周二，人人最大对冲基金桥水公司首创东谈主瑞·达利欧在X发布推文，内容是他的未出书新书《国度怎么歇业》初稿的序论的第一章。
本书的第一章用七页的篇幅简略而完整描摹一个典型债务大周期（经久债务周期）的发展机制。以下是著作亮点：
短期债务周期：当经济行为和通胀率低于预期时，利率相对于通胀较低，相对于其他投资的答复率而言较低时，货币和信贷很容易提供。这些条件饱读动借钱销耗和投资，从而导致资产价钱、经济行为和通货扩展回升，直到高于预期水平，此时货币和信贷受到驱散，利率相对于通胀率和其他投资的答复率变得相对较高。这导致用于销耗和投资的借钱减少，从而导致资产价钱下降、经济行为放松弛通胀裁减，进而导致利率下降，货币和信贷变得愈加容易，周期再行启动。
经久债务周期：短期债务周期加起来会形成大型经久债务周期，信贷是一种欢快剂，东谈主们想要更多，是以就会偏向于创造信贷。这会导致债务跟着时分的推移而上升，常常会导致债务的大部分短期周期性高点和低点高于以前。
中央银行不错解救中央政府，是以中央政府债务的风险是荫庇的。如果评级机构对债务因爽约和贬值而贬值的风险进行评级，那么债权东谈主将得到更好的服务。毕竟，这些债券应该是财富的保藏室，应该被如斯评级。
债务大周期从健全/硬通货和信贷到日益宽松的货币和信贷，再到债务落空，导致临了转头必要的谨慎/硬通货和信贷。
在债务大周期的这一阶段启动时，最初的间隙常常从私营部门延长到中央政府，然后延长到中央银行。债务资产的净抛售，尤其是政府债务资产的净抛售，是一个很大的危境信号。
经久债务周期的后期，当央行行长们悉力将其刺激战术振荡为增多支拨时，储户、投资者和企业窄小假贷和支拨和/或存在通货紧缩，因此他们得回的无风险利息对他们来说相对有眩惑力。在这种时候，即使利率降至 0%（致使低于 0%），也很难让东谈主们罢手现款储蓄。这一阶段的特色是经济进入通货紧缩、疲软或负增经久，东谈主们和投资者囤积低风险的、常常是政府担保的现款。
经济景气时积存储蓄，经济疏远时就不错动用储蓄。储蓄过多和过少王人要付出代价，莫得东谈主概况在两者之间取得齐全的平衡。
债务危机提供了巨大的风险和机遇，如果投资者了解债务危机的运作方式，并掌捏淡雅的搪塞原则，债务危机既能破坏帝国，也能为投资者提供绝佳的投资契机。
以下是全文翻译：
先容一个国度的债务和债务增长有驱散吗？
如果政府债务增长不放缓，利率尽头所影响的一切将会发生什么变化？
像好意思国这样领有主要储备货币的进攻大国会歇业吗——如果会，那会是什么样式？
有莫得一种债务大周期不错让咱们追踪，告诉咱们何时该哀悼债务问题，以及该怎么搪塞？
这些问题不单是是经济学家的学术问题，亦然投资者、战术制定者和大多数东谈主王人必须答复的问题，因为这些谜底将对咱们悉数东谈主的福祉和咱们应该作念什么产生巨大影响，但目下尚无委果的谜底。
目下，有些东谈主认为政府债务和债务增长莫得任何驱散，尤其是在一个国度有储备货币的情况下。那是因为他们信服，如果储备货币的货币辞天下范围内被往常接受，那么它的中央银行老是不错印钞来偿还债务。其他东谈主则认为，高水平的债务和快速的债务增长预示着一场行将到来的要紧债务危机，但他们不知谈危机将以何种方式、在何时爆发，也不知谈会到来怎么的影响。
那么，经久债务周期呢？诚然“买卖周期”被往常认同，有些东谈主也判辨到它是由短期债务周期驱动的，但对于大型经久债务周期来说，情况并非如斯。莫得东谈主承认或驳斥它。我在教科书中找不到对于它的任何优秀磋商或描摹，即使是天下最先的经济学家——包括现在或曩昔正在管制中央银行和政府国债的经济学家——当我与他们一谈探讨这个至关进攻的主题时，他们也莫得太多要说的，这便是我将这项磋商进行并传递下去的原因。
在启动磋商这些之前，我应该先解释一下我的起点，我不是以经济学家的身份来磋商这个话题的，我是别称人人宏不雅投资者，50多年来，我阅历了许多国度的繁多债务周期，对这些周期有了填塞的了解和把捏，并押注周期将怎么发展下去。我仔细磋商了曩昔100年的悉数要紧债务周期，并轻松地磋商了曩昔500年中的更多债务周期，因此我信服我知谈怎么搪塞和把捏债务周期。因为我现在深感担忧，是以我以为有事业将这项磋商传递给其他东谈主，让他们我方评估。
为了判辨，我像医师磋商许多病例一样看待许多病例，检验它们背后的机制，以了解鼓吹其进展的因果关系。我还从这些阅历中学习，反念念我学到的东西，把它写下来，让智慧的东谈主阅读和质疑它。然后我构建系统，将赌注押在我学到的东西，并得回新的体验。我一遍又一随处这样作念，直到我故去，我可爱这样作念。因为我的游戏便是在市集高下注，而且债务市集简直驱动着一切，是以几十年来我一直沉进于磋商债务动态。我信服，如果你了解这些动态，作为投资者、商东谈主或战术制定者不错作念得突出好，如果你不了解，你最终会受到它们的伤害。
通过我的磋商，我发现有在经久的债务大周期，这些周期老是会导致巨大的债务泡沫和落空。我看到，自1700年以来存在的轻佻750个货币/债务市鸠合，唯有轻佻20%仍然存在，而悉数这些剩余的市集王人通过我在磋商中描摹的机械流程严重贬值。我看到了旧约中怎么描摹这个经久的债务大周期，几千年它是如安在中国朝代中反复献艺的，以及它怎么一次又一次地预示着帝国、国度和省份的雕零。
这些债务大周期老是以不朽、渊博一致的方式运作，这些方式但应该被很好地判辨，但目下还莫得。在这项磋商中，我但愿澄澈地解释它们是怎么运作的，我的描摹将作为一个模板，不错用来了解资产和债务的情况以及可能发生的事情。诚然我知谈我将要描摹的债务大周期模板以前莫得经过审查，但我有信心它存在，因为我用它押注事情会怎么发展赚了好多钱。我之是以传递它，是因为我现在正处于一个东谈主生阶段，我想共享我所学到的、我发现有价值的东西。你不错用它作念你可爱的事情。
为什么我认为我判辨了别东谈主不睬解的东西？
我忖度这有几个原因。最先，这种动态莫得得到往常判辨，因为经久债务大周期常常接续轻佻一世的时分—— 80 年（或多或少25年）傍边，是以咱们无法通过训诲来了解它们。
其次，咱们太关注发生在咱们身上的事情，是以东谈主们忽视了大局。我还认为，东谈主们会对哀悼过多的债务有偏见，因为大多数东谈主可爱信贷赋予他们的销耗材干，而且如实有许多对于债务危机的警告从未发生过。对2008年人人金融危机和PIIGS国度（葡萄牙、意大利、爱尔兰、希腊和西班牙）的欧洲债务危机等要紧债务危机的牵挂照旧褪去，自从咱们照旧渡过了它们之后，许多东谈主认为战术制定者学会了怎么管制它们，而不是将这些案例视为行将到来的更大危机的早期预警。
但不管是什么原因，这些动态被忽视的原因并不进攻。我将描绘启航生的事情和原因，如果对我所说的有填塞的意思意思，我的模板将接受评估，并将左证其优点来决定死活。
这让我猜度了一个原则：
如果咱们对事情的运作方式达不成一致，咱们就无法就正在发生的事情或可能发生的事情达成一致。 出于这个原因，我需要列出我对机器事业旨趣的描摹，并尝试与您和其他学问膏腴的东谈主进行多方，然后再连接探讨正在发生的事情和可能发生的事情。
在政府债务强大且连忙增长的时间，如果不最先磋商其他情况是怎么发生的，就假定此次会与其他时期不同，这在我看来是一种危境的飘零。这就像假定咱们恒久不会再发生内战或天下大战，因为它们在咱们的豆蔻年华从未发生过，而不磋商曩昔导致它们的机制。（趁便说一句，我信服内战和天下大战今天也在发展。与我的其他书一样，我将对原型动态进行描摹，然后望望不同的案例如缘何及为什么发生不同，以便东谈主们不错追踪相对于模板确现时案例，并将正在发生的事情和可能发生的事情放在高下文中。这样，您既不错看到许多正在发生的案例，又不错窥见改日。将正在发生的事情与该模板进行比拟，我信服咱们正在进入中央政府和中央银行将“歇业”的情况之一，这种情况以前照旧发生过数百次，并形成了要紧的政事和地缘政事后果。
这让我猜度了一个进攻的问题，经久债务周期只是共同组成我所说的通盘大周期的几种相互关连的力量之一。例如，1） 债务周大期影响并受其影响 2） 国度里面政事和社会协调与龙套的大周期，这些事件相互影响 3） 国度之间地缘政事协谐和龙套的大周期，这些周期反过来又受到影响 4） 要紧天然灾害的影响，如干旱、激流和流行病，以及 5） 要紧新期间的发展。这五种力量加在一谈，组成了和平与鼎沸、龙套与疏远的通盘大轮回。 因为这些力相互影响，而且简直影响悉数事物，是以必须将它们放在一谈商量。这些力量是怎么运作和互动的，以及现在正怎么运作和互动，在我的书和视频《搪塞不停变化的天下次第的原则》中有更翔实的先容，在本磋商的第17章，即临了一章中也有较小进程的先容。在这项磋商中，我将主要关注债务大周期，尽管咱们会看到许多对于债务大周期与其他力量相互作用以创造咱们所走的谈路的方式。
本磋商由 4 个部分和 17 章组成。
第1部分描摹奉赵务大周期，早先突出轻松，然后以更完整和机械的方式发展，然后用一些方程式来展示机制，并预测可能发生的事情。
第2部分展示了35个债务大周期案例中施行发生的情况，在翔实的模板中列出了典型的事件序列是怎么发生的，并表现有助于详情周期发展进程的症状。
第3部分追究了最近的债务大周期，该周期始于1944年第二次天下大战收尾时，新的货币和天下次第启动之际，并一直延续到现在。在那一部分，除了关注好意思国经久债务周期和通盘大周期（因为它一直是天下主要的储备货币国度和天下最先大国，因此成为自1944年以来东谈主们不错称之为好意思国天下次第的天下主要塑造者）以外， 我还突出简要隘描摹了中国和日本的大周期，展示了从1860年代到现在的它们。这将使您更全面地了解自1944年以下天下上发生的事情，并提供另外两个债务大周期案例供您搜检。
临了，在第 4 部分中，我将瞻望改日，望望我的想象驱散怎么讲明好意思国管制其债务职守所需的条件，以及五放荡量在改日几年可能怎么伸开。
因为我判辨到，不同的读者的专科学问水平不同，他们但愿为此付出的时分也不尽换取，我想匡助你从中得回你想要的东西，是以我把最进攻的几点用粗体写出来，这样你就不错只阅读最基本的东西，并有礼聘地深刻磋商你感意思意思的细节。 我将我认为是不朽和渊博的原则用斜体字写成。如果您是一位信得过对经济学和市集感意思意思的专科东谈主士或有抱负的专科东谈主士，我疏远您阅读整篇著作，因为我信服它会给你一个你会可爱的私有视角，并会匡助你在事业中取得顺利。如果你不是，我疏远你只读粗体部分。 另外，我很想和你进行双向对话，以尝试在什么是简直的以及怎么搪塞它方面保持同步，是以我正在磋商一些新期间来作念到这一丝，我稍后会告诉你。
鄙人一章中，我将用短短七页的篇幅来描摹债务大周期。如果你想就此留步，那透澈没问题。我但愿这项磋商的分析对您有所匡助。
第 1 部分：债务大周期详尽第 1 章：债务大周期本章的标的是用七页的篇幅简略而完整描摹一个典型债务大周期的机制。
机器怎么事业
信贷是资助支拨的主要器用，而且很容易创建。因为一个东谈主的支拨便是另一个东谈主的收入，是以当产生多量信用时，东谈主们会销耗和赚取更多，大多数资产价钱王人会高潮，而且大多数东谈主王人可爱它。偿还债务要倒霉得多。因此，中央政府和中央银行偏向于创造多量信用。信贷还会产生必须偿还的债务，这会产生相背的后果——即当必须偿还债务时，它会减少支拨、裁减收入和裁减资产价钱，这是东谈主们不可爱的。
换句话说，当某东谈主（借钱东谈主-债务东谈主）以一定的成本（利率）借钱（称为本金）时，借钱东谈主-债务东谈主在短期内不错破耗比他们的收入和储蓄更多的钱。但从永恒来看，这需要他们偿还（本金 + 利息），当他们必须偿还时，这需要他们花的钱比他们领有的少。这种动态便是为什么信贷/支拨/偿还债务动态施行上是周期性的。
短期债务周期每个阅历过屡次短期债务周期并受到它影响的东谈主王人应该突出闇练短期债务周期。最先，当经济行为和通胀率低于预期时，当利率相对于通胀较低，相对于其他投资的答复率而言较低时，货币和信贷很容易提供。这些条件饱读动借钱销耗和投资，从而导致资产价钱、经济行为和通货扩展回升，直到高于预期水平，此时货币和信贷受到驱散，利率相对于通胀率和其他投资的答复率变得相对较高。这导致用于销耗和投资的借钱减少，从而导致资产价钱下降、经济行为放松弛通胀裁减，进而导致利率下降，货币和信贷变得愈加容易，周期再行启动。这些周期常常接续轻佻六年，或多或少三年。
短期债务周期加起来会形成大型经久债务周期莫得引起填塞关注的是，这些短期债务周期怎么累积成大型经久债务周期。因为信贷是一种创造欢快的欢快剂，东谈主们想要更多，是以就会偏向于创造信贷。这会导致债务跟着时分的推移而上升，常常会导致债务的大部分短期周期性高点和低点高于以前。
这些加起来就形成了经久债务周期，当它变得不可接续时，债务周期就会收尾。在经久债务周期的早期，当债务职守较低且信贷/债务更有可能为高利润的悉力提供资金时，与在周期后期债务职守较高且贷方的分娩礼聘较少时，承担更多债务的材干是不同的。
在早期阶段，借钱（致使借好多钱）并偿照旧很容易的。短期周期的早期，由前边描摹的假贷和支拨的可用性和经济性驱动的， 亦然由对最近货币紧缩时期的灾荒的回忆所带来的挥之不去的严慎所驱动的。在大债务周期的早期，当债务和总偿债额相对于收入和其他资产相对较低时，信贷、支拨、债务和偿债的增多和减少主要由前边描摹的风险较小的激励步骤决定。但在大债务周期的后期，当债务和偿债成本相对于收入和可用于履行偿债义务的其他资产的价值而言变得较高时，爽约风险会更高。
此外，在大债务周期的后期，当债务资产和欠债相对于收入而言较多时，既要试图将利率保持在填塞高的水平以得意贷款东谈主-债权东谈主，同期又不让利率对借钱东谈主-债务东谈主来说太高，这一平衡行动变得更具挑战性。因为一个东谈主的债务是另一个东谈主的资产，两者王人必须得到得意。因此，诚然短期债务周期因前边描摹的经济商量而收尾，但经久债务周期收尾是因为债务职守太大而无法接续。换句话说，因为假贷和销耗更真谛，如果不防卫，债务和债务偿还会像癌症一样增长，合并一个东谈主的购买力并挤压其他销耗。这便是经久大债务周期形成的原因。
几千年来，跳跃各个国度，鼓吹债务大周期并形成随之而来的大市集和经济问题的是，相对于现有的货币、商品、服务和投资资产的数目，产生了不可接续的多量债务资产和债务职守。
更轻松地说，债务是寄托资金的情愿。作为念出的情愿多于已毕情愿的资金时，就会发生债务危机。当这种情况发生时，央行被动在 a） 印多量钞票并将其贬值或 b） 不印钞并发生要紧债务爽约危机之间作念出礼聘。临了，他们老是印钞和贬值。岂论哪种方式——通过爽约或贬值——产生过多的债务最终会导致债务资产（例如债券）贬值。
诚然这些案例的处理方式各不换取，但最进攻的身分是债务是否以央行不错“印制”的货币计价。但岂论变化怎么，咱们简直老是看到，相对于持有经济的分娩材干（即股票）和/或领有其他更踏实的货币形势（例如黄金），持有债务资产（即债券）变得相对不可取。
在我看来，真谛且不得当的是，当信用评级机构对中央政府的信用进行评级时，他们不会对其债务贬值的风险进行评级。他们只对债务爽约风险进行评级，这给东谈主一种装假印象，即悉数评级较高的债务王人是安全的价值储备。换句话说，因为中央银行不错解救中央政府，是以中央政府债务的风险是荫庇的。如果评级机构对债务因爽约和贬值而贬值的风险进行评级，那么债权东谈主将得到更好的服务。毕竟，这些债券应该是财富的保藏室，应该被如斯评级。正如您将在本磋商中看到的那样，这便是我对债券的观念。对于债务以本国货币计价（即以他们不错印制的货币）计价的国度，我将中央政府的债务与中央银行分开评级，以表现它们的风险有多大，我通过商量货币贬值的风险来评估中央银行债务的风险，以及政府债务爽约的风险。
爽约或贬值，我不在乎。我缓和的是失去我的财富储备，这不可幸免地会以某种方式发生。
追踪债务周期的进展短期债务周期和经久债务周期之间的主要区别在于央行扭转债务周期的材干。对于短期债务周期，它的收缩阶段不错通过多量的货币和信贷来逆转，使经济从疏远的通货紧缩状态中复原过来，因为经济有材干产生另一个阶段的非通胀增长。但经久债务周期的收缩阶段无法通过分娩更多的货币和信贷来逆转，因为现有的债务增长和债务资产水平是不可接续的，债务资产的持有者想要开脱它们，因为他们认为，岂论怎么，他们王人会成为空匮的财富持有者。
将经久债务周期的进展想象成疾病或生命周期，在不同的阶段，会进展出不同症状。通过识别这些症状，东谈主们不错大致详情周期的进展位置，并对它从那边可能怎么发展的一些预期。
轻松地描摹一下，债务大周期从健全/硬通货和信贷到日益宽松的货币和信贷，再到债务落空，导致临了转头必要的谨慎/硬通货和信贷。更具体地说，早先是私营部门不错偿还的健康借钱；然后，私营部门过度假贷，出现亏本，难以偿还；然后政府部门试图提供匡助，过度假贷、亏本，而况难以偿还；然后，中央银行试图通过“印钞”和购买政府债务来提供匡助，但在偿还方面碰到了问题，这导致它尽可能地将更多的债务货币化（即，如果债务以它不错印钞的货币计价）。诚然并非悉数病例王人以透澈换取的方式进展，但大多数病例会阅历以下五个阶段：
1） 谨慎的货币阶段：当净债务水平较低时，货币谨慎，国度具有竞争力，债务增长鼓吹分娩率增长，从而创造足以偿还债务的收入。这导致金融财富和信心的增多。
信贷是寄托资金的情愿，与需要在以后付款的信用不同，货币结算往复——即，如果给钱，往复就完成了，而如果给了信用，则欠款。创造信用很容易。任何东谈主王人不错创造信用，但不是任何东谈主王人不错创造货币。例如，我不错通过接受您的情愿来创造信用，即使您莫得钱。因此，信用很容易增长，因此信用比货币多得多。
最有用的货币既是交换媒介，亦然天下范围内往常接受的财富储存库。在经久债务周期的早期阶段，股票开户货币是“硬的”，这意味着它是一种交换媒介，亦然财富的储存库，这些财富不成玩忽增多供应，例如黄金、纯银和比特币。像比特币这样的加密货币现在正在成为一种公认的硬通货，它是一种辞天下范围内被往常接受且供应有限的货币。货币成为无效财富储存库的最大、最常见的风险是创造多量财富的风险。想象一下领有创造货币的材干，谁不会忍不住作念好多这样的事呢？那些不错的东谈主老是如斯。这就形成了经久债务周期。
在大债务周期的早期，a） 货币常常是硬同伙——例如黄金——像货币一样流畅的纸币不错以固订价钱兑换成“硬通货”，而况 b） 未偿还的纸币和债务（支付货币的情愿）并未几。大债务周期包括 a） “纸币”和相对于 b） “硬通货”和什物资产（例如商品和服务）的债务资产/欠债的积存，以及相对于偿还债务所需的收入。
基本上，债务大周期的运作方式就像庞氏骗局或音乐椅一样，投资者持有越来越多的债务资产，信服他们不错将它们振荡为具有购买力的货币来得回简直的东西，但跟着这种信仰所持有的债务资产相对于什物资产增多， 这种转念赫然变得越来越不可能，直到意志到这一丝，并启动出售债务以得回硬通货和什物资产。
在债务周期的早期阶段，私东谈主和政府债务和偿债比率为 1） 相对于收入较低和/或 2） 相对于流动资产较低。例如，政府债务和偿债相对于政府税收较低和/或相对于不错舒适转念为货币的政府流动资产（例如储备和其他储蓄，如主权财富资产）较低。例如，当咱们所处的债务大周期始于 1944 年时，a） 好意思国政府债务和 b） 好意思国货币供应量除以好意思国政府领有的黄金数目的比率分离等于 a） 7 倍和 b） 1.3 倍，而现在这些比率分离为 a） 37 倍和 b） 6 倍。
在这一周期的早期阶段，债务水平、债务增长、经济增长和通货扩展既不太热也不太冷，财务景况王人很谨慎。
在周期的这个阶段，相对于“安全”资产，“风险资产”相对低廉。那是因为对前一时期形成巨大挫伤的牵挂会影响豪情和订价。例如，在1940年代末和1950年代初，股票收益的收益率轻佻是债券收益率的4 。
在这个阶段，有一个健康的经济和淡雅的投资答复，不错进入下一阶段。
2） 债务泡沫阶段：债务和投资增长大于所产生的收入所能支付。
在这个阶段，资金很容易得回且低廉，出现奉赵务融资的经济扩张和经济鼎沸。多量债务融资购买鼓吹了商品、服务和投资资产的需乞降价钱高潮，市集情谊突出乐不雅，而且按照大多数传统计议尺度，市集订价过高。
在这个阶段，常常会有一些令东谈主咋舌的新发明，这些发明信得过具有变革性，投资者投资于这些发明，而莫得材干也不缓和评估其改日现款流的现值是大于照旧小于其成本。
这种态势最终会产生泡沫，进展为为投契提供资金的债务和还本付息的增长率，高于偿还债务所需的收入增长率。
在这一阶段，市集和经济似乎很好，大多数东谈主王人信服它们会变得更好，它们通过多量假贷得回资金，“财富”被口耳之学地创造出来。我所说的 "口耳之学 "是指想象中的财富比施行存在的财富更多。
例如来说，泡沫时期的特征包括债务增长速率显豁快于收入增长速率，资产价钱相对于改日现款流现值的传统计议尺度偏高，以及我在泡沫想法中计议的许多其他身分。(现代的一个例子是估值高出 10 亿好意思元的独角兽企业，其悉数者在纸面上已成为 "亿万大亨"，但只筹集到5000万好意思元的资金，因为投契性风险本钱家插足资金是为了得回近似期权的筹码，以防企业发展淡雅。泡沫不错接续一段时分后才见顶。然则，它们不可幸免地会进入下一阶段。
3） 顶峰阶段：泡沫碎裂并出现信贷/债务/市集/经济收缩。
泡沫落空是由于货币紧缩和之前的债务增长率不可接续，便是这样轻松。
当泡沫落空时，就会启动自我强化的收缩，因此债务问题会像侵袭性癌症一样连忙延长，是以战术制定者必须连忙搪塞，要么扭转场面，要么指点去杠杆化收尾。在大多数情况下，不错通过给系统多量导致债务问题的物资，即通过创造更多的信用和债务，来暂时逆转债务收缩。这种情况一直接续到它不成再连接下去，这时发生了一次大范围的去杠杆化。
4） 去杠杆阶段：债务和偿债水平灾瘠土下降，以与收入水平保持一致，从而使债务水平可接续。
在债务大周期的这一阶段启动时，最初的间隙常常从私营部门延长到中央政府，然后延长到中央银行。债务资产的净抛售，尤其是政府债务资产的净抛售，是一个很大的危境信号。当这种情况发生时，除非中央政府和中央银行管制得突出好，而且连忙招揽有用步骤，不然情况将连忙恶化。这种抛售以挤兑银行的形势出现。我所说的“银行挤兑”是指上交债务资产以得回真金白银，而像银行这样的贷方莫得填塞的钱。当债务问题变得显豁时，债务资产的持有东谈主会出售他们的债务资产，从而推高债务利率。这使得债务更难偿还，因此风险更大，从而推高利率。
出售政府债务导致 a） 解脱市集驱动的货币和信贷紧缩，从而导致 b） 经济疲软，c） 货币下行压力，以及 d） 由于中央银行试图捍卫货币，外汇储备下降。经典的情况是，这些挤兑会加快并搬砖砸脚，债务资产的持有者会以某种方式（通过爽约或通过货币贬值）失去他们认为储存在这些债务资产中的购买力，从而导致市集价值和财富发生巨大变化，直到债务爽约。
由于这种紧缩战术被讲明注解对经济危害太大，央行最终在放宽信贷并同期允许货币贬值，货币贬值自身便是出售债务资产的原因，因为它成为不良的财富储存库。因此，岂论是货币紧缩导致债务爽约和经济不景气，照旧货币宽松导致货币和债务资产贬值，王人对债务资产不利。这种动态创造了所谓的归天螺旋，因为它是一种自我强化的债务收缩动态，其中不停上升的利率会导致债权东谈主看到的问题，导致他们出售债务资产，从而导致更高的利率或需要印更多的钱，这会使货币贬值，导致更多的债务资产和货币出售等等，直到螺旋收尾。
当政府债务发生这种情况时，意志到债务过多是问题场合，天然会导致削减支拨和借钱的倾向。 然则，因为一个东谈主的支拨是另一个东谈主的收入，是以在这种时候削减支拨常常只会导致债务收入比的增多。这常常是战术转向债务重组和债务货币化的组合时，礼聘的组合主要取决于以该国货币计价的债务数目。这种债务爽约、债务重组和/或货币化减少了相对于收入的债务职守，直到达到新的平衡。向踏实平衡的转变常常要通过几次灾荒的休养，因为在确保的财务谨慎性之前就照旧实现了临界财务谨慎性。
经典去杠杆流程的进行如，在这个阑珊/疏远阶段的早期，列国央行会裁减利率并提升信贷的可得性。
当 a） 债务范围强大且债务收缩正在进行中，b） 利率不成再裁减（即当利率下降到 0% 傍边时），c） 对政府债务的需求不及，以及 d） 货币宽松不及以对消自我强化的疏远压力时，央行被动转向新的“器用”来刺激经济。
常常，为了刺激经济，央行必须将利率裁减到低于景色经济增长率、通货扩展率和债券利率，但当它们接近0%时，就很难作念到这一丝了。与此同期，中央政府常常会让我方堕入更多的债务中，因为税收收入下降，提拔私营部门的支拨增多，但私营部门莫得填塞的需求来购买这些债务。中央政府阅历奉赵务紧缩，即解脱市集对其债务的需求不及。如果债务出现净抛售，那会产生更倒霉的问题。
在周期的去杠杆化阶段，常常会出现“推绳索困局”，这是战术制定者在 1930 年代创造的短语。它发生在经久债务周期的后期，当央行行长们悉力将其刺激战术振荡为增多支拨时，储户、投资者和企业窄小假贷和支拨和/或存在通货紧缩，因此他们得回的无风险利息对他们来说相对有眩惑力。在这种时候，即使利率降至 0%（致使低于 0%），也很难让东谈主们罢手现款储蓄。这一阶段的特色是经济进入通货紧缩、疲软或负增经久，东谈主们和投资者囤积低风险的、常常是政府担保的现款。
在这个阶段，中央银行必须作念出礼聘，是保持“硬”性货币，导致债务东谈主债务爽约，这将导致通货紧缩疏远，或者通过多量印钞来使货币“软”化，这将使货币和债务贬值。因为用硬通货偿还债务会导致如斯严重的市集和经济阑珊，是以迎靠近这种礼聘时，中央银行最终老是礼聘印钞和贬值。天然，每个国度的中央银行只可印制该国的货币，这就引出了我的下一个进攻不雅点。
在这个阶段，如果中央央行领有“印钞”材干，中央银行就会创造多量的货币和信用，并积极地向市集投掷。它常常购买政府债务和具有系统进攻性的实体的债务，这些实体有爽约风险（以弥补私营部门对债务的不及，并东谈主为地将利率保持在低水平），无意还会购买股票，为东谈主们购买商品、服务和金融资产创造激励。
在这个阶段，货币贬值常常亦然可取的，因为这会刺激经济并提升通胀率，从而对消通货紧缩压力。如果货币与黄金、白银或其他东西挂钩，则该集合常常会断开，并转向法定货币体系。如果货币莫得挂钩——即如果该货币照旧是法定货币——相对于其他财富和其他货币的储备，使其贬值是有匡助的。在某些情况下，央行的举措可能会推高景色利率，要么是因为央行收紧货币战术以回击通胀，要么是因为它莫得收紧货币来回击通胀，债务持有东谈主不想购买新刊行的政府债务和/或他们想出售它因为它不成提供填塞的答复。进攻的是要不雅察施行和景色利率以及债务的供求情况，以了解正在发生的事情。在这种时候，征收特殊税收和本钱管制等突出战术就会变得很渊博。
去杠杆化阶段常常是一个灾荒的时期，爽约、重组和/或贬值会减轻债务职守，这时不可幸免地会发生债务重组和债务货币化的激进组合，以减轻相对于收入的债务和偿债职守。在典型的去杠杆化中，债务收入比裁减约 50%，或多或少约 20%。它不错作念得好，也不错作念得很差。
当它作念得好时，我称之为“鲜艳的去杠杆化”，中央政府和中央银行同期以平衡的方式进行债务重组和货币刺激。重组减轻奉赵务职守而况是通货紧缩的，而货币刺激也减轻奉赵务职守（通过提供货币和信贷使购买债务更容易），但会形成通胀性、刺激经济，因此，如果它们取得正确的平衡，就会出现正增长，债务职守下降和可接受的通货扩展。
岂论作念得好照旧坏，这王人是大债务周期的阶段，不错减轻多量债务职守，并为下一个债务大周期的启动奠定基础。
5） 债务危机消退：达到新的平衡，新一轮周期启动。
为了领有一个可行的货币/信用/债务体系，必须 a） 货币/债务填塞健全，不错成为可行的财富储存库；b） 债务和偿债职守与服务他们的收入一致，以便债务增长是可接续的；c） 债权东谈主和债务东谈主王人信服这些东西会存在； d） 货币和信贷的可得性以及施行利率启动与贷款东谈主-债权东谈主和借钱东谈主-债务东谈主的需求保持一致。
在大周期的后期阶段，这些事情常常会发生，它需要豪情和根蒂上的休养。在大范围去杠杆化之后，常常很难劝服贷方债权东谈主放贷，因为他们在去杠杆化流程中阅历的贬值/重组使他们厌恶风险，因此中央政府和央行必须招揽复原信誉的行动。这些常常触及通过以下方式整理他们的财务：a） 中央政府赚的钱多于花的钱和/或 b） 中央银行通过提供高施行收益率、提升准备金和/或将货币与黄金或强势货币挂钩来再次使货币变得“将强”。常常，在这个阶段，利率需要相对于通货扩展率相对较高，而况足以弥补货币疲软，因此成为贷方是值得的，而成为借钱东谈主的成本很高。周期的这一阶段对贷方-债权东谈主来说可能突出有眩惑力。
大债务周期所处的阶段也响应在所使用的货币战术类型上。 跟着债务大周期的发展，列国央行必须改变他们运行货币战术的方式，以保持信贷/债务/经济扩张的接续，因此通过不雅察他们正在使用的货币战术类型，东谈主们不错忖度大债务周期处于哪个阶段。 货币战术的各个阶段尽头导致这些阶段的条件如下：
第 1 阶段：挂钩（即硬通货）货币体系（MP1）。
这是从 1944 年到 1971 年存在的货币战术类型。这种类型的货币战术在债务泡沫碎裂时收尾，而况存在前边描摹的“银行挤兑”动态，即从信贷资产挤兑到硬通货，而有限的硬通货数目会导致大范围爽约。这产生了一种利害的印钞空想，而不是让货币的供应受到现有的黄金或硬通货供应的驱散，以便以情愿的价钱进行往复。
第 2 阶段：法定货币、利率驱动的货币战术 （MP2）。
在此阶段，利率、银行准备金和本钱要求亦然信贷/债务增长金额的戒指身分。这个法定货币战术阶段既提供了更大的生动性，又提供了较少的保证，即印钞不会太大以至于货币和债务资产贬值。好意思国从1971年到2008年一直处于这一阶段。当利率变化不再有用（例如，利率达到 0%，需要舒适货币战术）和/或私东谈主市集对所创造的债务的需求不及于正在出售的供适时，它就会收尾，因此，如果中央银行不印钞并购买债务， 货币和信贷将愈加紧缩，利率将高于预期。
第 3 阶段：债务货币化 （MP3） 的法定货币体系。
这种类型的货币战术是由中央银行诓骗其创造货币和信贷的材干来购买投资资产来实践的。当利率无法再裁减，而况私东谈主市集对债务资产（主如果债券和典质贷款，但也可能包括股票等其他金融资产）的需求不及以以可接受的利率购买供适时，它是首选礼聘。它对金融资产价钱成心，因此它常常不成比例地使那些领有金融资产的东谈主受益。它不会有用地将资金送到那些经济压力最大的东谈主手中，也不会很有针对性。好意思国从2008年到2020年一直处于这一阶段。
第 4 阶段：具有合作的大额财政赤字和大额债务货币化战术 （MP4） 的法定货币系统。
当为了使系统淡雅运行时，使用这种类型的货币战术，中央政府财政战术和中央银行货币战术必须合作，以便将货币和信贷送到最需要的东谈主和实体手中。诚然创造货币和信用常常不错暂时缓解债务问题，但它并不成惩处问题。
第 5 阶段：大幅去杠杆化 （MP5）。
这时必须通过债务重组和/或债务货币化大幅减少债务和偿债支付。如果以最好方式进行管制——我称之为漂亮的去杠杆化——减轻债务职守的通货紧缩方式（通过债务重组）与减轻债务职守的通胀方式（通过货币化）相平衡，那么去杠杆化不会产生不可接受的通缩或通胀。
要记取的债务大周期限定是：最先，私营部门过度假贷，出现亏本，而况难以偿还（即债务危机）；然后，为了提供匡助，政府过度假贷，出现亏本，而况难以偿还；然后，为了提供匡助，中央银行购买政府债务并承担损失。为了为这些购买提供资金，并为其他堕入窘境的债务东谈主提供资金（因为它是“临了贷款东谈主”），中央银行印制了多量货币并购买了多量债务。然后，在最坏的情况下，央行会因购买的债务而损失多量资金。
诚然别传现代中央银行“印钞”来购买债务，但中央银行并不是字面上的“印钞”。相背，它从买卖银行借钱（准备金），并支付突出短期的利率。在最极点的情况下，中央银行可能会亏本，因为它从购买的债务中得回的利息收入低于它必须为借入的钱支付的利息，当这些金额变得很大时，它可能会发现我方处于不得不购买债务的自我强化螺旋中。这导致它出现亏本和负现款流，并需要印制更多的钞票来偿还债务，购买更多的债务，这最终会产生更多的损失，这需要它作念更多相通的事情。这便是我之前提到的 “归天螺旋”。
多量“印制”会使货币贬值并形成通货扩展的阑珊或疏远，如果利率上升，央行的债券持有量就会亏本，它必须为其欠债支付的利率高于它从购买的债务资产中得回的利率。这是值得夺想法，但并不是一个很大的危境信号，除非央行领有突出大的负净资产，被动“印制”更多的货币来弥补进账少于欠债出账而出现的负现款流。 这便是我所说的央行歇业的真谛：诚然央行莫得债务爽约，但如果不印钞票，就无法偿还债务。
最终，债务重组和债务货币化减少奉赵务相对于收入的范围，债务周期顺从其好意思收尾。
第 6 阶段：转头硬通货 （MP6）。
在这个阶段，中央政府招揽行动复原其货币和信用/债务的谨慎性，这种类型的货币战术发生在债务通过债务爽约/重组和债务货币化减记之后，因此相对于可用于偿还债务的收入和金额的债务水平不错复原一致。如前所述，这是在持有债务资产的东谈主因爽约和/或通货扩展时期而被毁灭之后发生的，因此必须重建持有债务资产的信心。在这个阶段，列国常常会回到 MP1（即硬资产提拔货币战术）或 MP2（以利率/货币供应为标的的货币战术），通过高施行利率对贷方债权东谈主成心。
对于领有伟大帝国的伟大国度来说，债务大周期的收尾意味着它们杰出地位的散伙。
一些论断性不雅察经济景气时积存储蓄，经济疏远时就不错动用储蓄。储蓄过多和过少王人要付出代价，莫得东谈主概况在两者之间取得齐全的平衡。
大型债务危机是不可幸免的，纵不雅历史，唯有一丝数规律严明的国度避让了它们。这是因为相对于偿还债务所需的收入，贷款从来王人不是齐全的。而且它常常作念得很倒霉，因为东谈主们老是想要更多的信贷，而这变成奉赵务。
债务水平超出了可接续的水平，就需要裁减债务职守，这常常会导致债务爽约/重组以及货币和信贷的创造，从而激励债务危机的发生。而东谈主们的豪情强化了这个轮回：泡沫期使东谈主们愈加乐不雅，导致他们借钱更多，而疏远期使东谈主们愈加悲不雅，导致他们削减支拨。 尽管这种发展在历史上发生过好屡次，但大多数战术制定者和投资者认为他们目下的情况和货币体系不会改变。这种变化是不可想象的，而且它发生得很片刻。
预测债务危机发生的最好要领不是关注单一的影响力或数字，如债务占 GDP 的百分比；而是通过判辨和关注咱们将要磋商的许多相互关连的动态，尤其是在接下来的两章中，咱们将对这些动态身分进行深刻探讨。
如果债务以一邦本国货币计价，该国央行不错而且将会“印钞”以缓解债务危机。 这使他们概况比不成印钞更好地管制债务，但天然它也裁减了货币的价值。如果债务不是以中央银行不错印钞的货币计价的，那么它们将出现债务爽约和通货紧缩疏远，这些债务以他们所欠且无法印钞的货币来计议。
悉数债务危机，即使是要紧的危机，王人不错通过经济战术制定者对其进行重组和货币化来管制，从而减轻债务职守的通货紧缩方式（即刊出和重组债务）和减轻债务职守的通胀方式（创造货币和信贷并将其提供给债务东谈主，使他们更容易偿还债务）相互平衡。要津是跟着时分的推移分管答复，例如如果债务收入比需要下降约50%材干使其接续下去，那么将其散布为每年3%或 4%的债务重组，将比一年内裁减约50%的债务重组要小得多。
债务危机提供了巨大的风险和机遇，如果投资者了解债务危机的运作方式，并掌捏淡雅的搪塞原则，债务危机既能破坏帝国，也能为投资者提供绝佳的投资契机。
如果您试图精准地关注债务周期或将耀见地蚁合在短期内，您将看不到它们。 这就像比拟两片雪花，却忽略了它们简直换取，因为它们并不透澈换取。
要而论之。
在本磋商的其余部分，我将更深刻地探讨这一机制，展示照旧献艺了的35个案例施行原型案例，包括从1944年启动的其他大周期（例如，里面和外部次第的周期），咱们目下处于后期阶段，相对于这个模板是怎么发生的。 并简要先容一下中国和日本的大周期以及许多其他案例。
日本的情况很真谛，因为日本在其大债务周期中走得更远。值得夺想法是，其无数债务和债务货币化导致其货币和债务贬值，这导致其债券持有东谈主自2013年以来相对于持有好意思元债务的损失为45%，相对于持有黄金的损失为60%。在临了几章中，我将共享我是怎么左证这一模板来处理目下好意思国的问题的，好意思国不错怎么裁减严重债务危机的风险，以及我是怎么解读目下的五放荡量。
以下为英文版全文：
Introduction
Are there limits to a country’s’ debt and debt growth?
What will happen to interest rates and all that they affect if government debt growth isn’t slowed?
Can a big， important country that has a major reserve currency like the US go broke—and， if so， what would that look like?
Is there such a thing as a “Big Debt Cycle” that we can track that will tell us when to worry about debt and what to do about it?
These aren’t just academic questions for academic economists. They are questions that investors， policy makers， and most everyone must answer because the answers will have huge effects on all our well-beings and what we should do. But definitive answers don’t currently exist.
At this time， some people believe that there isn't any limit to government debt and debt growth， especially if a country has a reserve currency. That’s because they believe that the central bank of a reserve currency country that has its money widely accepted around the world can always print the money to service its debts. Others believe that the high levels of debt and rapid debt growth are harbingers of a big debt crisis on the horizon， but they do not know exactly how and when the crisis will come—or what its impacts will be.
And what about the big， long-term debt cycle? While the “business cycle” is widely acknowledged and some people recognize that it is driven by a short-term debt cycle， that is not true for the big， long-term debt cycle. Nobody acknowledges it or talks about it. I couldn’t find any good studies or descriptions of it in textbooks， and even the world’s leading economists—including those who are now running， or in the past ran， central banks and government Treasuries—didn’t have much to say about this critically important subject when I explored it with them. That is why I did this study and am passing it along.
Before I get into all that， I should begin by explaining where I’m coming from. I don’t come to this subject as an economist. I come as a global macro investor who for over 50 years has been through many debt cycles in many countries and has had to navigate and understand them well enough to bet on how they would go. I have carefully studied all the big debt cycles over the last 100 years， and superficially studied many more from the past 500 years， so I believe that I understand how to navigate them. Because I am now deeply concerned， I feel a responsibility to pass along this study for others to assess for themselves.
To gain my understanding， I look at many cases like a doctor studies many cases， examining the mechanics behind them to understand the cause/effect relationships that drive their progressions. I also learn from being in these experiences， reflecting on what I learn， writing it up， and having smart people read and challenge it. Then I build systems to place my bets on what I learned and have new experiences. I do that over and over and will do it until I die because I love it. Because my game has been to bet on the markets and because the debt markets drive just about everything， I have been obsessed with studying debt dynamics for decades. I believe that if you understand these dynamics， you can do very well as an investor， businessperson， or policy maker， and if you don’t， you ultimately will be hurt by them.
Through my research， I discovered that there are big， long-term debt cycles that have unfailingly led to big debt bubbles and busts. I saw that only about 20% of the roughly 750 currency/debt markets that have existed since 1700 remain and that all these remaining ones have been severely devalued through the mechanistic process I am going to describe in this study. I saw how this big， long-term debt cycle was described in the Old Testament， how it repeatedly played out in Chinese dynasties over thousands of years， and how time and again it has foreshadowed the fall of empires， countries， and provinces.
These Big Debt Cycles have always worked in timeless and universally consistent ways that are not well understood but should be. In this study， I hope to explain how they work with such clarity that my description will serve as a template that can be used to see what is going on with， and what is likely to happen to， money and debt. While I recognize that the Big Debt Cycle template I will describe has not previously been vetted， I am confident it exists because I have made a lot of money using it to bet on how things would go. I am passing it along because I am now at a stage of life in which I want to share what I have learned that I have found of value. You can do what you like with it.
Why do I think I understand something that others don’t? I theorize that this is for a few reasons. First， this dynamic is not widely understood because big， long-term debt cycles typically last about one lifetime—roughly 80 years (give or take 25 years)—so we don’t get to learn about them through experience. Second， because we focus so much on what is happening to us at the time it is happening， people overlook the big picture. I also think there are biases against being concerned about too much debt because most people like the spending ability that credit gives them， and it is also true that there have been many warnings about pending debt crises that never happened. Memories of big debt crises like the 2008 global financial crisis and the European debt crisis of the PIIGS countries (Portugal， Italy， Ireland， Greece， and Spain) have faded， and since we have gotten past them， many people assume that policy makers learned how to manage them rather than view these cases as early warnings of bigger crises on the horizon. But whatever the reason， it doesn’t matter exactly why these dynamics are overlooked. I am going to paint a picture of what happens and why， and if there is enough interest in what I’m saying， my template will be assessed and will live or die on its merits.
That leads me to a principle:
If we don’t agree on how things work， we won’t be able to agree on what’s happening or what is likely to happen. For that reason， I need to lay out my picture of how the machine works and try to triangulate with you and other knowledgeable people about it before moving on to look at what’s happening and what might happen.
At a time when government debt is large and increasing rapidly， it seems to me dangerously negligent to assume that this time will be different from other times without first studying how other cases transpired. It would be like assuming that we will never have a civil war or world war again because they haven’t happened before in our lifetimes without studying the mechanics that brought them about in the past. (By the way， I believe that both the civil war and world war dynamics are also going on today.) As in my other books，[1] I will create a description of the archetypical dynamic and then look at how and why different cases transpired differently so that one can track current cases relative to the template and put into context what’s happening and what’s likely to happen. In that way， you will both see many cases of this happening and get a peek into the future. Comparing what is happening with that template leads me to believe that we are heading into one of those cases in which central governments and central banks will “go broke” in the ways that have happened hundreds of times before and have had big political and geopolitical consequences.
This brings me to an important point. The Big Debt Cycle is just one of several interrelated forces that together make up what I call the overall Big Cycle. For example， 1) Big Debt Cycles influence and are affected by largely coinciding 2) big cycles of political and social harmony and conflict within countries that are both affected by and affect 3) big cycles of geopolitical harmony and conflict between countries. These cycles in turn are affected by both 4) big acts of nature， like droughts， floods， and pandemics and 5) developments of big new technologies. Combined， these five forces make up the overall Big Cycle of peace and prosperity and conflict and depression. Because these forces affect each other and practically everything， they must be thought of together. How these forces have worked and interacted and are working and interacting now is covered in much greater detail in my book and video titled Principles for Dealing with the Changing World Order and to a lesser extent in Chapter 17 of this study， which is the concluding chapter. In this study， I will be mostly focusing on the Big Debt Cycle， though we will see many references to the ways in which the Big Debt Cycle interacts with the other forces to create the path that we are on.
This study consists of four parts and 17 chapters. Part 1 describes the Big Debt Cycle， at first very simply， then in a more complete and mechanical way， and then with some equations that show the mechanics and help with making projections of what is likely to happen. Part 2 shows what has actually happened across 35 Big Debt Cycle cases， laying out in a detailed template the typical sequence of events that signifies how a cycle is transpiring and shows symptoms that can help identify how far the cycle has progressed. Part 3 reviews the most recent Big Debt Cycle， which started when the new monetary and world orders began in 1944 at the end of World War II and brings it up to the present. In that part， in addition to looking at the Big Debt Cycle and the overall Big Cycle with a focus on the US (because it has been the world’s major reserve currency country and the world’s leading power， thus making it the world’s leading shaper of what one might call the American world order since 1944)， I also very briefly describe the Big Cycles of both China and Japan， showing them from the 1860s until now. This will give you a more complete picture of what has happened in the world since 1944 and provide two other Big Debt Cycle cases to look at. Finally， in Part 4， I will peek into the future， looking at what my calculations say about what is required for the US to manage its debt burden， and how the five big forces might unfold in the years ahead.
Because I recognize that there are different readers who have different levels of expertise and want to give different amounts of time to this and I want to help you get what you want out of this， I put the most important points in bold so you can read just the most essential stuff and optionally dive into the details that interest you. I put what I believe are timeless and universal principles in italics. If you are a professional or aspiring professional who is really into economics and markets， I recommend that you read the whole thing because I believe that it will give you a unique perspective that you will enjoy and will help you to be successful in your job. If you are not， I recommend that you just read what is in bold. Also， because I’d love to have a two-way conversation with you to try to get in sync about what’s true and what to do about it， I am working on a few new technologies for doing that， which I will tell you about later.
In the next chapter， I will describe the Big Debt Cycle in just seven pages. If you want to stop there， that’s perfectly fine.
I hope that you will find the study’s analysis helpful.
Part 1: Overview of the Big Debt Cycle
Chapter 1: The Big Debt Cycle in a Tiny Nutshell
My goal for this chapter is to convey in seven pages a very brief but complete description of the mechanics of a typical Big Debt Cycle.
How the Machine Works
Credit is the primary vehicle for funding spending and it can easily be created.[2] Because one person’s spending is another’s earnings， when there is a lot of credit creation， people spend and earn more， most asset prices go up， and most everyone loves it. Paying back debt is much less enjoyable. As a result， central governments and central banks have a bias toward creating a lot of credit. Credit also creates debt that has to be paid back， which has the opposite effect—i.e.， when debts have to be paid back， it creates less spending， lower incomes， and lower asset prices， which people don’t like. In other words， when someone (a borrower-debtor) borrows money (called principal) at a cost (an interest rate)， the borrower-debtor can spend more money than they have in earnings and savings over the near term. But over the long term， this requires them to pay back (the principal + interest) and when they have to pay it back， it requires them to spend less money than they have. This dynamic is why the credit/spending/debt-paying-back dynamic is inherently cyclical.
The Short-Term Debt Cycle
Everyone who has been around long enough to be affected by it several times should be well-acquainted with the short-term debt cycle. It starts with money and credit being provided readily when economic activity and inflation are lower than desired， and when interest rates are low relative to inflation rates and low in relation to the rates of return on other investments. Those conditions encourage borrowing to spend and invest， which causes asset prices， economic activity， and inflation to pick up until they are higher than desired， at which time money and credit are restrained， and interest rates become relatively high in relation to inflation rates and rates of return on other investments. This leads to less borrowing to spend and invest， which leads to lower asset prices， a slowing of economic activity， and lower inflation， which leads interest rates to come down， money and credit to become easier， and the cycle to begin again. These cycles have typically lasted about six years， give or take three years.
Short-Term Debt Cycles Add up to Big， Long-Term Debt Cycles
What isn’t paid enough attention is the way in which these short-term debt cycles add up to big， long-term debt cycles. Because credit is a stimulant that creates a high， people want more of it， so there is a bias toward creating it. This leads debt to rise over time， which typically leads to most of the short-term cyclical highs and lows in debt to be higher than the ones before. These add up to create the long-term debt cycle， which ends when it becomes unsustainable. The capacity to take on more debt is different early in the Big Debt Cycle when debt burdens are lower and there is more potential for credit/debt to be able to fund highly profitable endeavors than it is later in the cycle when debt burdens are higher， and lenders have fewer productive options.
In that early part， it is easy to borrow—even to borrow a lot—and pay it back. These early short-term cycles are primarily driven by the previously described availability and economics of borrowing and spending， and also a lingering cautiousness brought about by memories of the pain of the most recent time when money was tight.[3] Early in the Big Debt Cycle， when debts and total debt service are relatively low in relation to incomes and other assets， increases and decreases in credit， spending， debt， and debt service are primarily determined by the previously described incentives with less risk. But late in the Big Debt Cycle， when debts and debt service costs get high relative to income and the value of other assets that can be used to meet one’s debt service obligations， the risks of default are higher. Also， late in the Big Debt Cycle， when there are a lot of debt assets and liabilities relative to income， the balancing act of trying to keep interest rates high enough to satisfy lender-creditors without having them too high for borrower-debtors becomes more challenging. That’s because one person’s debts are another’s assets and both must be satisfied. So， while short-term debt cycles end because of the previously described economic considerations， long-term debt cycles end because the debt burdens are too great to be sustained. Said differently， because it is more enjoyable to borrow and spend， if one isn’t careful， debt and debt service can grow like a cancer， eating up one’s buying power and squeezing out other consumption. This is what makes the long-term Big Debt Cycle.
Throughout the millennia and across countries， what has driven the Big Debt Cycle and has created the big market and economic problems that go along with it is the creation of unsustainably large amounts of debt assets and debt liabilities relative to the amounts of money， goods， services， and investment assets in existence.
Said more simply， a debt is a promise to deliver money. A debt crisis occurs when there have been more promises made than there is money to deliver on them. When that happens， the central bank is forced to choose between a) printing a lot of money and devaluing it or b) not printing a lot of money and having a big debt default crisis. In the end， they always print and devalue. Either way—via default or devaluation—the creation of too much debt eventually causes debt assets (e.g.， bonds) to be worth less.
While there are variations in how each of these cases plays out， the most important factor is whether the debt is denominated in a currency that the central bank can “print”. But no matter the variation we almost always see that it becomes relatively undesirable to hold the debt assets (i.e.， bonds) relative to holding the productive capacity of the economy (i.e.， equities) and/or owning other， more stable forms of money (e.g.， gold).
To me it is interesting and inappropriate that， when credit rating agencies rate the credit of a central government， they don’t rate the riskiness of its debt losing value. They only rate the risk of default on the debt， which gives the misimpression that all higher-rated debt is a safe storehold of value. Said differently， because central banks can bail out central governments， the riskiness of central governments’ debts are hidden. Creditors would be better served if the rating agencies rated the riskiness of the debt losing value through both default and devaluation. After all， these bonds are supposed to be storeholds of wealth and should be rated as such. As you will see in this study， that is how I look at bonds. For countries with debts denominated in their own currencies (i.e.， in a currency they can print)， I rate central governments’ debts separately from their central banks to show how risky they are， and I rate the risks of central banks’ debts by considering the risk of the devaluation of money to be as， if not more， probable than a default on government debt.
Default or devaluation， I don’t care. What I care about is losing my storehold of wealth， which inevitably will happen one way or another.
Following the Debt Cycle’s Progression
The main difference between a short-term debt cycle and a long-term (big) debt cycle has to do with the central bank’s ability to turn them around. For the short-term debt cycle， its contraction phase can be reversed with a heavy dose of money and credit that brings the economy up from a depressed disinflationary state because the economy has the capacity to produce another phase of noninflationary growth. But the long-term debt cycle’s contraction phase cannot be reversed by producing more money and credit because existing levels of debt growth and debt assets are unsustainable and holders of debt assets want to get out of them because they believe that， one way or another， they will be poor storeholds of wealth.
Think of the Big Debt Cycle’s progression like the progression of a disease or a life cycle through stages that exhibit different symptoms. By identifying these symptoms one can identify approximately where the cycle is in its progression with some expectations of how it is likely to progress from there. Described most simply， the Big Debt Cycle moves from sound/hard money and credit to increasingly loose money and credit to a debt bust that leads to a return to sound/hard money and credit brought about by necessity. More specifically， at first there is heathy borrowing by the private sector that can be paid back; then the private sector overborrows， has losses， and has problems paying it back; then the government sector tries to help， overborrows， has losses， and has problems paying it back; then the central bank tries to help by “printing money” and buying the government debt， and has problems paying it back， which leads it to monetize a lot more debt if it can (i.e.， if the debt is denominated in the currency that it can print). Though not all cases progress in exactly the same way， most cases progress through the following five stages:
1) The Sound Money Stage: When net debt levels are low， money is sound， the country is competitive， and debt growth fuels productivity growth， which creates incomes that are more than enough to pay back the debts. This leads to increases in financial wealth and confidence.
Credit is the promise to deliver money. Unlike credit which requires a payment of money at a later date， money settles transactions—i.e.， if money is given the transaction is complete， whereas if credit is given money is owed. It’s easy to create credit. Anyone can create credit but not anyone can create money. For example， I can create credit by accepting your promise to pay me money even if you don’t have the money. As a result， credit easily grows so there is much more credit than there is money. The most effective money is both a medium of exchange and a storehold of wealth that is widely accepted around the world. At the early stage of the Big Debt Cycle money is “hard，” which means that it is a medium of exchange that is also a storehold of wealth that can’t easily be increased in supply， such as gold， sterling silver， and Bitcoin. Cryptocurrency like Bitcoin is now emerging as an accepted hard currency because it is a currency that is widely accepted around the world and is limited in supply. The biggest， most common risk to money becoming an ineffective storehold of wealth is the risk that a lot of it will be created. Imagine having the ability to create money; who wouldn’t be tempted to do a lot of that? Those who can always are. That creates the Big Debt Cycle. In the early part of the Big Debt Cycle， a) money is typically hard—e.g.， gold—and the paper money that circulates like money is convertible into the “hard money” at a fixed price and b) there isn’t a lot of paper money and debt (which is the promise to pay money) outstanding. The Big Debt Cycle consists of the building up of a) “paper money” and debt assets/liabilities relative to b) “hard money” and real assets (e.g.， goods and services) and relative to the income that is required to service the debt. Basically， the Big Debt Cycle works like a Ponzi scheme or musical chairs with investors holding an increasing amount of debt assets in the belief that they can convert them into money that will have buying power to get real things， yet as the amount of the debt assets that are held up by that faith increases relative to the real things， that conversion becomes more obviously impossible until that is realized and the process of selling the debt to get the hard money and real assets begins.
At the early stage of the debt cycle， private and government debt and debt service ratios are 1) low relative to incomes and/or 2) low relative to liquid assets. For example， government debt and debt service are low relative to government tax revenue and/or low relative to government liquid assets (e.g.， reserves and other savings such as sovereign wealth assets) that can easily be converted into money. For example， when the Big Debt Cycle that we are in began in 1944， the ratios of a) US government debt and b) US money supply divided by the amount of gold the US government had were equal to a) 7x and b) 1.3x respectively， whereas now these ratios are a) 37x and b) 6x respectively.
During this early stage in the cycle， debt levels， debt growth， economic growth， and inflation are neither too hot nor too cold and finances are both sound.
At this stage in the cycle， “risky assets” are relatively inexpensive relative to “safe” assets. That is because the memories of the prior period in which there was great damage done affects psychology and pricing. For example， in the late 1940s and early 1950s stock earning’s yields were roughly 4x that of bond yields.
During this stage， there is a healthy economy and good investment returns that lead to the next stage.
2) The Debt Bubble Stage: When debt and investment growth are greater than can be serviced from the incomes being produced.
In this stage， money is readily available and cheap， there is a debt-financed economic expansion and an economic boom. Demands for and prices of goods， services， and investment assets are driven up by a lot of debt-financed buying， sentiment is very bullish， and， by most conventional measures， the market is overpriced.
In this stage， there are typically amazing new inventions that are truly transformative that investors invest in without an ability or care to assess whether the present value of their future cash flows will be greater or less than their costs.
This dynamic eventually produces a bubble that is reflected in the rates of debt and debt service growth to finance speculation being greater than the income growth rates that are needed to service the debts. In this stage， markets and economies seem great， most everyone believes that they will get better， they are financed by a lot of borrowing， and “wealth” is created out of nothing. By wealth being created out of nothing， I mean that there is greater imagined wealth rather than actual existing wealth. For example， bubble periods are identifiable by extensive periods (e.g.， three years) of debt growth that is significantly faster than income growth， high asset prices relative to traditional measures of the present values of likely future cash flows， and many other factors that I measure in my bubble indicator. (You can find the indicator
here
.) A contemporary example is the unicorn that is valued at over $1 billion that has made the owner a “billionaire” on paper but has only raised $50 million in capital because speculative venture capitalists put in the money to get option-like chips in case it does well. Bubbles can go on a while before the top is made. However， they inevitably lead to the next stage.
3) The Top Stage: When the bubble pops and there is a credit/debt/market/economic contraction.
The popping of the bubble occurs due to a combination of a tightening of money and the prior rate of debt growth being unsustainable. It is just that simple.
When the bubble is popped， a self-reinforcing contraction begins so the debt problems spread very quickly， like an aggressive cancer， so it is very important for policy makers to deal with it quickly， either to reverse it or to guide the deleveraging to its conclusion. In most cases， the debt contraction can be temporarily reversed by giving the system a heavy dose of what caused the debt problem—i.e.， by creating more credit and debt. That continues until it can’t continue anymore， at which time a big deleveraging occurs.
4) The Deleveraging Stage: When there is a painful bringing down of debt and debt service levels to be in line with income levels so that the debt levels are sustainable.
At the beginning of this stage in the Big Debt Cycle， the first cracks typically spread from the private sector to the central government and then to the central bank. Net selling of debt assets， especially net selling of government debt assets， is a big red flag. When that happens conditions will deteriorate quickly unless managed very well and very quickly by central governments and central banks. That selling takes the form of runs on banks. By “runs on banks” I mean the turning in of debt assets to get real money， which lenders like banks don’t have enough of. When debt problems become apparent， the holders of the debt assets sell their debt assets， which drives interest rates on the debt up. This makes the debt more difficult to service， hence more risky， which drives interest rates higher.
The selling of the government’s debt leads to a) a free-market-driven tightening of money and credit， which leads to b) a weakening of the economy， c) downward pressure on the currency， and d) declining reserves as the central bank attempts to defend the currency. Classically， these runs accelerate and feed on themselves as holders of debt assets see that， one way or another (through default or through the devaluation of their money)， they will lose the buying power that they had believed was stored in these debt assets， causing great shifts in market values and wealth until debts are defaulted on， restructured， and/or monetized. Because this tightening proves too harmful for the economy， the central bank eventually simultaneously eases credit and allows a devaluation of the currency. The devaluation of money can itself be the reason to sell the debt asset because it becomes a poor storehold of wealth. So， whether there is a tightening of money that leads to debt defaults and a bad economy or an easing of money that produces a devaluation of money and debt assets， it is not good for the debt asset. This dynamic creates what is called a death spiral because it is a self-reinforcing， debt-contraction dynamic in which the rising interest rates cause problems that creditors see， leading them to sell the debt assets， which leads to even higher interest rates or the need to print more money， which devalues the money and leads to even more selling of the debt assets and the currency and so on until the spiral runs its course. When this happens to government debt， the realization that too much debt is the problem naturally leads to the inclination to cut spending and borrowing. However， because one person’s spending is another’s income， cutting spending at such times typically only contributes to increases in debt-to-income ratios. That is typically when policies are shifted to a mix of debt restructurings and debt monetizations with the mix chosen primarily dependent on how much of the debt is denominated in the country’s currency. This defaulting on， restructuring of， and/or monetizing debt reduces the debt burdens relative to incomes until a new equilibrium is reached. The movement to a stable equilibrium typically takes place via a few painful adjustment spasms because borderline financial soundness is achieved before secure financial soundness.
Classically， the deleveraging process progresses as follows. Early in this recession/depression phase， central banks bring interest rates down and make credit more available. However， when a) debts are large and a debt contraction is underway， b) interest rates can’t be lowered any more (i.e.， when they fall around 0%)， c) there is not enough demand for government debt， and d) the monetary easing is not enough to offset the self-reinforcing depressionary pressures， the central bank is forced to switch to new “tools” to stimulate the economy. Classically， to stimulate the economy the central bank must lower interest rates to below nominal economic growth rates， inflation rates， and bond rates， but that is difficult to do when they approach 0%. At the same time， the central government is typically getting itself into a lot more debt because tax revenues are down and spending is up to support the private sector， yet there is not enough private sector demand to buy that debt. The central government experiences a debt squeeze in which the free-market demand for its debt falls short of the supply of it. If there is net selling of the debt， that creates a much worse problem.
Often in this deleveraging stage of the cycle there is a “pushing on a string，” a phrase coined by policy makers in the 1930s. It occurs late in the long-term debt cycle when central bankers struggle to convert their stimulative policies into increased spending because savers， investors， and businesses fear borrowing and spending and/or there is deflation， so the risk-free interest that they are getting is relatively attractive to them. At such times， it is difficult to get people to stop saving in “cash” even when interest rates go to 0% (or even below 0%). This phase is characterized by the economy entering a deflationary， weak， or negative growth period as people and investors hoard low-risk， typically government-guaranteed cash.
At this stage， central banks must choose between keeping money “hard，” which will lead debtors to default on their debts， which will lead to deflationary depressions， or making money “soft” by printing a lot of it， which will devalue both it and the debt. Because paying off debt with hard money causes such severe market and economic downturns， when faced with this choice central banks always eventually choose to print and devalue money. Of course， each country’s central bank can only print that country’s money， which brings me to my next big point.
At this stage， if it has the ability to “print money，” the central bank creates a substantial amount of money and credit and throws it aggressively at the markets. It typically buys government debt and private sector debt of systemically important entities that are at risk of defaulting (in order to make up for the private sector’s inadequate demand for debt and to keep interest rates artificially low)， and it sometimes buys equities and creates incentives for people to buy goods， services， and financial assets. At this stage， it is also typically desirable to devalue the currency because that is stimulative to the economy and raises inflation rates thus negating the deflationary pressures. If the currency is linked to gold， silver， or something else， that link is typically broken and there is a move to a fiat monetary system. If the currency isn’t linked—i.e.， if the currency is already a fiat currency—devaluing it relative to other storeholds of wealth and other currencies is helpful. In some cases， the central bank’s moves can drive nominal interest rates higher， either because the central bank tightens monetary policy to fight inflation or because it doesn’t tighten money to fight inflation and holders of the debt don’t want to buy the newly issued government debt and/or they want to sell it because it doesn’t provide an adequate return. It is important to watch real and nominal interest rates and the supply and demand for debt to understand what is happening. At such times， extraordinary policies to get money like imposing extraordinary taxes and capital controls become common.
This deleveraging stage is typically a painful time when debt burdens are reduced by defaults， restructurings， and/or devaluations. This is when an aggressive mix of debt restructurings and debt monetizations inevitably takes place to reduce the debt and debt service burdens relative to incomes. In a typical deleveraging the debt-to-income ratio has the be lowered by roughly 50%， give or take about 20%. It can be done well or poorly. When it is done well， which I call a “beautiful deleveraging，” central governments and central banks simultaneously do both debt restructurings and monetary stimulations in a balanced way. The restructurings reduce debt burdens and are deflationary while the monetary stimulations also reduce debt burdens (by providing money and credit to make it easier to buy debt) but are inflationary and stimulative to the economy so， if they get the balance right， positive growth occurs with falling debt burdens and acceptable inflation. Whether done well or poorly， this is the stage of the Big Debt Cycle that reduces a lot of the debt burden and establishes the bottom that can be built on to begin the next Big Debt Cycle.
5) The Big Debt Crisis Recedes: When a new equilibrium is reached， and a new cycle begins.
In order to have a viable money/credit/debt system， it is imperative that a) money/debt is sound enough to be a viable storehold of wealth， b) debt and debt service burdens are in line with the incomes to service them so that debt growth is sustainable， c) creditors and debtors both believe that those things will exist， and d) the availability of money and credit and real interest rates begin to fall in line with that which is needed by both lender-creditors and borrower-debtors. This late phase of the Big Cycle is when there is a movement to those things happening. It requires both psychological and fundamental adjustments. After a big deleveraging， it is typically difficult to convince lender-creditors to lend because the devaluations/restructurings they experienced in the deleveraging make them risk-averse， so it is imperative that the central government and the central bank take credibility-restoring actions. These generally involve bringing their finances in order by a) the central government earning more money than it spends and/or b) the central bank making money hard again by offering high real yields， raising reserves， and/or linking the currency to something hard like gold or a strong currency. Typically， in this stage， interest rates need to be relatively high in relation to inflation rates and more than high enough to compensate for currency weakness， so it pays to be a lender and is costly to be a borrower. This stage of the cycle can be very attractive for lender-creditors.
The stage that the Big Debt Cycle is in is also reflected in the types of monetary policies being used. As the Big Debt Cycle progresses， central banks have to change how they run monetary policy in order to keep the credit/debt/economic expansion going， so by observing what type of monetary policy they are using， one can surmise about what stage the Big Debt Cycle is in. The phases in monetary policy and the conditions that lead to them are as follows:[4]
Phase 1: A Linked (i.e.， Hard) Monetary System (MP1). This is the type of monetary policy that existed from 1944 until 1971. This type of monetary policy ends when the debt bubble bursts， and there is the previously described “run on the bank” dynamic， which is a run from credit assets to the hard money， and the limited amount of hard money causes massive defaults. This creates a compelling desire to print money rather than leave the supply of it limited by the supply of the gold or hard money that exists to be exchanged at the promised price.
Phase 2: A Fiat Money， Interest-Rate-Driven Monetary Policy (MP2). During this phase， interest rates， bank reserves， and capital requirements are also controllers of the amounts of credit/debt growth. This fiat monetary policy phase both allows more flexibility and provides less assurance that money printing won’t be so large that it will devalue money and debt assets. The US was in this phase from 1971 until 2008. It ends when interest rate changes no longer work (e.g.， interest rates hit 0% and there is a need to ease monetary policy) and/or the private market demand for the debt being created falls short of the supply being sold so that， if the central bank did not print the money and buy the debt， money and credit would be tighter and interest rates would be higher than desired.
Phase 3: A Fiat Monetary System with Debt Monetization (MP3). This type of monetary policy is implemented by the central bank using its ability to create money and credit to buy investment assets. It is the go-to alternative when interest rates can no longer be lowered and when private market demand for debt assets (mostly bonds and mortgages though it can also include other financial assets like equities) is not large enough to buy the supply at an acceptable interest rate. It is good for financial asset prices， so it tends to benefit disproportionally those who have financial assets. It won’t effectively deliver money into the hands of those who are financially most stressed， and it won’t be very targeted. The US was in this phase from 2008 until 2020.
Phase 4: A Fiat Money System with Coordinated Big Fiscal Deficit and Big Debt Monetization Policy (MP4). This type of monetary policy is used when， in order to make the system work well， central government fiscal policy and central bank monetary policy have to be coordinated in order to get money and credit into the hands of people and entities that need it most. While creating money and credit typically temporarily alleviates the debt problem， it does not rectify the problem.
Phase 5: A Big Deleveraging (MP5). This is when there must be a big reduction in debt and debt service payments through a debt restructuring and/or a debt monetization. When managed in the best possible way—what I call a beautiful deleveraging—the deflationary ways of reducing debt burdens (e.g.， through debt restructurings) are balanced with the inflationary ways of reducing debt burdens (e.g.， by monetizing them)， so that the deleveraging occurs without having unacceptable amounts of either deflation or inflation. The Big Debt Cycle sequence to keep in mind is: first the private sector overborrows， has losses， and has problems paying it back (i.e.， a debt crisis); then， to help， the government overborrows， has losses， and has problems paying it back; then， to help out， the central bank buys the government debt and takes losses. To fund those purchases and to fund other debtors in trouble (because it is the “lender of last resort”)， the central bank prints a lot of money and buys a lot of debt. Then， at its worst， the central bank loses a lot of money on the debt it bought.
While it is said that modern central bank “prints” money to buy the debt， the central bank doesn’t literally “print money.” Instead， it borrows money (reserves) from commercial banks that it pays a very short-term interest rate on. At its most extreme， the central bank can lose money because the interest earnings it gets on the debt it bought are less than the interest that it has to pay out on the money it borrowed， so when these amounts become large it can find itself in a self-reinforcing spiral of having to buy debt， which leads it to have losses and negative cash flows which leads it to need to print more money to service its debt and to need to buy more debt which ends up having more losses which requires it to do more of the same. This is the “death spiral” I mentioned earlier. When done in large amounts， the “printing” devalues the money and creates inflationary recessions or depressions. If interest rates rise， the central bank loses money on its bond holdings because the interest rate that it has to pay on its liabilities is greater than the interest rate it receives on the debt assets it bought. This is notable but not a big red flag until the central bank has a very large negative net worth and is forced to “print” more money to cover the negative cash flow that it experiences due to less money coming in on its assets than has to go out to service its liabilities. That is what I mean when I say the central bank goes broke: while the central bank doesn’t default on its debts， it can’t make its debt service payments without printing money.
Eventually the debt restructurings and debt monetizations reduce the size of the debts relative to incomes and the debt cycle runs its course.
Phase 6: The Return to Hard Money (MP6). In this phase the central government takes actions to restore the soundness of its money and credit/debt. This type of monetary policy occurs after the debt has been written down through debt defaults/restructurings and debt monetizations so the debt levels relative to the incomes and amounts of money that are available to service the debts can be brought back into alignment. As previously described， it comes after those who held the debt assets were burned by the defaults and/or inflationary periods， so confidence in holding debt assets has to be rebuilt. At this stage， countries typically go back to MP1 (i.e.， a hard-asset-backing monetary policy) or MP2 (an interest rate/money supply-targeted monetary policy) that is beneficial to lender-creditors via high real interest rates.
For great countries with great empires， the end of the Big Debt Cycle has meant the end of their prominence.
A Few Concluding Observations
It pays to build up savings in the good times so there are savings to draw on in the bad times. There are costs to having too much savings as well as too little savings， and no one gets the balance exactly right.
Big debt crises are inevitable. Throughout history only a very few well-disciplined countries have avoided them. That is because lending is never done perfectly relative to the incomes that are needed to service it. And it is often done badly because people always want more credit and that turns into debt. Debt levels get beyond that which is sustainable which leads to the need to bring the debt burdens down which typically leads to a mixture of debt defaults/restructurings and the creating of money and credit， leading a debt crisis to occur. And people’s psychology reinforces the cycle: the bubble period makes people more optimistic causing them to borrow more， and the bust causes people to be more pessimistic causing them to cut spending. Even though this progression has happened many times in history， most policy makers and investors think their current circumstances and monetary system won’t change. The change is unthinkable—and then it happens suddenly.
The best way to anticipate a debt crisis happening is not by focusing on a single influence or number like debt as a percent of GDP; it is by understanding and focusing on a number of interrelated dynamics that we will get into， especially in the next two chapters.
If debts are denominated in a country’s own currency， its central bank can and will “print” the money to alleviate the debt crisis. This allows them to manage it better than if they couldn’t print the money， but of course it also reduces the value of the money. If the debt is not denominated in currencies that their central banks can print， then they will have debt defaults and deflationary depressions measured in the currency that they owe and can’t print.
All debt crises， even big ones， can be managed well by economic policy makers restructuring and monetizing them so that the deflationary ways of reducing the debt burdens (i.e.， writing off and restructuring debt) and the inflationary ways of reducing debt burdens (creating money and credit and giving it to the debtors to make it easier for them to service their debts) balance each other. The key is to spread the paying back over time. For example， if the debt-to-income ratio needs to fall by about 50% to make it sustainable， a debt restructuring that spreads it out to be at a rate of 3% or 4% per year would be much less traumatic than one that is about 50% in one year.
Debt crises provide great risks and opportunities that have been shown to both destroy empires and provide great investment opportunities for investors if they understand how they work and have good principles for navigating them well.
If you try to focus on debt cycles precisely or focus your attention on the short term you won’t see them. It’s like comparing two snowflakes and missing that they are pretty much the same because they’re not exactly the same.
That’s it in a nutshell.
In the rest of this study I will get into the mechanics in greater depth， show the actual archetypical sequences that have played out over 35 cases， look at how the Big Debt Cycle and Big Cycle that includes the other big cycles (for instance， cycles of internal and external order) that started in 1944 and that we are currently in the late stages of have transpired relative to this template， and briefly look at the Chinese and Japanese Big Cycles and a number of other cases. The Japanese case is interesting because Japan is further along in its Big Debt Cycle. Notably its large debt and debt monetizations have led to the depreciation of its currency and debt， which led holders of its bonds to have losses of 45% relative to holding US dollar debt since 2013 and losses of 60% relative to holding gold since 2013. In the final chapters， I will share how I am processing the US today relative to this template， how the US could reduce the risk of an acute debt crisis， and how I read the Five Big Forces today.
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