How the Economic Machine Works

Economic Machine - NEW shutterstock
The economy is like a machine. At the most fundamental level it is a relatively simple machine, yet it is not well understood. Below we explain timeless insights of how it works and share long term perspectives that illustrate these forces playing out.

How the Economic Machine Works

How does the economy really work? This simple but not simplistic video by Ray Dalio, Founder of Bridgewater Associates, shows the basic driving forces behind the economy, and explains why economic cycles occur by breaking down concepts such as credit, interest rates, leveraging and deleveraging.

Larry Summers and Ray Dalio on How the Economic Machine Works

This is a thought-provoking interview between Ray Dalio and Larry Summers, President Emeritus of Harvard University and former U.S. Treasury Secretary and is based off Dalio's 30-minute animated video entitled "How the Economic Machine Works."
A new study on the rises and declines of past leading empires that puts today’s economic, political, and policy situation into perspective of the big picture.
October 28, 2019
Bob Prince
The laws of physics give us the concepts of potential energy and kinetic energy. For example, when a ball is held high above the ground, it has a lot of potential energy; when the ball is released and in motion, this turns into kinetic energy; and when the ball is on the ground at rest, it has neither. Economies have analogous dynamics. Explore how developed economies now have limited potential energy left to draw on and how to approach investing in such a world.
This report is an examination of populism, the phenomenon — how it typically germinates, grows, and runs its course.
October 23, 2017
Ray Dalio, Steven Kryger, Brandon Rowley, Neil Hannan
Today, wealth and income skews are so great that average statistics no longer reflect the conditions of the majority of Americans. To give you a sense of what the picture below the averages look like, we broke the economy into two economies — that of the top 40% and that of the bottom 60%.
February 7, 2019
Greg Jensen, Atul Narayan, Oliver Simon, Lauren Forman
Almost every major driver of US corporate profit margins has improved in the last two decades, boosting equity returns. Explore these driving forces of the past and how sustainable they are going forward.
March 27, 2019
Greg Jensen, Atul Narayan, Daniel Crowley, Sam Green
Many of the forces that fueled the secular rise in US profit margins have buoyed company profits across the developed world, while Chinese companies saw profit margins shrink. Explore how these drivers have affected global margins and how equity valuations could change in the future.
April 28, 2009
Ray Dalio, Jason Rotenberg
For the first time in history central banks (most importantly the Fed) are producing enough money to make up for contracting credit as an antidote to the D-process.
More Featured Research
Stay Informed
Sign up to receive our latest research on the forces shaping global economies and markets.
You're almost finished.
You will receive an email confirmation shortly.
There's been an error. Please start over and try again.
Stay Informed
Sign up to receive our latest research on the forces shaping global economies and markets.
Almost There!
We'd like to know you a bit better!
You're almost finished.
To complete your registration, click the confirmation link in the email we just sent you.
Sorry, there has been an error. Please start over and try again.

Disclaimer & Agreement


Bridgewater Associates, LP is a global investment management firm. Bridgewater Associates, LP advises certain private investment funds and institutional clients, and is not available to provide investment advisory or similar services to most other investors. This website is a resource for audiences other than investors such as potential employees, researchers, students, counterparties and industry participants. Bridgewater Associates, LP believes it is useful for such persons to have an accurate source of relevant information. Under no circumstances should any information presented on this website be construed as an offer to sell, or solicitation of any offer to purchase, any securities or other investments. This website does not contain the information that an investor should consider or evaluate to make a potential investment. Offering materials relating to investments in entities managed by Bridgewater Associates, LP are not available to the general public.

To view this content, you must agree to the following terms, in addition to and supplementing the Bridgewater Terms of Use and Privacy Policy:

I confirm to Bridgewater Associates, LP and agree that:
  • I am entering this website only to obtain general information regarding Bridgewater Associates, LP and not for any other purpose.
  • I understand that investments managed by Bridgewater Associates, LP are not available to the general public.
  • I understand that this website does not contain the information I would need to consider for an investment, and that such information is only available to a limited group of persons and institutions meeting specified criteria.
  • I understand that this website has not been reviewed or approved by, filed with, or otherwise furnished to any governmental or similar authority, and is intended only to provide limited information to members of the public who have a legitimate interest in that information for reasons unrelated to making investments.
  • I understand that when Bridgewater Associates, LP makes third party information available, Bridgewater generally will not have verified statements made by the third party, and the presentation of information may omit important information.
  • I understand that third party materials such as live interviews made available by Bridgewater Associates, LP generally will not have been edited by Bridgewater and statements in those materials by individuals associated with Bridgewater should be understood in the conversational context in which they were made, which may include providing historical background.
  • The content constitutes the proprietary intellectual property of Bridgewater or its licensors and that I will not directly or indirectly copy, modify, recast, create derivative works, post, publish, display, redistribute, disclose, or make available the content, in whole or in part, to any third parties, or assist others to do the same, or otherwise make any commercial use of the content without the prior written consent of Bridgewater.

By registering my information below and clicking "Agree," I certify that I have read, understand and agree to the foregoing Disclaimer, Terms of Use and Privacy Policy.
This website uses cookies. Click here for additional details. By continuing to use this website, you consent to the use of cookies.

Internet Explorer is not supported by this website.

For optimal browsing we recommend using Chrome, Safari, or Firefox.