How the Economic Machine Works

Ray Dalio, founder of Bridgewater Associates (which manages about $150 billion in assets), has released this 30 minute video explaining his vision of “How the Economic Machine Works.” It is well worth watching, particularly for his description of the potential for a “beautiful deleveraging.” Dalio concludes with three helpful rules of thumb for individuals and policy-makers: (1) Don’t have debt rise faster than income (because your debt burdens will eventually crush you); (2) Don’t have income rise faster than productivity (because you’ll eventually become uncompetitive): and (3) Do all that you can to raise your productivity (because, in the long run, that’s what matters most).

4 thoughts on “How the Economic Machine Works

  1. Point raises some unanswered questions. Raising productivity increases means more ‘things’ per person can be produced or, put differently, the same number of things with less people. Who buys these things and with what?

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