Ray Dalio manages Bridgewater Associates, one of the world’s largest and most successful hedge funds. Dalio is a legend in the investment world. He has built an incredible track record and has garnered tremendous respect for his insights into the economy. He recently created a new short animated video called “How the Economic Machine Works”
Dalio incorporates both the short and long term debt cycles into his big picture view of the economy.
What I found most insightful were his 3 “Simple” Rules of Thumb. I added the quotations because although Dalio refers to them as simple this in no way should diminish their importance.
Here are the 3 rules, which I encourage you to read at least a couple of times.
1. Don’t have debt rise faster than income – your debt burdens will eventually crush you
2. Don’t have income rise faster than productivity – eventually you will become uncompetitive
3. Do all that you can to raise your productivity – in the long run that’s what matters most
He finishes by saying:
“This is simple advice for you and simple advice for policy makers. You might be surprised, but most people including most policy makers don’t pay enough attention to this.”
To view the full video please click here www.economicprinciples.org