of the financial market sometimes breaks down, what are the economic signals during each stage of the cycle, and the consequences of the right and wrong policy responses.

I am a big follower of Warren Buffett, who repeatedly mentioned that any attempt on top down economic forecast is fruitless. Yes it is true. But i do believe
...more
Alessandro Orlandi
Mar 16, 2019 rated it liked it
Shelves: investors
Not my favourite book. I liked much More Mastering the Market Cycle: Getting the Odds on Your Side. I think that it's a good attempt by Ray Dalio to explain his thoughts, but I would have rather prefer he gave a complete view rather than say "I give you something but how I do this is private". I was a bit annoyed by this. If you write a book on this topic give your complete view otherwise it has no point.
Sebastián Ortega
Jan 02, 2019 rated it really liked it
The first part of the book describes the archetypes of inflationary and deflationary debt crises in great detail. I suppose that for an economist it can be even too simplistic but for the layman is packed with insight and very illuminating.

The second part is a series of case analyses crisis by crisis taking into account extensive details, news of the time, etc. You don't need to work that part to get the takeaways of the book.

All in all, read it if you have a minimal interest on the next big cri
...more
Railgun
Oct 08, 2018 rated it it was amazing
I read the PDF version (it's a free download thanks to Ray, the author of the book) - the debt crisis framework is straightforward to understand, but, to make it work, you need to notice the subtle difference described in the case studies. The timing of this book is perfect, the sooner you read it, the better you'd think about how to protect yourself from the upcoming crisis. I hope you enjoy reading it and learn something.
Guillermo Trueba
Feb 08, 2019 rated it really liked it
A primer on the cyclical capitalista crisis.
I learned a ton about medium and long term economy trends thanks to debt.
The relationships between the different components of an economy, the key role of debt.
The whole book is grind towards the end, but you can read it in order to gain an intuitive understanding of crisis so now reading macroeconomic indicators is easier and provides me some insight were before i was clueless.
Recommended read if you want to invest.
erick tavarez
Feb 10, 2019 rated it it was amazing
Amazing read

It is no surprise that Mr. Dalio is such an incredibly successful man. His analysis is so extensive, yet his mastery of the subject matter allows him to explain it succinctly. This is by far the best book I have ever read in terms of analyzing severe market downturns. Amazing read.
Brian
Feb 01, 2019 rated it liked it
Shelves: finished
Quite interesting and involved

An in-depth study on the structure of debt that is quite interesting though dry. But whoever thought the study of finance & debt was supposed to be entertaining & comedic!

This text is by far the best in the study of debt. I’m sure to refer back to it when needed?
Joel Borges
Apr 16, 2019 rated it it was amazing
Unbelievable book that details both inflationary and deflationary pressures.

As a business and finance major, and someone who practices in money management in my career...incredibly detailed read that helped build on my process in better understanding the economic cycle, debt crisis, investor psychology, general economics.
Michal Takac
Mar 03, 2019 rated it it was amazing
Book provides good insight into the topic of crises on the financial market and is a valuable resource for the investors, economists and everyone looking for a way to enhance his finance education. Keep in mind this is highly technical book, not so easy to read and is not suitable for people without enhanced knowledge in finance and economic.
Ben Wong
Jan 26, 2019 rated it liked it
To start off, this is a book for people in finance, not easy for the layman. An extension of his youtube videos, this doesnt teach much of anything new, but i loved the newspaper clippings at the end of each of the later chapters; it allows me to relive how things were at the time.
Matthew S.
Nov 13, 2018 rated it it was amazing  ·  review of another edition
Great framework for understanding short term vs. long term debt cycles. Admittedly this is a dense read, especially the specific case studies at the end. However, this is helpful for understanding what are the underlying relationships between social unrest and the credit markets.
Musaed Alshatti
Feb 18, 2019 rated it it was amazing
This is a terrific and must-read piece.
Apoorv
Mar 20, 2019 rated it it was amazing
Must Read
Joseph
Dec 12, 2018 rated it liked it
Shelves: unfinished
there are some good pointers, but this is definitely not an easy read.
Xinyu Wu
Nov 25, 2018 rated it it was amazing
Needs to re-read
Santiago Castillo
Dec 31, 2018 rated it it was amazing
Shelves: re-read-books
A must read for anyone who is interested in economics and financial markets!
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Raymond Dalio (born August 8, 1949) is an American investor, hedge fund manager, and philanthropist. Dalio is the founder of investment firm Bridgewater Associates, one of the world's largest hedge funds.
“In the immediate postbubble period, the wealth effect of asset price movements has a bigger impact on economic growth rates than monetary policy does. People tend to underestimate the size of this effect. In the early stages of a bubble bursting, when stock prices fall and earnings have not yet declined, people mistakenly judge the decline to be a buying opportunity and find stocks cheap in relation to both past earnings and expected earnings, failing to account for the amount of decline in earnings that is likely to result from what’s to come. But the reversal is self-reinforcing. As wealth falls first and incomes fall later, creditworthiness worsens, which constricts lending activity, which hurts spending and lowers investment rates while also making it less appealing to borrow to buy financial assets. This in turn worsens the fundamentals of the asset (e.g., the weaker economic activity leads corporate earnings to chronically disappoint), leading people to sell and driving down prices further. This has an accelerating downward impact on asset prices, income, and wealth.” 1 likes
“This way of thinking about risk caused many investors to increase their exposures beyond what would normally be seen as prudent. They looked at the recent volatility in their VAR calculations, and by and large expected it to continue moving forward. This is human nature and it was dumb because past volatility and past correlations aren’t reliable forecasts of future risks.” 0 likes
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