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Thanks Yogi. I’ve always found Dalio fascinating - if perhaps a bit “over the top” in his analysis.
From your linked story: ”When asked about the potential consequences of a simmering trade dispute, Dalio described the current state of affairs as ‘an extension of the patterns of history’ — and singled out 1930s Germany as one example. said there was a write-down of debt at that time, alongside a hike in tariffs to boost revenue and a buildup of its domestic base. ‘Be nationalistic, be protectionistic, be militaristic. That is the way these things operate,’ he said. ”
Sounds about right. Whether wittingly or unwittingly, proceeds from the tariffs have potential to pay down debt. Not only that, but if they cause more inflation the debt will be repaid in cheaper dollars.
Reluctant to quote from paid subscription sites, but found the following analysis from a reader / poster on Bill Fleckenstein’s site early last week thought provoking. I cannot vouch for the accuracy.
(From Mr. Skin): “All throughout mid to late 1929, the stock market had several ‘little’ dips as the Smoot-Hawley tariff bill moved slowly through congressional committees.When progress stalled, the market would rally.
“The whipping around "tariff anxieties" finally helped trigger the big margin call ‘spasms’ in late September and early October. The market finally caved in as margin liquidation took place on October 24, 28, and 29. Following the October-November crash, the market rallied strongly into 1930, regaining about 50% of the drop.
“However, the Senate finally passed the tariff bill in March and President Hoover signed it into law the next month. That marked the end of the rally and the market broke sharply and went straight down until June 1932, losing 90% from the 1929 high.” (posted 3/11/25)
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In January 2025, Barrons mentioned that U.S. Will Lose Its Last Triple-A Credit Rating .
https://apple.news/AectmDFN4QLuQsLvCKTsSZQ
Wouldn’t that be lovely of that happens?
From your linked story: ”When asked about the potential consequences of a simmering trade dispute, Dalio described the current state of affairs as ‘an extension of the patterns of history’ — and singled out 1930s Germany as one example. said there was a write-down of debt at that time, alongside a hike in tariffs to boost revenue and a buildup of its domestic base. ‘Be nationalistic, be protectionistic, be militaristic. That is the way these things operate,’ he said. ”
Sounds about right. Whether wittingly or unwittingly, proceeds from the tariffs have potential to pay down debt. Not only that, but if they cause more inflation the debt will be repaid in cheaper dollars.
Reluctant to quote from paid subscription sites, but found the following analysis from a reader / poster on Bill Fleckenstein’s site early last week thought provoking. I cannot vouch for the accuracy.
(From Mr. Skin):
“All throughout mid to late 1929, the stock market had several ‘little’ dips as the Smoot-Hawley tariff bill moved slowly through congressional committees.When progress stalled, the market would rally.
“The whipping around "tariff anxieties" finally helped trigger the big margin call ‘spasms’ in late September and early October. The market finally caved in as margin liquidation took place on October 24, 28, and 29. Following the October-November crash, the market rallied strongly into 1930, regaining about 50% of the drop.
“However, the Senate finally passed the tariff bill in March and President Hoover signed it into law the next month. That marked the end of the rally and the market broke sharply and went straight down until June 1932, losing 90% from the 1929 high.” (posted 3/11/25)
From: Fleckenstein Capital .com
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