Author: Mwangi Waithaka

Ray Dalio’s free YouTube video “How the Economic Machine Works” is one of the most practical, straightforward, and useful guides to understanding macroeconomics. Dalio used this template to understand the macroeconomic environment for decades, and it contains key ideas such as debt, cycles, deleveraging, and depression. This is one in a series of posts that will break down and simplify his views. This article discusses deleveraging. When the economy reaches its long-term debt peak, it goes through a deleveraging. Deleveraging is a situation where borrowers have got into excessive debt that cannot be relieved by reducing interest rates. People start…

This financial crisis was a period where the world experienced a significant economic downturn between 2008 and 2009. There was widespread decrease in global economies that led to a recession. Many individuals and organizations worldwide were affected, particularly millions of Americans. As financial institutions began to fail, the US government intervened by providing bailouts to prevent further collapse. It is also known as The Great Recession. The U.S. housing market before the financial crisis In the early 2000s, investors in the U.S. and abroad were looking for another low-risk, high-return investment. Traditionally, they invested in stocks and bonds, but these were paying very low interest. This was because…

The dot-com bubble is a stock market bubble that revolved around speculative investments in dotcom or internet-based companies. This bubble started in 1995 and burst five years later, in 2000. Investors were so excited about the progress of the internet that they invested in pretty much any tech company with a “.com” domain on their internet address. In the early 1990s, the internet was just like any other new industry. It was a revolutionary technology that had come onto the scene. People got very interested in it. They saw the money-making potential, and they wanted to get involved. Like with any other…

Ray Dalio’s free YouTube video “How the Economic Machine Works” is one of the most practical, straightforward, and useful guides to understanding macroeconomics. Dalio used this template to understand the macroeconomic environment for decades, and it contains key ideas such as debt, cycles, deleveraging, and depression. This is one in a series of posts that will break down and simplify his views. This article discusses productivity growth and debt cycles. Productivity growth and debt cycles, both short-term and long-term, are the primary drivers of the economy. These forces are generated through transactions, which are primarily influenced by human behavior. By…

The Great Depression was a worldwide disaster, with millions of people falling into poverty. In America, many people waited in line for bread and lived in makeshift housing. In Germany, the impact of the Great Depression paved the way for Hitler and eventually led to the beginning of World War Two. The Roaring 20s During World War One, farmers took out loans to buy machinery like tractors and harvesters. They also increased the size of their farms. This led to a significant increase in crop yields. This war came to an end after four years of conflict. America was on…

Ray Dalio’s free YouTube video “How the Economic Machine Works” is one of the most practical, straightforward, and useful guides to understanding macroeconomics. Dalio used this template to understand the macroeconomic environment for decades, and it contains key ideas such as debt, cycles, deleveraging, and depression. This is one in a series of posts that will break down and simplify his views. This article discusses credit and transactions. Credit is very useful in an economy. An economy is a system for producing and exchanging valuable goods. The economy is about people: how they make money and for what they spend…

Financial literacy is the ability to know how to use different financial skills and terms fluently to make smart money decisions. These skills include budgeting, managing debt, investing, and planning for retirement. If you lack these skills, you may be financially illiterate. An education in finance places you in a position to make informed decisions about your money. It will help you build a lifetime of financial knowledge. A good understanding of money, including how to use it wisely, can help you accomplish your goals. These goals may, to an extent, include saving up for school or retirement, using loans…

The seven stages of empire is a cycle that runs on a long-term basis and society is switching between high-quality money and large amounts of currency. The cycle always concludes with gold emerging as the ultimate winner against depreciating currencies. Mike Maloney coined this concept which is similar to the British soldier, writer and lecturer, Sir John Glubb. He (Sir John) researched the history of eleven empires, beginning with the Assyrians in 859 B.C. and ending with the British in 1950 A.D. He concluded that all empires experienced a similar pattern of growth and decline, broken down into seven stages.…

The aim of war, as in World War Two, is to accumulate as many resources as one could, such as gold, silver, and raw materials. Also, to control the poor regions where they were found. Don’t forget to make huge amounts of profits and become enormous and all-pervasive. Economic conditions that contributed to World War II. After World War I, the Allied Powers held a conference in Paris to sign the Treaty of Versailles. Unfortunately, the poorly structured peace treaty and a global economic crisis created the conditions that led to World War II.  The Treaty of Versailles blamed Germany for…

Wars (like the first world war) and currency have a connection. Wars are fought primarily for economic, religious, and political reasons, but mainly to gain control of resources. People and countries require resources for their daily needs and growth. Real money like gold and silver is scarce; therefore, currencies were created to represent this value. These currencies allow individuals and governments to fulfill the requirements of the people and their countries. Gold, Silver, and Currency The most common currency in Europe in the 1600s was gold and silver. Hence, the size of their economies was dependent on how much gold…