Debt cycle

The multi-decade accumulation of debt relative to income, and the eventual adjustment.

The mechanism is that debt lets spending exceed income for a time, and every rupee of spending is somebody's income, so the process is self-reinforcing on the way up. It reverses when debt service consumes too much of income to sustain.

The adjustment can take four forms: austerity, default, money printing and transfers of wealth, and the mix chosen is a political decision with very different consequences for savers and borrowers.

Ray Dalio's framing of this is the standard reference and it is a useful lens rather than a forecasting tool.