The Collapse will Hit Harder Next Months

There exists a long-term debt cycle, consisting of multiple phases that span over several decades. Currently, we find ourselves entering the next phase of this cycle. Renowned investor Ray Dalio has emphasized multiple times that people tend to assume the near future will mirror the recent past. While history indeed repeats itself, individuals often fail to recognize the long-lasting nature of these cycles. Over the past 40 years, from 1980 to 2020, we have operated within a specific phase of this long-term debt cycle. Particularly in the last 20 years, we have
In the late 90s, a hedge fund known as long term capital management (LTCM) engaged in a trade called a relative value trade. In this trade, they would buy and short the same debt instruments for a small difference, often just one cent. Since these instruments were from the same issuer, it was considered a risk-free trade. The strategy allowed LTCM to obtain significant leverage and execute this trade in global markets. However, as more traders caught on to this profitable strategy, it started increasing the risk of the global financial system.