In the early 'sound money' stage of the long-term debt cycle, debt creates more income than is needed to pay it back (a good use of capital), productivity increases, debt isn't rising fast relative to income, confidence is high and financial systems are stable - but high confidence itself starts to be a red flag because it precedes the shift to expensive asset prices and a debt bubble.

causalpending

Speaker

Ray Dalio

Evidence Quote

productivity increases and debt is not Rising fast relative to income confidence is high Financial systems are stable

Source

Ray Dalio on AI, Job Loss & the Future of the Economy | EP #148Peter H. Diamandis
Created: 6/18/2026, 1:59:18 PM

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