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| Bridgewater founder Ray Dalio, Bridgewater website |
I recently discovered (after about 3 million other people) a thirty minute YouTube video that Mr. Dalio produced to explain fundamentals of what he refers to as the economic machine.
This video, which he narrates, has been translated into several languages and viewed over 3,200,000 times. The content begins slowly with concepts that could be embraced by most eighth graders, but progresses to explain the primary levers that policy-makers use to manage and stimulate the economy. You can find it here.
There are numerous lessons cleverly and clearly explained here. Example: I hadn't appreciated why economists seem obsessed with Wage Growth until I watched this simple animated video. The importance of wage growth has less to do with the oft-misused and politically-charged phrase, "income inequality" and more to do with our collective ability to consume and thus deflate credit bubbles.
Also explained, is the concept of Credit, which Mr. Dalio asserts, "...is the most important part of the economy and probably the least understood". Other explanatory notes...
- "A beautiful deleveraging" of our massive debt and deficits is the catalyst for a soft landing we all pray for in order to avert "social disorder" and societal collapse.
- Spending cuts are generally what people think of when they hear about "austerity" measures exercised by government, individuals and businesses to lower spending on goods and services.
- Wealth redistribution occurs primarily through higher taxation on upper income Americans.
- Money-printing refers to Federal Reserve purchases of government bonds and other financial assets ($2T since the Great Recession alone).
