How The Economic Machine Works by Ray Dalio

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  • Published on Sep 22, 2013
  • Economics 101 -- "How the Economic Machine Works."
    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.

    To learn more about Economic Principles visit: www.economicprinciples.org.

    [Also Available In Chinese] 经济这台机器是怎样运行的: tvclip.biz/video/-ZbeYejg9Pk/video.html
    [Also Available In Russian] Как действует экономическая машина. Автор: Рэй Далио (на русском языке): tvclip.biz/video/8BaNOlIfMLE/video.html

Comments • 8 184

  • Eskimoto
    Eskimoto Hour ago +1

    Why do public educators HATE to teach us things we actually WILL need in the future to better our lives?

  • ollieone051
    ollieone051 2 hours ago

    Borrowing money is borrowing from your future. They should put that at the top of every loan before you sign it.

  • Abhinav Gautam
    Abhinav Gautam 3 hours ago

    Excellent video. Thank you, so much for this!!

  • Đạt Dương
    Đạt Dương 5 hours ago

    worthwhile recommended video by Tony Robbins

  • James Edwards
    James Edwards 6 hours ago

    I like it. Wonderful video.

  • Pranay Sahgal
    Pranay Sahgal 7 hours ago

    Thank you sir, you have been very kind !!👍

  • Sachin Dolta
    Sachin Dolta 8 hours ago

    *Here from AI podcast , Lex Fridman*

  • Parasitic Jewish Banker

    How about Jews?

  • Epic878787
    Epic878787 13 hours ago

    1) "Buy" and "sell" are [unintentionally}deceptive terms because there is really no difference between them: Everything is just a trade, you could say, "I'm going to the grocery store to *sell* some currency for a loaf of bread and a dozen eggs.
    2) "Drives the economy"(1:52) re spending. This term suggests that everything depends on spending rather than other things and is deceptive. It would be far more explanatory and clear to say that *supply meeting demand" drives the economy, that is, transactions. Imagine a barter economy; there is no currency or credit so there is no "spending" yet there is still an economy and it could be almost identical to ours but without spending, so ***spending does Not drive the economy***. You are being deceived into believing that more and more spending is good, it's not. Not all spending is good, rather we should rate different types; spending on production is good, on consumption is bad and putting currency in the mattress is the worst. By the 5:25 mark he seems to be guilty of the broken window fallacy, create spending by breaking all the windows so we have to hire more glass makers and window installers and spend money on window replacement and we'll all get rich.
    3) The central government shouldn't be an important part of the economy and isn't really unless your talking about regulation and law enforcement and that sort of thing.
    4) "Any two people can agree to create credit out of thin air". Not monetary credit, is he talking about a reputation, wtf, oh, he means with the banks' and governments' help. The real big deal about creating credit, he doesn't tell you: You are borrowing money that doesn't exist, wasn't earned, wasn't saved; it's fake, fiat money so why should the lender make a profit? Is he taking a risk? Not if the loan is secured. If you have 50% of your house paid for in a non-scam economy, housing prices will not fall by 50%+ in a short period of time so there is no risk, so *why are you paying interest in earned money and why does the bank get to collect it*? Scam. If you have 50% down on your house you should be able to fractionally reserve lend the remaining 50% to your self wiping out the interest payment, but no, you are enslaved to the banks.
    5) (7:50) We should not be trying to increase our spending. This video is a lie and trying to get the public happier with maximum debt and real money interest payments on fake money lent; it's a scam. Following is more deception based on, "borrowed money spent". If credit is spent on productive capacity that spending is only good if the production purchased produces enough wealth to pay the debt. All spending on consumption is bad for the economy(though much is necessary of course) because that wealth is destroyed, eventually ending up in the land-fill.
    6) (10:40) He does make a distinction between spending on consumption and spending on production but he is much too gentle in how he communicates this and I think his earlier explanation and graphics will leave folks with the wrong impression.
    7) (12:00 or so) The whole credit cycle thing is made safe making the price of credit based on supply and demand like everything else rather than on fixing the price of credit through central bank influence. So if there is little savings in the economy, credit would be expensive because the supply is down, and vice versa. The free market is awesome because when the cost of credit is super low, instead of saving money - because you're getting almost no interest on it - you will spend it on something you enjoy. This will decrease the supply of credit and make it more expensive again. It's a self correcting system which is an awesome thing.
    8) The purpose of the Federal Reserve is to hold together the banking cartel(which is what the Fed is) by fixing the price of credit so the banks don't compete against each other. The purpose of fractional reserve lending is to hide the fact that, eg. when the reserve rate is 40:1 and you borrow at a listed 5% interest, you are really paying 200% interest - *usury*.
    9) (15:07) No, it never *pays* to buy goods and services with borrowed money; it always *charges*.
    10) (22:36) "The government *must* increase spending" lol. The economy is not something that can be *stimulated* that's a BS term. The economy can be fucked with and manipulated to benefit the few.
    11) (23:00) "The government must raise taxes or borrow money" *** or abolish the Fed before it happens and allow the free market to operate. The "haves" will leave the country to avoid those higher taxes. This is called capital flight. Then the government will build a wall to keep everyone in. It is the USSR, except the ultra rich *haves* control government so they will be fine and the rest will suffer.
    12) (27:00) The right balance is achieved by letting the free market operate, it is self correcting, when there is too little savings, the price of credit rises, this is the interest you should essentially get in your savings account, so you would be motivated to cut spending and save more, say at 20%. If there is too much savings, the cost of credit might be 1% and you would decide to spend the money on something nice for yourself instead of saving it.
    13) Rule 3 is a good one.

  • Noah Mcnair
    Noah Mcnair 14 hours ago

    Guy: How the economic machine works 30 mins
    Me: It’s 31 mins actually

  • Kyle Dixon
    Kyle Dixon 16 hours ago

    This is fantastic! This video and others like it.. is the reason I love youtube. It makes you question Why anyone would ever go into debt to get a college education.

  • Nick Francis
    Nick Francis 18 hours ago

    Kenysian at it's best. If the production curve is the beginning let's address that first...Dalio and the world economists "A nope!"

  • John Alchin
    John Alchin 21 hour ago

    Who owns the central bank?

  • snide 2
    snide 2 21 hour ago

    Although this is coming from an American perspective, it should apply to any nation under the federal reserve system which is almost all of them... Over 70 percent of America is on a pharmaceutical drug, and over half are on two.. Society suffers from consumerism, materialism, class-ism, racism, bullying, addiction, disease, depression, anxiety etc etc etc.. People are slaves to the federal reserve dollar and the State. The Federal Reserve prints the slave's dollars which inflates the prices of goods and services overtime just enough to keep them working for life, and to prevent them from saving money or wealth and passing it down to the next generation of their family. Corporations own and control all the good Artists, and push agendas with them.. The educational system is nothing but indoctrination.. (I pledge allegiance to the flag).. The Healthcare system is really a sick care system, which drugs people up until death at extreme costs to their families wealth.. The legal system is really built upon Maritime Admiralty Laws (citizen-ship), which your parents are manipulated into signing you into as a human corporation through your birth certificate.. The legal system enslaves you as a citizen, while pushing unjust ideas like the "drug war", while doctors are simply legal drug dealers, it targets minorities, and the prison system is a business ran on the Stock Exchange.. Media is controlled and used to brainwash the masses through "television programming" and social media (see the NDAA Act of 2012 where propaganda was legalized), divide and conquer strategies are used to divide the masses by race, religion, flags, borders and politics (left vs Right), people are literally programmed.. Sporting events such as Football and Basketball are used to distract people from the truth, and most Americans love their beer, which is poison, and legal, so they spend their free-time in bars while cheating on their spouses.. Porn is freely available to help destruct the family unit, and to subdue male ambition.. People are fed GMO foods, while being fluoridated through their water supply, and their toothpaste.. People are being blasted by cellphone and Wifi radiation 24/7.. You can't even own something like property (ownership and freedom is an illusion), because if you miss a property tax payment, your home will be taken from you with your land.. Tax is literally extortion or theft, by threat of violence and caging, and taxes as well as inflation has it to where 95% of society will never get ahead, and will most likely die away medicated with some sort of "mental illness", which doesn't even truly exist, these are in fact just labels used to explain away certain states of mind, which are normally a result of this oppressive system. Taxes are used to slaughter millions of people who are in the way of this war machine made up of brainwashed slaves, and Americans are also brainwashed or suckered into supporting unjustified wars, under the banner of false ideas such as "The War on Terrorism", which this isn't even an enemy, so it gives the establishment the go ahead to attack anyone they want, for as long as they want.. Parents will even send their children off to be slaughtered to protect this sickening system.. The American Dream is a dream.. The term "American Dream" is used to brainwash you as well..

  • Ants Tech & Labor
    Ants Tech & Labor 21 hour ago

    天道酬勤

  • russell stone
    russell stone 22 hours ago

    elementary concepts. Ignores the bankruptcy of 1933 and liquidation under Nixon in 1971. "All debts are obligations of the United States (District of Columbia). 90th Congressional Record: all United States citizens (District of Columbia) are civilly dead entities operating as co-trustees and co-beneficiaries of the PCT (Private Constructive cestui que Trust of US Inc under the 14th amendment, which upholds the debt of USA and US, Inc." It's all a scam. There are no "borrowers" and no "lenders." The people are the creditors but they've been duped and dumbed down. How can a "bank" loan something that has no value? You and I cannot do that. What gives bankers the right to print trillions of NOTES (most through keystrokes) out of nothing and claim ownership of assets as a result? Those bankers hide everything they do and give the "money" to themselves and their buddies in order to enslave the world, which they have done.

  • John J
    John J Day ago

    A little deceptive tying the central bank and government together. They are completely independent. However you did say the central bank effectively controls the direction of our economy which means a small set of individuals run the country. That is a very true statement.

  • JB Weld
    JB Weld Day ago

    I'm not rich... but the more I learn about economics, I have contempt for the poor (working age and not disabled) who buy dumb crap then rag on the people who played the game correctly.

  • 733Rafael
    733Rafael Day ago

    credit/debt based monetary religion black magic is pure evil invented )3w$ to sabotage humanity by order of their reptilian masters

  • ZO Om
    ZO Om Day ago

    Hello homosapienes,
    Have you ever heard about Islamic economy 1400 years ago ? Which should solve all the credit problems or maybe you are too busy settling your dept while watching the bombing news ?

  • Văn Nguyễn Đình

    I am gonna watch this again even just finished watching it! This is real porn.

  • Hallenor
    Hallenor Day ago

    This is BS.Its the representation of a utopia.Corruption is rampant in todays econmy making this movie a cinderrella story.

  • fgfgfgf drtduud
    fgfgfgf drtduud Day ago

    ZOG propaganda. No, it's NOT about transactions, that's what the oligarchy would have you think because it serves them.

  • newlifeme1
    newlifeme1 Day ago

    It is insane to consider a line of credit as an increased income when it is the borrowing of money you are yet to earn and receive, plus interest. How can you say that someone who's annual salary is 100 grand has an income of 120 when you add their line of credit? They still only earn 100. True, the debt could increase productivity but not all productivity leads to profit and the risk is gamble or a wish. The interest is a lose that decreases the persons income. True, a person or a company can still make a profit despite the lose but do to the unpredictable nature of life and the economy it can be easy to fall behind on payments and sink under the compounding interest of debt.

  • Jim Campbell
    Jim Campbell Day ago

    what a strawman argument. congress sold us out to the federal reserve (international bankers that have no allegiance to any nation). "the borrower is the servant to the lender". China bought out our debt sold to them by congress and the federal reserve. both gained but not the people. this video only highlights how the mechanics of commerce works and says nothing about the fractional reserve banking ponzi scheme.

  • newlifeme1
    newlifeme1 Day ago

    This is insane. No wonder the world suffers so much. The financial system is illogical. I would love to know what the central banks have in their reserves to give this imaginary money true value. It seems like they just sell and trade servitude.

  • Elbert Basa
    Elbert Basa Day ago

    FINALLY! A video where Tai Lopez doesn't show up in a Lambo

  • DJ DIGITAL
    DJ DIGITAL Day ago

    The Bible states, owe no man nothing!
    Cash is King.......I live in Las Vegas and money 💰 talk....bullshit walks.
    Imformative video.

  • 100perdido
    100perdido Day ago

    Someone like Ray can borrow money at near 0% and buy assets such as stocks and bonds which yield more than his borrowing rate, so he gets to keep the difference and make money without having to bother with doing any actual work.

  • Kaito Riku
    Kaito Riku Day ago +18

    Despite the rumored economic crash, there are people making millions by taking advantage of the stock market and Mr Rogan Colbert happens to be one of them and i'm lucky to be benefiting from his investment platform. Anyone who wants to start benefiting can reach out to him at
    Roganfelixcolbert(ä)gmaïl-com

    • Xi Chen
      Xi Chen 6 hours ago

      ​ Kaito Riku Thanks

    • Kaito Riku
      Kaito Riku 6 hours ago

      ​ TIM YOON Yes you can, when i first started i did start with $2500 and i made over $9,000 in a week just e-maïl him at (Roganfelixcolbert(ā)gmaïl-com) to get started

    • TIM YOON
      TIM YOON 9 hours ago

      How can i get started, can i start up with a little amount of $5000? maybe i will invest more with time

    • Investor’s 1st Tool
      Investor’s 1st Tool Day ago

      The stock market crash is just a rumor spread by this experts so they can take full advantage of the market and maximize their profit earning

    • Gerald Harry
      Gerald Harry Day ago +1

      Experts are really taking advantage of the market crash while amateurs are complaining

  • Youarturo
    Youarturo Day ago +1

    Thank you Ray Dalio for a Master Class on Basic Economics, so basic that the real problem with the economy is that we-humands have made it over complex-complicated for our own destruction ... THANK YOU VERY MUCH !!!

  • kathleen smith
    kathleen smith 2 days ago

    Here is a lesson --- NEVER TRUST A BILLIONAIRE --- they did not become a billionaire by following the rules, they usually have no moral compass and get rich because they lie, cheat, steal and even are willing to murder. JEFFREY EPSTEIN shows you how the real works. Fuck Dalio!!!!!!!!!!!!!!!!!

  • kathleen smith
    kathleen smith 2 days ago

    The FED does not CONTROL THE AMOUNT of money in the economy --- this is a LIE. FED controls the RATE OF INTEREST (price of money). Private Banks make money everytime the make loan --- that is 97% of the money in our system comes into existence. GUY IS FULL OF SHIT. Want to learn how world really works --- look up Warren Mosler. Dalio is a fucking lying piece of shit.

  • Carlos Gabriel Hasbun Comandari

    The part where Dalio says that it is human nature to spend more than one has is highly biased and cringeworthy.
    It is offensive to conflate one's own characteristics with other people's characteristics. It's called a psychological projection, and I am sick and tired of hearing it in many places, way too many times.

  • Carlos Gabriel Hasbun Comandari

    The problem is that there are incentives for banks to lend money to borrowers that cannot repay the debt, as long as they can get their hands on collateral.

  • BullRunOptions
    BullRunOptions 2 days ago +1

    This should be shown in every high school economics class. I am amazed everyday at how few people understand the basics of economics. Great video Mr. Dalio!!!

  • Nagendra Singh
    Nagendra Singh 2 days ago

    I luv his voice ♥

  • Ashis Kumar
    Ashis Kumar 2 days ago

    Brilliant...

  • Mo Shirazi
    Mo Shirazi 2 days ago +1

    pls ppl.go out and spend! 👍

  • Tony Frey
    Tony Frey 2 days ago

    Debt creation is not productive wealth in the hands of the corporate oligarchs; it is debt enslavement of the masses. Basically the debt creation of the federal reserve central banks is for the benefit of the corporate oligarchy. The corporate oligarchy manages the debt slave mullets and harvests the catch when they are ripe for the picking.

  • Daron Ryan
    Daron Ryan 2 days ago

    Best snow job I've watched in a long time.

    • Daron Ryan
      Daron Ryan 2 days ago

      He came so close to saying but didn't quite say it.
      www.theguardian.com/world/2013/dec/31/us-population-growth-slowest-1930s-census-data

  • Nandha Krishnan S Grade 5

    I had pyp exhibition so thx for the info i got loads of info from you MR.Ray Dalio

  • Udhaiya Devendran
    Udhaiya Devendran 2 days ago

    thanks for info

  • corn holio
    corn holio 2 days ago

    Sounds like slavery with extra steps

  • Mike
    Mike 2 days ago

    This is just BS. It says nothing about the current economic reality. Only good for you little fools who want Papa Capitalist to tell you everything will be fine.

  • surfinmuso
    surfinmuso 2 days ago

    Economists are basically insane.. pathological. Not one of them can accept the glaring fact that our planet has finite resources, and act accordingly.

    That, is a type of illness, mental disease....pathological.

    And those fucks decide our futures. Fuck them-we need to remove them from all decision making or we are screwed...probably already are.

  • The Truth
    The Truth 2 days ago +1

    "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered." Thomas Jefferson

  • روائع متنوعة

    Hi
    I have viable ideas in technology that could benefit science and make life easier for investors to support and implement

  • bonob0123
    bonob0123 2 days ago

    a beautiful deleveraging ie Obama's handling of the 2008 crisis. the benefits of which we are still reaping.

  • Ellypsis
    Ellypsis 2 days ago

    Bitcoin Fixes this

  • eGidukasGP
    eGidukasGP 2 days ago +7

    “It’s humans nature”... that’s a good one...

  • Life Is Beautiful
    Life Is Beautiful 2 days ago

    perfect

  • Nicholas Jones
    Nicholas Jones 3 days ago

    nope, Keynesian nonsense. See the video 'why you have never heard of the depression of 1920' to see how well things can work when governments do not throw a spanner in the works

  • LordAugastus
    LordAugastus 3 days ago +4

    And then realise that fed reserve, fed bank is a private entity profiting off labour of everyone because they printed money out of thin air, and that bank isnt controlled by the gov, no oversight, no control.

    • snide 2
      snide 2 21 hour ago +1

      Although this is coming from an American perspective, it should apply to any nation under the federal reserve system which is almost all of them... Over 70 percent of America is on a pharmaceutical drug, and over half are on two.. Society suffers from consumerism, materialism, class-ism, racism, bullying, addiction, disease, depression, anxiety etc etc etc.. People are slaves to the federal reserve dollar and the State. The Federal Reserve prints the slave's dollars which inflates the prices of goods and services overtime just enough to keep them working for life, and to prevent them from saving money or wealth and passing it down to the next generation of their family. Corporations own and control all the good Artists, and push agendas with them.. The educational system is nothing but indoctrination.. (I pledge allegiance to the flag).. The Healthcare system is really a sick care system, which drugs people up until death at extreme costs to their families wealth.. The legal system is really built upon Maritime Admiralty Laws (citizen-ship), which your parents are manipulated into signing you into as a human corporation through your birth certificate.. The legal system enslaves you as a citizen, while pushing unjust ideas like the "drug war", while doctors are simply legal drug dealers, it targets minorities, and the prison system is a business ran on the Stock Exchange.. Media is controlled and used to brainwash the masses through "television programming" and social media (see the NDAA Act of 2012 where propaganda was legalized), divide and conquer strategies are used to divide the masses by race, religion, flags, borders and politics (left vs Right), people are literally programmed.. Sporting events such as Football and Basketball are used to distract people from the truth, and most Americans love their beer, which is poison, and legal, so they spend their free-time in bars while cheating on their spouses.. Porn is freely available to help destruct the family unit, and to subdue male ambition.. People are fed GMO foods, while being fluoridated through their water supply, and their toothpaste.. People are being blasted by cellphone and Wifi radiation 24/7.. You can't even own something like property (ownership and freedom is an illusion), because if you miss a property tax payment, your home will be taken from you with your land.. Tax is literally extortion or theft, by threat of violence and caging, and taxes as well as inflation has it to where 95% of society will never get ahead, and will most likely die away medicated with some sort of "mental illness", which doesn't even truly exist, these are in fact just labels used to explain away certain states of mind, which are normally a result of this oppressive system. Taxes are used to slaughter millions of people who are in the way of this war machine made up of brainwashed slaves, and Americans are also brainwashed or suckered into supporting unjustified wars, under the banner of false ideas such as "The War on Terrorism", which this isn't even an enemy, so it gives the establishment the go ahead to attack anyone they want, for as long as they want.. Parents will even send their children off to be slaughtered to protect this sickening system.. The American Dream is a dream.. The term "American Dream" is used to brainwash you as well..

  • rough rough
    rough rough 3 days ago

    Ray dalio is my only and forever mentor i wish to meet him one day

  • Jan K
    Jan K 3 days ago

    Has there ever been a "beautiful deleveraging"?

  • skutch Blobaum
    skutch Blobaum 3 days ago

    Not one mention of the corruption involved due to an elite class of perverts and thieves who mostly inherit or steal their money via extortion or all out fraud and never produce a damn thing besides the perversion and corruption that none of us actually need.

  • veganath
    veganath 3 days ago +1

    I'm confident with advances in AI, resource management will become more efficient with no boom/bust cycle... it's a work in progress

  • WarDog LRS
    WarDog LRS 3 days ago

    The founders didnt want a central Bank what would the present day be like if we were on the Gold standard cause printed money has no backing only belief But precious metals has value so what would our nation be like if we were on precious metals

  • VINODH KANNAN
    VINODH KANNAN 3 days ago

    Thank you!😊