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kwheeles's review against another edition
3.0
Well-supported analysis of debt crises (reading this since it appears we are headed into a significant expansion of debt). A key takeaway for me is that during the reflation/recovery phase, wealth effects have played a large role (Dalio argues that they are primary over near term income effects). And that asset price inflation is its own sort of inflation (again, may be the primary effect). I came out of school in 1979 when US inflation was over 13% (the fed funds rate ranged up to 18%), and in 1992 spent months in Brazil during a period of hyperinflation (over 1100% that year). I was also an avid reader of Milton Friedman ('inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output'). So I'm sensitized to inflation more than others might be. Coming out of the 2008-2009 financial crisis, I expected inflation given the monetary actions taken (low rates and quantitative easing). Part of the absence of inflation I wrote off to reduced velocity of money (which is true, it wasn't turning over), but it seems to me an alternative way to see it (as this book does) is that the inflation was going into financial assets (which do not turn over the same way fiscal stimulus does, and therefore lack the multiplier effect). So I have to wonder if that will hold true coming through the upcoming debt crisis - whether inflation will remain mild and inflation will occur moreso in assets. A factor which supports asset based inflation is the increased level of income inequality (since my younger years) and the current political environment which encourages increased income inequality. It makes sense that the recovery will provide an outsize boost to asset prices. But the wealth effect we have seen in the past was based on wealth more broadly distributed - as income inequality increases it seems the wealth effect will be less helpful - providing less fiscal impact and going more into inert wealth gains at the top of the income scale. So in summary, maybe it won't hurt us with inflation, but it may not be as healthy a recovery with the wealth concentrated in fewer hands.
Separately, these crises leave a mark - they change society. And the COVID pandemic is not just a financial crisis, but a societal disaster. It is would be easy to underestimate its ongoing impact, but one can hope that it will shift the power balance between labor and capital (in labor's favor). WWII was a tremendous example of the equalizing nature of societal disaster. Not only would this benefit us from an individual egalitarian point of view, but it could restore the effectiveness of traditional monetary and fiscal policy tools (shifting fiscal power to consumers at the expense of absentee landlords/equity holders). One can hope.
Separately, these crises leave a mark - they change society. And the COVID pandemic is not just a financial crisis, but a societal disaster. It is would be easy to underestimate its ongoing impact, but one can hope that it will shift the power balance between labor and capital (in labor's favor). WWII was a tremendous example of the equalizing nature of societal disaster. Not only would this benefit us from an individual egalitarian point of view, but it could restore the effectiveness of traditional monetary and fiscal policy tools (shifting fiscal power to consumers at the expense of absentee landlords/equity holders). One can hope.
orlandom1188's review
informative
tense
slow-paced
4.0
Teaches about all types of market cycles. In detail, he brings up multiple major financial events in history and tells you where things broke down. It’s a long read but worth it. You will have a hard time finding someone who can teach you at length about this subject the way Dalio does. This book feels more like a textbook.
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