How the economic machine works

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25/11/2013 9:32AM

How the economic machine works

Trustee education is vital to the good operation of an SMSF. Investment understanding is critical and so anything that assists in this is always welcome. A superb free online video has been produced by Ray Dalio of Bridgewater Associates which is recommended viewing for all.

There are plenty of economic experts in the world and you can’t listen to all of them, so when the founder of the largest hedge fund in the world with almost $US130 billion under management produces an education video, it’s worth having a watch.

Financial Advisers could have clients view the video to help better educate their clients on some of the forces at play in the world economy.

http://www.economicprinciples.org/

The 30 minute video is a plainly spoken entertaining cartoon filled with some great examples of the way an economy actually runs and the interactions of different parts of an economy. He explains the cause-and-effect relationships within an economy.

In the video he explains, “ Think of borrowing as simply a way of pulling spending forward”, explaining “you essentially need to borrow from your future self. In doing so you create a time in the future that you need to spend less than you make in order to pay it back”.

To put in perspective what people think,  former US Federal Reserve chairman said  Dalio’s hedge fund has “a bigger staff, and produces more relevant statistics and analyses than the Federal Reserve”.

This article has been produced as general information only. We are not associated with any other the people or firms named.