Page 116 - Ray Dalio - Principles

The ECB’s decision was obviously the right thing to do, for
reasons that were relatively simple. But seeing how
controversial its move was, it occurred to me that the world

needed a simple explanation of how the economic machine
works, because if everyone understood the basics, then
economic policymakers would be able to do the right things a
lot faster and with less angst in the future. That led me to make
a thirty-minute video, How the Economic Machine Works,
which I released in 2013. Besides explaining how the
economy works it provides a template that helps people assess

their economies and gives them guidance about what to do and
what to expect during a crisis. It had a much bigger impact
than I expected, as it was watched by more than five million
people in eight languages. A number of policymakers told me
in private that they found it helpful for their own
understanding, for dealing with their constituents, and for

finding better paths forward. This was very rewarding to me.

From my contacts with policymakers in a number of
countries I learned quite a bit about how international relations
really works. It is quite different from what most people
imagine. Countries behave in a more self-interested and less
considerate way than what most of us would consider
appropriate for individuals. When countries negotiate with one

another, they typically operate as if they are opponents in a
chess match or merchants in a bazaar in which maximizing
one’s own benefit is the sole objective. Smart leaders know
their own countries’ vulnerabilities, take advantage of others’
vulnerabilities, and expect the other countries’ leaders to do
the same.

Most people who haven’t had direct contact with the
leadership of their own and other countries form their views
based on what they learn in the media, and become quite naive
and inappropriately opinionated as a result. That’s because
dramatic stories and gossip draw more readers and viewers
than does clinical objectivity. Also, in some cases “journalists”
have their own ideological biases that they are trying to
advance. As a result, most people who see the world through

the lens of the media tend to look for who is good and who is
evil rather than what the vested interests and relative powers