Developed debtor countries, including Greece, Spain and Italy, that can’t print money to make it easier to service their debts and to make up for slow credit growth will have decade- long depressions and debt defaults.
‘A Country in Decline’
Dalio expects emerging creditor nations to be tomorrow’s economic leaders. Countries such as China and India that have currencies and monetary policy linked to those in the U.S. are experiencing inflationary bubbles because their interest rates are too low, he says. They will have to unlink from the U.S. or face intolerable conditions. Emerging economies will account for 70 percent of global GDP in 15 to 20 years versus 47 percent now.