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How the Economic Machine Works
304 pages, Unknown Binding
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About the author
Ray Dalio
41 books5,227 followersRaymond Dalio (born August 8, 1949) is an American investor, hedge fund manager, and philanthropist. Dalio is the founder of investment firm Bridgewater Associates, one of the world's largest hedge funds.
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Displaying 1 - 14 of 14 reviews
April 14, 2016
This book should be renamed to "How the economic machines of the past worked". Because that's what 80% of the pages are dedicated to - the Great Depression, the German recession, other developing nations' economic stand etc. The actual explanation of how an economy works (mostly in the context of the US) is the first few (~50) pages.
My favorite quote from the book was this: "In booms, everyone's a capitalist. In busts, everyone's a socialist". So true.
The book is mainly structured as follows:
1. How an economy works - Explaining debt cycles, deflation, deleveraging, currency trends etc.
2. Understanding recessions - probably the bulkiest part of the book is a *very detailed* analysis of the US Great Depression and German recession. I don't exaggerate when I say it's very detailed. Ray does a quarter-by-quarter data-backed analysis, and looks at policies that were passed and what the effect was.
3. Modelling futures of emerging economies - Ray proposes a template/formula for computing how much growth various economies will have. It takes worker productivity and country culture into account. (Spoiler alert - India and China are on top).
The book is full of data, tables and graphs - which I love. But the concepts are so macro, that it's not really relevant for me and most of the people who might like the title of the book. I think this book is more useful to those seeking a career in global finance, or economic policy-making.
Regardless, it's a great book that is very easy to consume. The "chapters" are long blog posts, essentially, and you can skip what you don't like. I loved the general explanation of debt cycles, and macro trends in the first few pages (~60 pages or so).
My favorite quote from the book was this: "In booms, everyone's a capitalist. In busts, everyone's a socialist". So true.
The book is mainly structured as follows:
1. How an economy works - Explaining debt cycles, deflation, deleveraging, currency trends etc.
2. Understanding recessions - probably the bulkiest part of the book is a *very detailed* analysis of the US Great Depression and German recession. I don't exaggerate when I say it's very detailed. Ray does a quarter-by-quarter data-backed analysis, and looks at policies that were passed and what the effect was.
3. Modelling futures of emerging economies - Ray proposes a template/formula for computing how much growth various economies will have. It takes worker productivity and country culture into account. (Spoiler alert - India and China are on top).
The book is full of data, tables and graphs - which I love. But the concepts are so macro, that it's not really relevant for me and most of the people who might like the title of the book. I think this book is more useful to those seeking a career in global finance, or economic policy-making.
Regardless, it's a great book that is very easy to consume. The "chapters" are long blog posts, essentially, and you can skip what you don't like. I loved the general explanation of debt cycles, and macro trends in the first few pages (~60 pages or so).
September 18, 2016
Very interesting!
Dalio presents his macro model and then using its templates goes in deep detail through several deleveraging case studies.
The book is written pretty clearly, though the accompanying video is even more pedagogical.
The model is interesting - starts micro (with transactions), but then completely jumps over the standard demand/supply frameworks to the macro-stratosphere. It is very clear (Dalio himself acknowledges it) that it is not complete, nonetheless seems to be very coherent and have some explanatory power. The implications are also a bit... worrisome.
The main danger of the book is that one might think that he/she understands macroeconomics a bit. :)
Dalio presents his macro model and then using its templates goes in deep detail through several deleveraging case studies.
The book is written pretty clearly, though the accompanying video is even more pedagogical.
The model is interesting - starts micro (with transactions), but then completely jumps over the standard demand/supply frameworks to the macro-stratosphere. It is very clear (Dalio himself acknowledges it) that it is not complete, nonetheless seems to be very coherent and have some explanatory power. The implications are also a bit... worrisome.
The main danger of the book is that one might think that he/she understands macroeconomics a bit. :)
January 3, 2018
Although I'm not a big fan of Ray Dalio, it is undeniable that he has written a 101 kind of book for those who want to understand how the markets operate, the various terminologies involved in economics that is essential to understand how monetary transactions happen in everyday world and how they change the real economies across various countries in the world, the basics of transactions, financial institutions, markets etc.
If you want a quick 30 min introduction to the concepts captured in the book, do watch: https://www.youtube.com/watch?v=PHe0b...
If you want a quick 30 min introduction to the concepts captured in the book, do watch: https://www.youtube.com/watch?v=PHe0b...
January 8, 2024
The model that Dalio submits on how the economy works is neatly summarised in this video, and his thoughts on how empires rise and fall are summarised in this video; both put up by Dalio himself.
The analysis in this book is interesting, especially when put in contrast with traditional economic models relying on demand and supply (which Dalio briefly does when setting out his model). Dalio also proves his explanation for how the economy works and how recessions and depressions happen from examples that came earlier in history, which was quite helpful. I hesitate to give it 5 stars, however, due to the less-than-clear writing which was one of the biggest impediments to me getting through this book.
Still, a good read overall.
The analysis in this book is interesting, especially when put in contrast with traditional economic models relying on demand and supply (which Dalio briefly does when setting out his model). Dalio also proves his explanation for how the economy works and how recessions and depressions happen from examples that came earlier in history, which was quite helpful. I hesitate to give it 5 stars, however, due to the less-than-clear writing which was one of the biggest impediments to me getting through this book.
Still, a good read overall.
February 24, 2023
More of a Wittgenstein's ladder than a bible of macroeconomics.
Global macro fund managers never seem to understand that it's theory-building ambitions, not the resultant theories themselves, that make them successful. Dalio's theory is worth considering, but only in the context of a broader understanding of street macroeconomics from which we can see the simplifying assumptions and linguistic tricks used to make a specific problem tractable. His insistence on codification and systematization is probably why his successors can't seem to thrive in an environment where the rules of the game are constantly shifting.
As in any financial classic, the reader ought to look for how to think, not what to think!
Global macro fund managers never seem to understand that it's theory-building ambitions, not the resultant theories themselves, that make them successful. Dalio's theory is worth considering, but only in the context of a broader understanding of street macroeconomics from which we can see the simplifying assumptions and linguistic tricks used to make a specific problem tractable. His insistence on codification and systematization is probably why his successors can't seem to thrive in an environment where the rules of the game are constantly shifting.
As in any financial classic, the reader ought to look for how to think, not what to think!
April 9, 2025
It is sort of odd the cyclical nature of reserve currencies lasting about 250 years or so.
Ray outlines all of the important aspects to consider rising powers vs decking powers.
Every man’s debt is another man’s asset.
Talks about gov debt and debt obligations (Social Security pensions annuities).
Really good book. Would pair with why nations fail or the 4th turning is you are interested in understanding the future of financial markets and economics are headed generally.
Ray outlines all of the important aspects to consider rising powers vs decking powers.
Every man’s debt is another man’s asset.
Talks about gov debt and debt obligations (Social Security pensions annuities).
Really good book. Would pair with why nations fail or the 4th turning is you are interested in understanding the future of financial markets and economics are headed generally.
This entire review has been hidden because of spoilers.
January 1, 2022
Read the section on productivity heuristics. A useful quantification of things we know already about productivity growth rates. Lots of charts. Lots of quick analysis for specific countries. Useful as a reference to begin research into foreign markets & how to hedge your way into them. Assume that the prior section is very similar to his Big Debt book.
September 11, 2017
Just an amazing piece of work by Ray. Should be a must read from early on basic finance class for kids.
February 27, 2018
BA overview of the three major macroeconomic cycles
August 15, 2018
Ray Dalio is a genius. He explained the economic up-turn and down-turn in the book very easily. A must read for economics students and professionals.
August 16, 2019
Fun to read and easy to grasp, also nice youtube video.
August 3, 2024
Watching the video is more or less the same
July 29, 2018
A must-read for anyone who's serious about investing.
February 5, 2019
Wow Mr Dalio's book changed my points of view on economics
This wonderful book is a must do read for everyone
If we do not understand the laws of economics and money we are condenmed to struggle
This wonderful book is a must do read for everyone
If we do not understand the laws of economics and money we are condenmed to struggle
Displaying 1 - 14 of 14 reviews