The Economy Machine

Ray Dalio is a true Maven. He uses a template to analyze his deals and the economy. You make money by buying low selling high and Dalio uses the template to analyze what’s going low or high.

He created a YOUTUBE video explaining the economy as a machine. I came to a similar understanding in my own investing career but not as well thought out as this video. Especially pay attention to the long term credit cycle. It’s been about 90 years since 1929.

4 Replies to “The Economy Machine”

    1. Wow excellent! I got interested in this stuff in 6th grade and wrote my first paper on the stock market in the 8th. Put’s a whole different patina on the risk of the 4 x 25 mantra.

  1. Thanks for introducing me to this video. Very well done and explained some concepts I was not up to snuff on.

    I always thought printing money would cause hyper inflation but now know it doesn’t have to

    1. Depends on who you give the money to. What the Fed did was print money and used that to buy bad debt and put that on their balance sheet. The FED then had the banks put that printed money into the reserve so the banks couldn’t lend it and then paid the banks 2% interest on their reserve. This effectively put the banks in neutral but making enough money to survive while moving bad debt to the fed, which could let it mature over 10 years. Much of that bad debt was short term bad, but long term many of those properties would be sold so those loans would eventually mature. Instead of loosing 90 cents on the dollar they may only loose 10 cents or break even and eventually would be able to sell that debt back into the market. If the fed hadn’t done this the banks would have been forced to write off 90 cents on the dollar and would have gone out of business which would have forced the country into depression. Hyperinflation happens when the money hits the actual economy and is not invested but spent.

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