Public vs. Private

Ray Dalio’s thoughts on the ongoing transfer of wealth….the link below is worth looking at just for the charts

The economy is not reacting to the Fed’s tightening in the usual way, as evidenced by the data in the charts. The shift in wealth from the public sector (central government and central bank) and government bondholders to the private sector (households and businesses) made the private sector relatively insensitive to the Fed’s rapid tightening to a more normal monetary policy. This coordinated government maneuver resulted in the household sector’s balance sheets and income statements being in good shape, while the government’s are in bad shape. This occurred in 2020 and 2021 when large budget deficits and central bank purchases of bonds led to deteriorating balance sheets and increased losses on government bonds. In 2022, with inflation roaring and unemployment low, there was a move toward less easy fiscal policies and rapid moves from central banks away from easy monetary policies. This tightening sent bonds and stocks down, and squeezed some areas of the capital markets and economy, but the private sector’s net worth rose to high levels, unemployment rates fell to low levels, and compensation increased. This led to a better-off private sector, while central governments and central banks lost money on government bonds.

https://www.linkedin.com/pulse/whats-happening-economy-great-wealth-transfer-ray-dalio/?published=t