How The Economic Machine Works Part 3

2025-08-20

One principle that I’ve really learned is “Pain + Reflect = Progress.”

2025-08-11

My view is that buying and holding real estate is not an effective investment strategy in our current economic environment, for a few reasons.

1) Real estate is more interest rate sensitive than it is inflation sensitive, so given our current circumstances it is likely to go down in real terms

2) It is a fixed asset that is easy to tax, which limits its impacts on your ability to diversify

3) Real estate is nailed down, so investing in it makes it more difficult to move money from one place to another

That’s my view, in a nutshell. I’m curious to hear if you agree.

#GovernmentDebt #debt #principles

2025-08-05

The U.S. dollar used to be backed by gold — and it’s not farfetched to think we may be headed there again in the future.

History shows us that the same cycles repeat time and time again. One such cycle is related to currency devaluation.

Once people start to lose trust in the fiat system, we see a specific cause and effect reaction occur.

1) Governments print a lot of money
2) They pay off the debt with the cheap money
3) Nobody wants to hold the devalued currency
4) Governments go back and link money to gold

Will this same pattern happen again? It’s hard to say, and it wouldn’t happen anytime soon. But it is conceivable.

2025-07-30

In an advanced economy, credit does more good than bad. But it’s important to remember that borrowing creates cycles — and if the cycle goes up, it eventually needs to come down.

I explain why this is particularly important today in my new book, How Countries Go Broke.

But if you’d like more context on how all of these pieces come together, I recommend you watch my 30-minute explainer “How the Economic Machine Works” here: &t=1444s

#principles #howcountriesgobroke #economics #credit

2025-07-15

In 10 years, the US government will be $55-60 trillion in debt (which will be 7-7.5 times government revenue) because there will be $25-30 trillion of additional borrowing. That amounts to about $425,000 of debt per American family.

When I calculate the supply and demand for this debt, I don’t see enough buyers to buy the debt the US needs to sell, which will cause big problems.

We can avoid the worst-case scenario, but we need to act now.

To learn more, I encourage you to read my new book, How Countries Go Broke: The Big Cycle.

#raydalio #principles #economics #debt