Monday, January 15, 2018

Jeff Desjardins — How the Economic Machine Works, According to Ray Dalio

Three Major Forces
Dalio says this model has guided Bridgewater for over 30 years, and that there are three major forces that shape the economy:
1. Productivity Growth
Productivity growth, which is measured as a percentage of GDP, grows over time as knowledge, technology, and innovations help to raise our productivity and living standards.
2. Short-Term Debt Cycle
Usually lasting 5-8 years, the short-term debt cycle is a repeating pattern that occurs as credit expands and contracts.

3. Long-Term Debt Cycle
Usually lasting 75-100 years, the long-term debt cycle usually ends in a period of extreme deleveraging, where global debt is unsustainable and asset prices fall....
Visual Capitalist
Video: How the Economic Machine Works, According to Ray Dalio
Jeff Desjardins

2 comments:

Matt Franko said...

“the short-term debt cycle is a repeating pattern that occurs as credit expands and contracts.”

Yes like it has a mind of its own...

Keynes Forum said...

Dallo states that deleveraging takes a decade or so. Hitler did it in a couple of years by SPENDING! Hitler became popular, even among workers, because Schacht gave everyone a job by 1935: two years, not a decade!

Then, starting in 1941, FDR did it in one year by SPENDING! He gave everyone a job!