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HOW ECONOMY WORKS -- RAY DALIO - Coggle Diagram
HOW ECONOMY WORKS
-- RAY DALIO
ECONOMY
WORKS LIKE A SIMPLE MACHINE
THREE MAIN FORCES
PRODUCTIVY GROWTH
SHORT TERM DEBT CYCLE
LONG TERM DEBT CYCLE
TRANSACTIONS
BUYER x SELLER
BUYER - MONEY/CREDIT
SELLER - GOOD/SERVICES/ASSETS
SPENDING
DRIVES ECONOMY
TOTAL SPENDING: MONEY + CREDIT
PRICE: TOTAL SPENDING / TOTAL QUANTITY
THE BUILDING BLOCK OF ECONOMY MACHINE
MARKET
BUYER AND SELLER MAKING TRANSACTIONS
GOVERNMENT
CENTRAL GOVERNMENT
TAXES/SPENDS
CENTRAL BANK
INTEREST RATES
PRINTING MONEY
CONTROLS MONEY/CREDIT
BIGGEST PLAYER
CREDIT
MOST BIGGEST AND VOLATILE PART OF ECONOMY
LENDER x BORROWES
Make more money
Buy things or investing
PRINCIPAL plus INTEREST
Amount of Credit depends on the interest rate
CREDIT = DEBT
Lenders - Asset
Borrower - Liability
CREDIT INCREASES SPENDING