How do rising interest rates interact with public debt to prick a bubble?
Replied byRay Dalio
Founder at Bridgewater Associates
Niche: Finance
Revenue: Not Publicly Disclosed/month
Location: Westport, Connecticut, United States
Started: 1975
When interest rates rise, the cost of servicing debt increases for governments and private borrowers. Borrowers must find cash to cover interest payments, forcing them to sell equities and other assets. This shift in capital flows triggers the pricking of the bubble.
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