Ray Dalio, the founder of the world's largest hedge fund Bridgewater, recently stated that the assets acquired with borrowed funds have depreciated, and the collapse of Silicon Valley Bank (SVB) has heralded a global problem.
For a long time, banks were able to borrow cheaply and invest because the US Fed kept interest rates low, he explained. However, those investments have either lost value or produced lower returns as the Fed shifted to aggressive rate hikes last year to quell high inflation. When that happened, Dalio warned, everybody suffered losses. This situation is prevalent in the entire economy, the world economy and the US economy.