Daily Archives: 18/10/2018

Crises Chronicles

Ray Dalio is on a mission to share insights gained over 40 years at the helm of the vastly successful Brightwater Associates. After the financial crisis, Dalio published an excellent article on the workings of the economy. In 2017, he expanded on his previously published philosophy in a book called Principles (as per this summary). More recently he published a free downloadable book called A Template for Understanding Big Debt Crises, available here.

I have a copy of Principles but I must admit I have yet to finish reading it (on my to do list!). I have read the first section of the latest Big Debt Crises book and would highly recommend it. The second section of the book has detailed case studies (the US 2007-11, the US 1928-37, and Germany 1918-24) and the third section is a compendium of 48 other case studies.

Two graphs below from the Big Debt Crises book are worth reproducing, reflecting key factors behind our economy today.

click to enlarge

click to enlarge

Dalio is an astute student of history. He recently commented that “the biggest mistake that most people make is to judge what will be good by what has been good lately”.

Amen to that.