Dalio: The Fed is inflating a bubble and monetizing government debt.

On November 6, Ray Dalio, founder of Bridgewater Associates, stated that the Fed's past quantitative easing was “stimulus for depression,” while the current quantitative easing is “stimulus for bubbles.” When the supply of U.S. Treasuries exceeds demand, and the Fed is “printing money” and buying bonds, while the Treasury is shortening the duration of the debt it sells to compensate for the lack of demand for long-term bonds, these are all classic dynamics of the late stage of the “great debt cycle.” Due to the highly stimulative financial side of U.S. government policy (attributed to the enormous existing unpaid debt and huge deficits, and financed through massive Treasury issuance, especially over relatively short durations), quantitative easing will effectively monetize government debt rather than simply reinject liquidity into the private system. This is where the current situation differs, appearing to make it more dangerous and inflationary. It seems like a bold and risky “bet” on growth, especially growth driven by artificial intelligence, which is financed through very loose fiscal, monetary, and regulatory policies. We will have to monitor closely to respond appropriately. (Jin10)