Bridgewater co-CIO Greg Jensen has reasoned that interest rates may hinder other assets’ growth and lead to a slowdown in economic expansion. He emphasizes the importance of the formula “money plus credit plus income equals spending in the real economy.” Furthermore, Jensen highlights the factors that have contributed to economic growth despite the decline in growth rates. Specifically, he notes that spending remained robust due to the monetary assets invested, which was facilitated by the fed’s balance sheet and government borrowing. This is a unique situation where the economy did not collapse, but instead relied on the sustainability factor of excess reserves on the fed’s balance sheet. Overall, it is vital to comprehend this aspect of the current economic climate.
