How does the economy really work?

If you can explain it in simple terms, you’ll pretty much be able to understand it better. And imho, no one better understands the economy better than Ray Dalio, Founder of Bridgewater Associates. He is also the best-selling author of the book, Principles. If you’d like to learn more about who Ray Dalio is, watch this video.

I love these explainer videos, as the more visual an explanation is, the more complex topics you can absorb.

The 3 rules of thumb that you can take away from this are:

  1. Don’t have debt faster than income. (Because debt burden will eventually crush you)
  2. Don’t have income rise father than productivity. (Because you’ll eventually become uncompetitive)
  3. Do all that you can to raise your productivity. (Because in the long run that’s what matters most)

If you’d like to listen to the interview between Ray Dalio and Larry Summers on this, check out the below:

If you’re looking for the pdf version of the book, here it is. But I do recommend buying the book, and support the author.

Source:

How the Economic Machine Works [Animation] by Ray Dalio
In this animation, Ray Dalio explains How The Economic Machine Works. He covers important points such as credit, interest rates, leveraging and deleveraging.