How the Economic Machine Works

2013, Economics  -   73 Comments
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Ratings: 8.42/10 from 514 users.

The economy operates like a very simple apparatus. But most of the people can't fathom it - or they don't assent on how it really functions- and this has produced a lot of unnecessary economic agony.

Ray Dalio had a profound urge to distribute his straightforward but realistic instructions on economics. Though they're atypical, they have aided him to predict and dodge the global financial crisis, and have served him pretty well for the past 30 years.

Though the economic system might seem complicated, it functions in a plain, automated way. It's constructed of a few elementary components and a lot of uncomplicated transactions that are done repeatedly countless of times. These transaction agreements are predominantly compelled by human disposition, and they constitute three central forces that fuel the economy: 1. Productivity growth, 2. The Short term debt cycle, and 3. The Long term debt cycle.

We'll examine these three driving forces and how putting those in layers can generate a great pattern for following economic turbulences and evaluating what's occurring right now. All phases and all dynamics in an economic system are fueled by transactions. So, if we can comprehend them, we can appreciate the entire economy. People, companies, corporations, banks and governments all engage in transactions which are basically swapping money and credit for merchandise, services, equities and other monetary assets.

The biggest player (buyer and seller) in this "business" is the government, which has two very crucial components: Central Government that accumulates taxes and allocates money... and a Central Bank, which is very distinctive from other players because it governs the quantity of money and credit in the system.

It accomplishes this by affecting the interest rates and producing new money (literally). Because of this, the Central Bank is a critical influencer in the circulation of Credit. Credit is the most significant element of the economy, and apparently the least known. It is the most important because it is the largest and most unstable component.

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73 Comments / User Reviews

  1. Urbandweller

    DUSTUP: Taking from the rich! What a joke! If we're all taking from the rich then why are the majority of Americans living from paycheck to paycheck? You sound absurd!
    The "rich" thieves have been slowly but surely cutting wages for decades and expecting more work for employees.
    Capitalism is the central problem because many regulations have been lifted (Thanks President Clinton for revoking the Glass-Steagall Act) and it's monopolized by a private company called the Federal Reserve Bank.
    Capitalism incites greed, irresponsibility, racism, sexism...without regulations and protection for average workers it is "legally" allowed to steal by misrepresenting itself to the consumer.
    No one has ever been or will ever have worked enough (mentally or physically and independently) to be able to be either a multimillionaire or a billionaire...let alone a multimillionaire.
    THEY somehow get to determine what's a minimum wage. Who says? It's simply theft on a grand-scale.

  2. Sumit Raghani

    It makes deep sense in a grand scheme of things way. And it makes total sense too if you consider mature economies. It may not seem absolutely coherent to us when it comes to unpredictable governments and climate changes and warring times, but do the essence of what he is saying I feel can be reflected in those cycles too, and Ray definitely must have factored that in too, btw note to people who disagree - he is indeed the Founder of one of the biggest hedge funds ever Bridgewater associates..
    this is superlative stuff

  3. Randy Buchholz

    A big issue is using the word Credit when meaning Debit. Being the author is the head of a big hedge fund the whole fiat-credit systems is a good thing.

    Here is how the economic machine really works: Its a big Moving and Storing business. Take anything people believe has tangible value (like gold) and call it an asset. Create a restricted club. Implement a system where members are allowed to assign debt to people as a multiplier of the assets they start with. Call debt credit because that sounds more positive. Create a club rule, where if you give a member debt, they can call it credit, and a let them call credits assets. Now the other member has assets they can create multiplied debt from it. Create a business to move and store debt/credit, and charge people to move and store debt/credit. Nice. Now you don't care about the value of an asset, you only care that there are a lot of them to move and store. You can even take the original thing of value out of the system. No one will notice.

  4. jean

    The author is Ray Dalio, head of Bridgewater Associates, the world's largest hedge fund.

  5. David Poo Pants

    Many mouths and no listeners.
    Be happy that a starting block is available for those that have no clue.

  6. DustUp

    The devious Socialist-Communists (obama a puppet of the owners of the Fed being the owners of the CorproGovtMedia complex) love to point to corrupt Capitalism as the cause of all problems. What has corrupted it away from the founding sound system? Both Corporatism( which is another term for Fascism) and Socialism. We know the purpose of Corporatism, the name explains it. What is the purpose of Socialism? The well indoctrinated (emotionally propagandized) by the CorproGovtMedia complex (in this case socialist Schools and Media companies) want to believe it is beneficial method to help the less fortunate. FALSE.

    First, the central bank owners create a bubble big enough to cause a painful downturn (recession or worse) when they slow the easy money that created the bubble.

    Second, Socialism is used as a vote buying mechanism to those in pain. The I want it all now generation (mortgages, car, boat, school, etc loans) would rather point to the rich than point in the mirror and welcome relief by taking from the rich. Which Sort Of works in a lame fashion not solving anything, until the money runs out, which it ALWAYS does.

    End Result: The Big Corporatists being the cronies, minions of, as well as the owners of the central bank, meet success in eliminating competition for their entrenched corporations in 2 ways. Economic downturn gets rid of many. Socialist govt IS central control which dictates winners and losers via regulation (for the benefit of all, of course!).

    So, all you socialists, whether you want to admit it or not are the Marxist-Leninist-Stalinist stated useful idiots which bring about your own enslavement and dependency as easy as a fiddle playing on your emotions as well as your selfish greed (racking up debt rather than racking up savings, then taking someone else's savings making the middle class poor; the truly rich avoid taxes).

    If you gathered together independently from political parties and saw to it decent appropriate people were running for all offices from all parties in numbers, we wouldn't have a greedy power hungry group of central bankers and their minions running the show. No central bank, No fractional reserve banking, only transactions twixt free people. Then the only way to get more is to produce more, be a more valuable employee, or buy low sell higher (is it evil to buy apples in bulk and sell them one at a time at a profit for their trouble? Where you have the choice Not to buy or buy from another? If so, then Capitalism is evil. Clearly those who think so believe they should get paid to sit on their backside). That is true Capitalism, to entities choosing freely to exchange value. Harder for the I want it all now crowd, but MUCH fairer than any form of Collectivism(communism, socialism, fascism) what the usa is now, where the rich get richer and the poor get poorer. The usa ceased being a capitalist economy long ago. Clearly the people were smarter when the schools were non Govt. Anything govt does such as school IS by definition SOCIALISM.

    Oh poor them, what about the unfortunates that I as a socialist am willing to give the shirt off of everyone else's back to help? You emotionally played suckers will never pull you heads out. Decent people are generous to the truly needy. Americans give more out of their pocket, AFTER taxes than the rest of the world. The problem is, the socialists are Not those. They feel guilty about it. They want to believe everyone is like their cheapness so vote to steal from everyone. Taxes for things you don't approve of is theft despite any BS way you want to spin it for your corrupt head. Govt is always happy to expand and grow because the power hungry are drawn to govt. "Here let us take care of what YOU should be doing yourself." And your laziness is happy to let them until they become the monster you voted for.

    In summary, Socialism is all about eliminating competition to the big boys and to bring them even more dough as you become less free. (More taxes = Less freedom) They end up with the tax revenue the govt spends ...while govt skims more and more for itself while only dribbling a pittance to the dupes who keep voting for this. Brilliant.

  7. Moll

    Income tax in the US all goes to pay interest on the National Debt. It sucks wealth away from the middle class to the top 1%. Yes, the Federal Reserve is a private Bank looking after private interest. Fiat currency (dollar) has no intrinsic value... it needs to become money which has a true value backed by a commodity like Gold.

  8. deeznuts

    Does this mean that we are never not in debt

  9. drag1nze

    15 minutes if you play at double speed.

  10. leftOrRightLobe

    I like the nice little "black box" called the Fed... that prints money, controls interest (by flipping a switch)... oh and is not a part of the federal government...

    I look at modern capitalistic economies like this: We all live in a dream and there are a small class of people that generate what we should be dreaming. This is all due to group physiology of authoritative figures... which are heros of the dream.

    Freaking fairy dust...

    And this is best we have?

  11. Jordan Watkins

    This is nothing more than Socialist propaganda bulls**t

    1. InvisibleHandInMyPants

      How so? This is a factual representation of how economies work. Are you so filled with hate and delusion that you can not accept simple explanations of how the world works?

    2. Gareth page

      Are you fkn kidding me. This looks like it was made by the government, to paint a rosey picture of the state of things. Even that rosey picture looks like dog sht. Things are much worse than the video suggests. Do you really believe the elite are gonna start making donations to the national. If you think that is one of the 4 things that he states will allow things to improve, then you need to grow a brain. This is a hail Mary attempt at trying to make people believe that things are under control and will gradually improve in the long run. Notice he only mentions the federal reserve once for about 15 sec! He trys to explain QE by focusing on the central bank and what the government does with that $. If that doesn't tell you this video is for airheads, I don't know what else to tell. Use common sense. Look at the state of things around you, newsflash-unemployment in the US is not 6%, its closer to 25%! The bottom line is this-WERE FKD:(

    3. Shad Walker

      That would be Capitalistic propagdana drivel.

      Over simplified, especially the part about hard work and such. There are plenty of people who do not work hard that have an over abundance of money.

      Even Adam Smith attested to the fact that our form of economic system creates a rich, elite class that does now work at all yet consumes the vast majority of theproduce.

  12. docwatcher

    Good documentary. It is simplistic but you have to start somewhere ("Economics 101"), and leaving out all the 'how it really is' details, 'how it should be' debates etc. makes the topic more accessible to many people. Sure, you could/should know more, and finding out the simplifications made for this doc should be part of the fun. As suggested by reading the other comments here, many of the further details of Economics are highly debated.

  13. chum

    im sorry, but this documentary is so simplistic it is divorced from reality, it assumes all money is equal, all debt liabilities are equal, all borrowers and lenders are equal. it ignores power structures both social and geopolitical, and international influences. it spams meaningless catch phrases at you. It should be made clear this is an explanation of a process, with a lot of speculation added (especially when it starts going into taxing the rich -> inferences to nazi germany... that's just... =_= no comment). it is NOT an explanation of the economy. I'm not denouncing the capitalist process, but this explanation is so simplistic it clouds judgement, and is a crutch. This can only be seen as the first step in understanding economic processes. People who stop trying to find out more at this step are simply being misled.

  14. Karim Amghar

    OMG i really like it, in the beginning i suspected a simple and useless explanation, because as i knew the economy is far more complicated if you want to study it in its details, the micro/macro and a theoretical knowledges are necessary for that, but for a general idea for people who are studying something else that's really a good explanation, so thank you for that !! Peace :)

  15. Ole

    Rule number 2, "Don't have your income rise faster than your productivity" because you will eventually become uncompetitive.

    I don't get it. How income rising influence or affect our competitiveness?? Anyone please help me out.

    From Chiang Mai, Thailand

    1. Dave

      If two people do the same thing for the same price, then one would be more inclined to pay the one that wants less thus making you un competitive.
      Don't worry about if a easier way to understand is understanding inflation and make sure your debts aren't going at the rate of inflation.
      That's how the game is played
      eg a Debt at rate Inflation of say 3%pa
      your wage should rise at the rate of inflation of 3%pa
      so in theory your debt isn't rising
      but if you can borrow at 2% and inflation is 3%
      the money you have today can buy more than tomorrow you make a profit of 1%
      central banks raise interest rates so people have less money and lower them so people have more money
      Hope this explains it easier I'm an investor and study finance
      it's the easiest way to understand

    2. Shad Walker

      It is highly dependent upon what you are doing for income. For and hourly wage worker, this is a rule you should not listen to.

      Even if you are the boss, you might not listen to this rule, it would depend on how you are making your "income" rise. If you are cutting cost to increase the profit margin, you would still stay competitive.

      As many have said, this is a highly over simplistic view of such things and skips over the architecture flaws of Capitalism, Free Markets, Privatized Central Banks, etc.

  16. Simon Thorpe

    Very nice explanation. Ray Dalio nearly says everything you nee to understand what's going on. But there's one thing missing. We need the money in the system to be created with no debt. This can be done by what Positive Money calls "Sovereign Money Creation" - the central bank provides debt free money directly to central government which can then use that money to pay for vital work that is in the public interest - house building, repairing the transport infrastructure, renewable energy etc. It can also be in the form of direct payments to citizens - an unconditional basic income. The critical point is that this money creation has to have no debt attached.

    Finally, to prevent too much money getting into the system (and causing inflation), the Central Bank could be given the power to remove excess money by imposing a universal financial transaction tax on every electronic transaction. This is not a tax to raise money for the government, but simply to mop up any excess. The value of that tax could be minuscule because transactions are so high (at least $5 quadrillion a year in the US). All it would need to do is remove just enough extra money to keep the money supply at the right level.

    It would be great if the team could add these extra ideas to their beautifully presented documentary.

    1. Jon

      But the one issuing money acquires debt since money is a promissory note.

    2. Jim Lopez

      Simon you have a brilliant idea too bad the federal reserve (i.e. the rothchilds, bilderburg group, the central bank cartel-citi, j.p. morgan, etc.) would not make any money because of the interest free money being provided to the government. Oh well it was a nice thought anyway. Looks like we will continue on this bad dream until something drastic happens.....hope it isn't wwIII

    3. Jimmy Hacksaws

      Money doesn't acquire debt. Banks create it by issuing loans.

    4. Jon

      Money is a promissory note. If a promise of value is not a form of debt then what is it?

    5. NYyankeeboi

      That's a great idea, and it might very well fix our problem, Unfortunately, given recent decisions that have come out of Washington, it doesn't appear that fixing our problems is a goal of theirs.

  17. Ajay

    what an simple way to explain .. great :)

  18. Brogan

    People like to buy stuff, make mistakes, experiment, create and follow ideas. Those things I mentioned are the real building blocks to sustainable economy for the environment and for mankind but it requires money at the same time for people to do those things. And a way we can enable this is to create non-obligitory credit. Off course all you gold standard freaks will scream at your computer something like "HYPER-INFLATION" but if we spent more time learning how to issue money freely without inflationary repercussions than telling people that we have to suffer sh*tty years of recession because we like to think that we're balancing some metaphorical book somewhere - we'd be a little closer to progress.

  19. dmxi

    from 50 random facts about gold:
    The value of gold has been used as the standard for many currencies.
    After WWII, the United States created the Bretton Woods System, which set
    the value of the U.S. dollar to 1/35th of a troy ounce (888.671 mg)
    of gold. This system was abandoned in 1971 when there was no longer enough
    gold to cover all the paper money in circulation.d
    &:

    The world’s largest stockpile of gold can be found five stories
    underground inside the Federal Reserve Bank of New York’s vault and
    it holds 25% of the world's gold reserve (540,000 gold bars). While it
    contains more gold than Fort Knox, most of it belongs to foreign governments.f
    ....+
    The gold standard has been replaced by most governments by the fiat (Latin for “let it be done”) standard. Both Thomas Jefferson and Andrew Jackson strongly opposed fiat currency. Several contemporary economists argue that fiat currency increases the rate of boom-bust cycles and causes inflation.d
    aswell as:
    Only approximately 142,000 tons of gold have mined throughout history. Assuming the price of gold is $1,000 per ounce, the total amount of gold that has been mined would equal roughly $4.5 trillion. The United States alone circulates or deposits over $7.6 trillion, suggesting that a return to the gold standard would not be feasible. While most scholars agree a return to a gold standard is not feasible, a few gold standard advocates (such as many Libertarians and Objectivists), argue that a return to a gold standard system would ease inflation risks and limit government power.d

  20. DeckHazen

    Two realities transform our discussion of the economy into merely an academic exercise. The first is that the important markets are manipulated such that any picture of a business cycle no longer applies. If you don't believe me, then explain how demand for gold can sky-rocket and the price drops. The second reality is peak oil. Our economy is based on the availability of cheap oil and when that goes away, our economy goes with it. You won't hear about these realities on the nightly news and because of that they will hit the unprepared like a slap in the face with a cold fish.

  21. coryn

    And when you go beyond the usual economic generalizations you find still another very subtle problem, that is, while some people will consume all they have today, without thought for the morrow, there are others who will not consume all their production today, but rather save some for the morrow. When inevitably a crisis arrives, and distress becomes apparent, resulting in losses of jobs and income, those who have saved will still possess purchasing power. Voila, the haves and the have nots...... But few economists or book writers are among those without purchasing power, so they may well discount this phenomena. But notice, when a crisis occurs, the old timers who have witnessed these same problems understand the consequences .....

  22. LoggerheadShrike

    This film is totally clueless. The idea that the central bank "literally" produces new money by changing the interest rate, for instance, is completely wrong. The central bank's interest rates only influence the rate of money creation by the private banks, by encouraging or discouraging loans (which produce new money). It doesn't always work as intended and it's not a direct control, its just setting up conditions that usually encourage private banks to increase the money supply.

    The film clings to capitalism yet denies its main and primary engine, the very thing that allowed it to come into being - reserve banking. Without which there would be very little capital investment at all. Capitalism's secret to success is its ability to pull capital from the future, to generate it with nothing more than the promise of its success. In effect its capital that brings itself into being, from simply the idea of its existence. Without it, modern capitalism can't exist.

  23. Kansas Devil

    This is how the economy is supposed to work. Politics prevents that balance from happening. Obama suggested a balanced approach several years ago. That got nowhere. No beautiful deleveraging allowed.

    1. Toy Pupanbai

      Just shows that, deliberately or not, Obama is useless.
      (useless that is, to ordinary folk who naively expect their President to be working for them!)

  24. Guest

    And now children lets watch Part 2, where International Trade will be taken into account rendering the conclusion in Part 1 moot.
    Also, the brutal economic disparity created by the Cantillon Effect and the inevitably massive Inflation in the LR resulting from the relentless Seigniorage will be duly discussed.
    Happy future kids of the West :)

  25. Hector Velez

    The most important thing left out of this scheme is where does it all begin. Labor creates all wealth therefore the basis of the whole economic system.

  26. Ivica

    Hm, according to the graph at 1:15, if we simply eliminate all loan from our lives we would have stabile constant growth. Who needs banks then? This doc is trying to convince us otherwise (that loan is an absolute must for economy) and then they show the graph that disproves them. Currently, one generation suffers, one thrives but regardless of anything the bankers get rich. It is a nice little scam they got going on.

    OK, now let’s get serious. Without bank loans, to start a business, you would have to have investors (and they would own most of your business) which is kind of bad. With bank loan you basically get an affordable investor (only takes few percent of your business). The catch is: investors should take risks but banks do not (they are protected) – if the business fails they squeeze you and squeeze you and basically make you a slave (you and your family). It is a very nice scam they got going on.

    1. Il Ha

      You are completely right, a thing that had been suggested by Islamic (banking) 15 centuries ago!

  27. Janeen Clark

    ill tell you how it works in a sentence. make the slaves feed and house themselves. make the system detailed enough so they have no time to focus on self development and education and finally in every area possible use the concept of an enemy image any place where unity between people is possible so they can never form groups intelligent enough to make changes. (the only real groups of people are large music concerts 700,000 + people)

    1. socratesuk

      The occupy movement?, online bloggers? There is a lot of people who are well educated thanks to things like the internet. Someone has to build homes, and someone has to collect the rubbish. Someone has to grow the crops. Most of us in the West are far from starving and our lives are full of various gadgets brought to us by the profit motive.

    2. Christopher Loughrey

      That is the exploitative US capitalist system, one of the most exploitative and evil economic systems to have ever been conceived, far worse than communism ever was. That is not the economy per se though. All economic systems follow a basic set of rules which is tied to human nature, and the above explains how it works but also how a capitalist system works in terms of the credit/debit cycle.

  28. Socrates

    Seems like a great Video for a 9th Grader. Unfortunately, some of us are past that stage. Do I agree with everything? NO! I agree with about 10% of it because its pretty much not including a lot of factors about credit and money Ex: Bank's and Fed.
    Further more, this has no information about serious Economic drivers as Energy (oil, natural gas) nor Precious Metals (Gold and Silver)
    I have to think of this video as an IRS training requirement program and nothing more.

    1. Bartolomeu Lança

      crystal points
      cheers

  29. socratesuk

    Seems a bit of a simple documentary. I am pretty convinced one day the human species will ditch money all together, and come up with a more sustainable system.

  30. Chul

    ..."is human nature!" ha ha ha

  31. Hussain Fahmy

    Spot the severe flaws in the conventional economy against Islamic system.

    1. steviecomment

      i assume you live in a country with this superior economic system?

      Care to explain your system?

    2. Hector Velez

      He has none; he's just a religious fanatic with no idea of economics.

    3. Hussain Fahmy

      A superior economic system results in productivity and economic prosperity. The economic philosophy of Islam has no concept of Interest because according to Islam, Interest is a curse to society, which accumulates money around handful of people, and it results inevitably in creating monopolies, opening doors for selfishness, greed, injustice and
      oppression. Deceit and fraud prospers in the world of trade and business. Islam, on the other hand, primarily encourages highest moral ethics such as universal brotherhood, collective welfare and
      prosperity, social fairness and justice. Due to this reason, Islam renders Interest as absolutely Haraam and strictly prohibits all types of interest based transactions. The prohibition of Interest in the light of
      economic philosophy of Islam can be explained with the cost of distribution of wealth in a society.

      The distribution of wealth is one of the most important and most controversial subjects concerning the economic life of man, which has
      given birth to global revolutions in today’s world, and has affected every sphere of human activity from international politics down to the private life of the individuals. For many a century now, the question has been the centre not only of fervent debates, oral
      and written both, but also of armed conflicts. The fact, however, is that whatever has been said on the subject without seeking guidance from Divine Revelation and relying merely on human reason, has had the sole and inevitable result of making the confusion worse confounded.

    4. David Faubion

      Right you are Hussain; nearly every theology at its basis agrees with Islam (one of the most recent, vibrant and diverse religions). The most recent, best example of the Islamic influence upon the economic policy of a country, I am told, was in Syria by way of the Ba’ath Party in the 1970s. Judaism in its roots, thousands of years ago, created a forty-year cycle of wealth gradually turning over like weather, water or topsoil. Likely, the disparity twixt wealth and poverty was never nearly as absurd as it is today. Economics for the classical Greek Aristotle is a moral philosophy based on the household management and harmony. The ideal of an economics as a moral philosophy, rather than the hyper-competitive dynamic of a winner and loser of boom and bust, is evident in the writing of the more recent Adam Smith, David Ricardo, Marx, Engels and, to an extent, in every economic theorist no matter what side of the aisle. Theology is the mother of philosophy in which ethics is the center-piece of theory; without ethics religion is useless passion: pseudo-religion: a false unity and, ergo, the world collapses under the dross of greed and self-interest. BTW, Iceland practiced tough love with its banks in the 2008 burst; Sweden took over many of its banks in the early 1990s and, thus, never lost its decade the way that Japan, for example, did.

    5. Hussain Fahmy

      Our wealth does not accompany our soul. However, our deeds, good and bad stay with us until the day of reckoning.

      On the Day when every soul will come pleading for itself, and every soul will be repaid what it did, and they will not be wronged. (The Noble Quran 16:111)

    6. David Faubion

      Yes, as in Aristotle sense of it, at the climax of our lives we take an assessment of what our lives have meant, generally we realize whether we have lived the ethical good life. The person who makes that self-reflection based on ethics likely did live an ethical good life.

    7. socratesuk

      What Islamic system is this????.......

    8. Hussain Fahmy

      The conventional economic system, that is based on interest, has resulted in concentrating the wealth in the hands of selected few creating monopolies and widening the gap between the rich and the poor. In
      contrast Islam encourages circulation of wealth and regards its role as important to an economy as the flow of blood to our human body. Just as clotting of blood paralyses human body, concentration of
      wealth paralyses economy. The fact is that today 10 richest men in the world have more wealth than 48 poorest countries of the world. Millions are malnourished, lack access to safe water, cannot read or write, in short the quality of life has decayed and the graph continues to go down.

      Economic justice requires a viable economic system supported by an efficient banking system. Interest based banking has proved to be inefficient as it fails to equitably distribute wealth which is necessary for the well being of mankind. On the other hand Islamic banking is efficient and ensures equitable distribution of wealth thus laying foundation for an inflation free economy and socially responsible banking.

    9. socratesuk

      Thanks for the post. Some interesting points. Inflation can happen regardless of interest, and some nations lack running water due to poor state management. Wars and conflict don't help either. Although scrapping interest seems noble, the interest is what pays the wages of those that work at the bank, its also the main source of income.

    10. steviecomment

      Thanks for the reply. I agree that interest free loans should be the norm. The banks don't actually lend out their own money. It's brought into existence when the loan is taken out. The banks can still operate because they collect in new money that they have created. Interest causes big problems. This whole scheme is a scam, and forces us to have constant growth to pay the interest. I think the west should adopt this rule. The people creating real wealth should be put first. Not greedy bankers.

    11. jackal

      I can't believe that anyone would accept your thesis. Just look at your first paragraph above. Name one Islamic country where you don't have the very rich and the very poor, just as we have in North America. Our democratic system is the shits as far as wealth creation is now evident (1%/99%), so I agree with your description of that system. But to say that the Islamic economic system works is also BS. If you read your description again of the Islamic model, you will see that it defines the Marxist/Leninist/Communistic economic system to a "T." As we all know, that has stopped functioning for quite a while now. There are a lot of it that was Utopian, with which I would agree, but, as usual the fundamental greed built into the human psyche has never allowed it to happen.

    12. Hussain Fahmy

      Whilst the Islamic economic model is not enforced by any so called Islamic countries, Muslims have formed consortium among themselves successfully to take advantage of the benefits of it's features. Our model may have a touch of Marxist/Leninist/Communistic theories in practice however, in it's essence the values are placed in morality, Divine accountability and sustainability; has proven beyond any doubts that it works for the greater good of Humanity.

    13. Jon

      I think you are misled. Really Rich and ENTERPRISING people (your 10 richest men) got wealth not in liquid form but in revenue generating assets. If wealth is liquidated, then that would mean affecting employment too. The world as we know it will have changed and stagnated in the absence of progress.

      This seems to be the misconception by socialist politicians in Greece when they thought the wealthy few can repay whatever bad loans that government guarantees in behalf of the people. Liquidating the assets of the wealthy would amount to loss of a major part of the economy.

      I get it - the oil ROYALTIES that generate wealth for Islamic economies are in liquid form. Banks help to preserve the value of these assets. Thus the ideas you fondly present and justify.

      In contrast, the Western Christian nations are heavily indebted to pay huge royalties for energy that create the best economic model.the world has ever seen. Just recently, governments printed debt in the form of money, 2-3x more money supply to tide over a recovery period because of an oil price shock that sent major banks and financial houses crashing.

      Indeed your economic system is the better one. I have to agree with you on this one.

    14. Hussain Fahmy

      May prosperity touch every aspect of our lives with; ethical and moral values. Best wishes.

  32. Serge

    The problem with this video is that the dollar is also debt/credit. The Fed purchases bonds and international countries "lend" to us. The real economic shift hasn't occurred because the dollar is the world's currency. If it was some other currency, the US would be Haiti.

  33. Che

    This is total bs.. Identifies the bank that prints money for the government as a federally owned institution when in reality it is the federal reserve that prints U.S money and it is a privately owned business..

    1. Soulfree

      It's not bs... It says in the documentary that the banks print money to make money! Were you not listening? The lender is the FED and at 3:52 it says, "the lender wants to make their money into more money." Who cares if it is private or government? That's how the system works and who cares how that originated. The FED is submissive to the US government anyway. You are never going to accomplish any revolution Che, if you keep drowning in your dark and distorted conspiracies!

    2. Hector Velez

      What has Che said that has anything to do with revolution anyway? He simply stated his view of the Fed. I've read his comments before and there's nothing revolutionary in his thinking. On the contrary, I find his views reactionary.

    3. Soulfree

      Nothing I suppose, I was just poking fun at his name being Che and came to the conclusion he was some revolutionary inspired by Mr. Guevara. I just have to say though, his observation that the FED is privately owned does not disqualify the documentary in the slightest and it actually does not deny the fact that in the US the bank is privately owned or that it wants to make money. I don't know what his point is or why that ruins the documentary for him.

    4. Hector Velez

      I hear ya! Thanks for the reply.

    5. LoggerheadShrike

      yeah, who cares. Now can I go just make up fantasy money for my own profit like the banks do? No? Why not?

      If it's public that's one thing; everybody owns it, nobody is getting any special privileges. But if it's private, why can't we all do it? Who decides that only a select group of people get to have that right?

    6. Soulfree

      The bank provides a service, as in credit, to people or organizations who want to invest in something. Why should bankers not be compensated? It is not like the people who run the FED own all the money in the economy. The banking industry has a HUGE amount of responsibility on their heads, and trust me they are not trying to sabotage the game, that would only hurt their interests. It is not the banks fault people take out loans they cannot repay, is it? The fact is we live in a capitalistic society that is set on privatizing everything; especially in the US, where the police force and prisons are becoming privatized. My point is, this is the game; if you look at it like monopoly, the banker does not own the board, they do not own all the property, they have a responsibility of distributing money and managing the economy of their country. Those people in charge of the FED are just players too, with their own little place on Boardwalk or Parkway. Is it fair? Probably not. But who said life was?

    7. LoggerheadShrike

      This is not about what's fair.

      Liberty isn't fair. Liberty is about an equal measure for all. That's great for many, bad for some. If one man can lend $100 out when he has only $10, then, all free men - or none - should be able to. Never some.

      For some, this would be a terrible change. No longer would they enjoy special privileges; they would compete with free men measured equally, with all the economic rights of each other.

      Monopoly is a crude simulacra of the system - not the other way around!

    8. Guest

      It's not bs... It says in the documentary that the banks print money to make money. Were you not listening? The lender is the FED and at 3:52 it says, "the lender wants to make their money into more money" Who cares if it is private or government? That's how the system works and why does it matter how that originated? The FED is submissive to the US government anyway. You are never going to accomplish any revolution Che, if you keep drowning in your dark and distorted conspiracies!

    9. Norton

      "The FED is submissive to the US government anyway."
      Really?

  34. Thinker

    This doco seems to be explaining why boom/bust cycles happen, but to say that it's explaining "How the Economic Machine Works" is a bit of a stretch in my humble opinion.

    1. David Faubion

      Part of the problem for several centuries now is the mechanization of economics, a word which shares its etymological roots with ecology. There is nothing inorganic and mechanical about a true economy of a flesh and bones, cellulose and water, weather patterns and topsoil economy; economy is all about link and unity with the planet and the universe in which the planet moves and unfolds within. Money is a cipher for the wealth of the universe and money loses its meaning and eternal usefulness when it is traded as manipulated for profit. Make it not for profit; a credit union is a step in the right direction.