How The Economic Machine Works by Ray Dalio

In this short note, I share a video by Ray Dalio, author of "Principles" and "Big Debt Crises" on how the economic machine works.

How The Economic Machine Works by Ray Dalio

One of the most important books I have read in 2017 was Ray Dalio’s principles. He has recently published an interesting video which reframed the way which I have understood economics. It is the best economics 101 which makes me think differently about our economy in terms of productivity, long and short term debt cycles over 10 years.

If you are reading Ray Dalio’s “Big Debt Crises”, this video will be a good primer to watch before diving deep into how he understood financial crises and offered his understanding of each one of them in the 20th and 21st century.

Let me share my interpretation of Ray Dalio’s “Principles” book as well. For me, Ray presented a roadmap to how he thinks and understands the work around him grounded to the realities available to him. In the book, he explains the set of principles which he identified that are important to how he operates. One of key principles is radical candor and the importance of hearing diverse and diverging views such that he can make important decisions without subjecting to potential biases. In reading the book, I believe that there is a deeper message than just reading and adopting his principles in work and life. What I believe Ray Dalio wanted the reader to do, is to figure out his or her own life and write down the set of principles that are important to them. It does not have to be the same set of principles that Ray has utilized in the course of his life. It is important that cultural and social backgrounds can differ between people and hence I did not think that his intention is to impose his values, but merely provide a system to how each one of us out there to write our own “principles” book that guides our own lives. That is perhaps, the most important lesson I have learned from the book and constantly re-read it whenever I am in doubt.

You can learn more on Ray Dalio’s website: Economic Principles.