The Great Risk Rebalance: Facing the debt supercycle challenge

With the rapid assumption of debt by governments, businesses, and consumers worldwide, global economies find themselves in the midst of a debt supercycle. As part of the Great Risk Rebalance series that examines key risks facing fixed income investors, our fixed income investment team explores the debt supercycle, what it means, and how investors might navigate their way through it.

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super Sako is a huge Challenge and I think it's very misunderstood over the last 30 years monetary policy has been the primary tool for influencing the US economy and its Works in NY lock magic every time the economy is going into difficulties with low interest rates and what we're trying to do here is to encourage the use of credit or we're expanding credit as a means to create economic rice that's been smoothing out there for economic cycle that's been German league right it's been effective but we have also probably left out selves to lose for too long and then by the time we try to change interest rates back to Ohio or normal level if you like boys may have hit the lights and then doing that it's quickly impacted the economy in before we know it we can just try to have to come down and down and down between a 30 cycle in the byproduct of that has been a huge buildup of dead and it's really any Blaine I've lost 30 years that that's a good how did we grow at three and a half for 4% in the United States for much of the last several decades how did the world economy grow at 8 plus percent and how did the emerging market economies grow at 12 plus percent up until recently part of the answer was the demographics were in the right place at the right time productivity was good part of the answer is we took out more debt so we could support that growth and the growth we lived at a standard that might have not been quite what we were producing so we borrowed in order to allow for that it is time to pay the piper and live probably in a lower growth world and if you manage to that lower growth expectation you can definitely still achieve reasonable returns with reasonable risk

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