The recent collapse of Silicon Valley Bank (SVB) has raised concerns among leading analysts and investors, with hedge fund manager Ray Dalio comparing the bank’s collapse to a “canary in the coal mine” while signaling potential future problems in the venture capital sector and beyond.
Dalio wrote in an open letter earlier this week that the collapse of SVB was a classic bubble-bursting event that is part of a short-term debt cycle that typically lasts around seven years.
In this cycle, Dalio argues, tightening monetary policy leads to a self-reinforcing contraction in debt and credit, culminating in a financial crisis….