That's right...there are a lot of buttons, knobs, gauges and little things that blink, buzz and ding.
Now, ask any pilot how many of the buttons, knobs, gauges and little things that blink, buzz and ding they use on any given flight and they will usually show you a core set of instruments that they use. All of the other instruments areimportant, but only necessary in a rare set of situations. So in other words, there are a core set of instruments that allow pilots to navigate from point A to point B safely.
This is how I view our government policymakers. Pilots, navigating our economies through various weatherconditions, all with the intention of landing safely. I view them sitting in front of a plethora of instruments andoftentimes wonder how they know which one to adjust for them to accomplish their desired result.
Now, I went to school for longer than some, not as long as others, but enough to know more than the average person. So I have what is known as "the curse of knowledge." Simply put, it can be difficult for me to realize that what I may see as easy to understand (because I'm involved with certain things on a daily basis), others may simply see as foreign and difficult to understand.
So when it comes to the economy and the government policymakers' decisions, I get that it can be extremely difficult to understand what they are doing, why they are doing it and what the ultimate outcome will be.
Will interest rates rise? When? By how much?
All good questions, but what we really need to understand to gain an appreciation of the current economic cycle we are in, is how the economy works.
Which brings me to this amazing video.
This plain-English, very creative video distills in 30 minutes, how the economic machine works and was created by one of the most influential people in the world - Ray Dalio.
Do yourself a favour and watch the video to gain a full understanding of the three main forces that drive the economy and you will begin to understand exactly where we are in the economic cycle and what you can do to take full advantage of it.
