Long-Term Debt Cycle

Mechanism

Across repeated short-term cycles, debt can rise faster than income because people and institutions tend to borrow and spend more rather than repay debt fully.

As long as incomes and asset prices rise, debt burdens can appear manageable and lenders may keep extending credit. Eventually debt-service obligations grow faster than income, forcing spending cuts. Because spending is someone else's income, the cycle reverses.

Source Support

Dalio explains the long-term debt-cycle buildup around 00:13:52-00:16:30.

Why It Matters

This mechanism explains why a system can become fragile even during apparently prosperous periods. It also explains why asset booms and rising incomes can delay recognition of debt stress.

Boundaries

The source gives a stylized macro cycle. The exact timing, sector distribution, and policy conditions need additional evidence in applied cases.