<story><title>A Template for Understanding How the Economic Machine Works (2011) [pdf]</title><url>https://media.economist.com/sites/default/files/pdfs/A_Template_for_Understanding_-_Ray_Dalio__Bridgewater.pdf</url></story><parent_chain></parent_chain><comment><author>apo</author><text>The &amp;quot;Business Cycle&amp;quot; section on page 17 is basically a blueprint for money and finance in decade-sized chunks.&lt;p&gt;1. Early Cycle. Low interest rates and lots of credit increase sales of big-ticket items.&lt;p&gt;2. Mid-Cycle. Slowing economy, low inflation and interest rates, consumption falls.&lt;p&gt;3. Late-Cycle. Capacity constraints surface and interest rates rise. &amp;quot;The stock market stages its last advance.&amp;quot;&lt;p&gt;4. Tightening Phase. Central bank raises interest rates in anticipation of rising inflation.&lt;p&gt;5. Early recession. GDP, inflation, stocks, and hedge assets fall as central bank keeps money tight.&lt;p&gt;6. Late recession. Central bank lowers rates, stocks rise. Cycle complete.&lt;p&gt;According to this roadmap, step (4) began about one year ago. In addition to increasing interest rates the Fed has committed to unwinding its QE assets from the 2009 aftermath.&lt;p&gt;The take-home message is that the Fed causes recessions according to a very predicable pattern. This came as quite a shock when I first read about it in the book &amp;quot;Secrets of the Temple.&amp;quot;&lt;p&gt;Also, there are a lot of gems tucked away into various corners of this essay, including this one:&lt;p&gt;&lt;i&gt;... a big part of the deleveraging process is people discovering that much of what they
thought was their wealth isn’t really there. &lt;/i&gt;</text></comment>
<story><title>A Template for Understanding How the Economic Machine Works (2011) [pdf]</title><url>https://media.economist.com/sites/default/files/pdfs/A_Template_for_Understanding_-_Ray_Dalio__Bridgewater.pdf</url></story><parent_chain></parent_chain><comment><author>cryptozeus</author><text>I find this very useful, every now and then i make it a point to watch his video to remind myself of the macro view on things &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;m.youtube.com&amp;#x2F;watch?v=PHe0bXAIuk0&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;m.youtube.com&amp;#x2F;watch?v=PHe0bXAIuk0&lt;/a&gt;</text></comment>