How The Economic Machine Works by Ray Dalio

There are several levels to what is wrong. I have dedicated the last 5 years to discovering what is going on so I will try my best to condense it down. In terms of a 'shorter' business cycle view (less than 10 year perspective) to what is wrong is that we are not in a recession but in a deleverage. We haven't had one of those since WW2 so most people don't know what it is and think it is a recession. A deleverage is a once in a 100 year massive transfer of wealth event. I have put resources on what a deleverage is at the end of this reply. The long term problem is that the Fed is a private bank. This means that the US Government and American citizens do not control the Fed. Forget the façade that makes them look like a branch of Government, especially the whole Presidential appointment of the Fed Chairman. It is a private bank that gets to print money and sell it to the US Government that American citizens are forced to use. That means that the US Government and American citizens are slaves with no control over their future. Each dollar printed is a debt burden on the American people and a debasement of the current currency value. Essentially think of printing money as a way that the Fed transfers wealth from your pocket into theirs. Furthermore, I believe that the Fed manipulates the economic cycle to create wealth transfer events that they reap the benefits of. For further information look to the following: [VIDEO] [LINK] www.youtube.com/watch?v=mII9NZ8MMVM‎ [LINK] [LINK]

This is a great overview done by Ray Dalio, founder of Bridgewater Associates; one of the world's largest hedge funds. "Created by Ray Dalio this simple but not simplistic and easy to follow 30 minute, animated video answers the question, "How does the economy really work?" Based on Dalio's practical template for understanding the economy, which he developed over the course of his career, the video breaks down economic concepts like credit, deficits and interest rates, allowing viewers to learn the basic driving forces behind the economy, how economic policies work and why economic cycles occur." [VIDEO]

Anyone creates "money" every time they lend. Banks do a lot of lending, so they're definitely involved. But even opening a bar tab creates "money" (more accurately, "credit"). Here's a great video by famous investor Ray Dalio about this concept: [VIDEO]

What's interesting is that I've seen the link on HN titled "Hedge Fund Is Building an Algorithmic Model From Its Employees’ Brains", but I didn't click on it. I found it a bit silly that the WSJ doesn't name the hedge fund in question.. It's like seeing a link on Hacker News that says "This company is redesigning its architecture", and the company is Facebook. Just say "Facebook is redesigning its architecture". I shared the video about "How the Economic Machine Works" (narrated by Dalio) on Facebook yesterday.. Here's the video: [VIDEO]

It's kind of crazy that, at least in the US, personal finance is not taught so much in grade school. I had to do a lot of reading and research now in my late twenties to figure out the best way to manage the RSUs I get at work and how to plan for a home purchase and retirement. It turns out (surprise) that most financial institutions don't have regular investors' best interest in mind. Instead, they see us as customers with value to siphon out over long periods of time. Understanding how economies work[1], how financial service companies sell products, theories behind volatility and market forces, and how simple portfolio management can be goes a long way to improving an individuals ability to efficiently self-manage their finances. 1. [VIDEO]

If you haven't seen his video, How the Economic Machine Works, I highly recommend it: [VIDEO] Also the way he runs Bridgewater is really interesting. It's structured with the goal to surface the best ideas and figure out which opinions are most likely to be correct. It's an "idea meritocracy" and a culture of radical transparency. Everything is recorded and made available to everyone else in the company. Employees are very candid, brutally honest, even with the CEO (Ray). He says a lot of people churn out in the first year or so, but those that get used to it love it and can't imagine working another way. His Ted Talk goes into quite a bit of detail about how it all works: [LINK] His book Principles lays out the foundation. Excerpt: [LINK] Videos: [LINK]

I find this very useful, every now and then i make it a point to watch his video to remind myself of the macro view on things [VIDEO]

I was talking about the two levers the Fed has to guide the economy at work - Printing Money and Lowering interest rates (as described by Ray Dalio [VIDEO] ). My coworker starry eyed, looked at me and said, "What about Quantitative Easing?". I responded that is printing money. I think the issue is, these concepts are given difficult sounding names, so people do not question their ethics. I'm not saying they are not needed - in a credit based economy it seems they are absolutely necessary, but perhaps they could be implemented in a way that doesn't so favor the rich.

Just a +1 comment, but thanks for sharing this, it’s very much worth reading, the foreword and overview is very much written in layman language. I might try and dig into the rest of material as well. For an even simpler but informative intro to debt cycles check out this video by Ray Dalio, it’s the best layperson explanation of debt I’ve ever seen: [VIDEO]

> if you were given the choice of having two currencies If having = "to personally own with the hopes that the price goes up", then you pick a currency with limited supply. If having = "to have it be the currency on which your entire economy runs", you should pick a currency which doesn't have a limited supply. Dollars were in limited supply too, and they aren't anymore for a very good reason. Here's Ray Dalio trying to summarize some of the relevant economic principles in a video - [VIDEO]

Historically, there have been a wide range of items used in barter and markets. [LINK] . Some of those like livestock depreciated in value very quickly since they literally had a lifespan. Others, like rare coins have gone up in value. In the context of Bitcoin we are talking about the modern world. The major forces in the modern world are Globalization and Technology. Assuming you don't want China to take over the world you need growth. Growth happens when investment and debts are created. Ray Dalio explains it well. [VIDEO] This is why successful countries like the USA target 2-3% inflation. It is theoretically possible to create a country where inflation was -1%, but technological growth, which is very hard to stop would create a deflationary spiral that would bring the economy to a halt.

How The Economic Machine Works by Ray Dalio comes to mind. It's 31 minutes long and provides a great high-level overview of basic economic principles. [VIDEO]

I found this 30 min summary by Ray Dalio really helpful. He breaks down how an economy works in a clear and concise way. Stupid simple like me. :) [VIDEO] I also found this recent interview with him had a number of interesting angles on the state of things in the US/world as a whole. [LINK] Would definitely love to hear counter points to these to continue improving my thinking.

Half in 30 years? That’s pretty good! Ethereum fell by that much in a couple weeks. On the way up in a bull market it’s all roses, but in a bear market, these things can crash hard. Money losing value gradually — Demurrage — makes people actually spend money rather than hoard it. If you want the money to earn interest, you will have to take some risk. Invest in some assets. Usually, stocks or real estate or (finally thanks to the JOBS act) new startups. I don’t know why people have “fat bank accounts”. Money isn’t meant to be stored. That’s a racket by the banks, along with the idea that you have to buy a home instead of renting. If you can rent and buy other assets that you understand better than real estate, then do that. This is not magic .. money has to come from somewhere. It usually comes from banks themselves — who lend it to people and businesses who believe that they can pay back MORE money ! The only way everyone can pay back more money than is in existence is if the money supply is increased in the meantime. So inflation happens. The only alternative is having lots of people default and restructure their loans to owe less. This is what Ray Dalio says can be “a beautiful deleveraging”. I don’t buy it… Learn how it all works: [VIDEO]

Whenever I want to try and understand what may be happening in the economy, I rewatch[1] Ray Dalio’s 2013 video on how the economic machine works. Bits about a “recession” come up around the 12-18min mark with relevant info beyond. That said, I don’t know enough to map/equate these simple types of economic explanation with current actual state. [1] [VIDEO]

That’s the gist of capitalism and why we have boom and bust cycles (in the short and long). Ray Dalios series on the topic of capitalism being funded by debt is quite approachable. [VIDEO]

It does not cover everything you asked for, but Ray Dalio has a excellent 30 min. video that explains ELI5 how the economy works: [VIDEO]

Austerity, taxing the rich, restructure debt, printing money. This video by Ray Dalio explains it much better than I ever could: [VIDEO]

Continue down the chain on your house example. Imagine in each case instead of transferring money in bank accounts, people do the work on credit. Add up all the credit at the end of the chain. Then go back and add up all the bank account balances in the "pay with money transfer". It'll be the same (except for the fraction). Now, go look at a bunch of public company balance sheets - you'll see payables and receivables all the way down from mining companies to retailers. One long chain of credit. They could have all borrowed money from banks instead and have zero trade receivables throughout the entire chain. The point of "money creation" is to enable economic activity. Credit does the same thing. In fact, your "money" at the bank is just a receivable from the bank. Ray Dalio has a quarter decent explanation of it here: [VIDEO]

"The economy" is just the word we use for transacting between one another. Whether individuals, or businesses, or a combination. The economy as it exists in popular culture is just a tool to bludgeon people over the head into acceptance of their pre-determined role/rank in society (and softly "nudge" their decision making in the direction of submission to larger, more wealthy entities/individuals). It's a Girard-style scapegoat designed to be a target for all of the predictable vitriol and confusion of an unpredictable and unknowable future. The thing that helped me think less in terms of "oh no the economy is bad, panic" and more so in "okay, what are you going to do about it" was this [1]. [1] [VIDEO]