From: Jeffrey Epstein <jeevacation@grnail.com>
To: Bill Gates
Subject: Re: FW: A video of my template for "How the Economic Machine Works"
Date: Thu, 31 Oct 2013 13:37:26 +0000
I have now given out the video without attribution to 12 people. 6 i told ray dalio prepared it, 6 i told it was
done by a local kid here in the VI. the reviews were highly skewed to say the least. those that saw what they
believed to be rays . thought interesting and maybe insightful. those that thought it was done by a kid thought it
simple minded.
On Wed, Oct 30, 2013 at 7:34 PM, Bill Gates < > wrote:
Ray did a strong job on this video which I promoted in a tweet...
I will be interested to get your reaction to it if you have a chance to look at it.
From: Ray Dalio [mailto:
Sent: Wednesday, October 16, 2013 11:08 AM
To: Bill Gates; Elizabeth Loy
Subject: A video of my template for "How the Economic Machine Works"
Dear Bill,
I know that you are terribly busy with very important matters. Nonetheless, I would appreciate you taking 30
minutes to view the video "How the Economic Machine Works". Besides possibly helping me, I believe that
it might help you.
I distilled everything I have to say about economics into this 30 minutes.
I did this simple video because I believe that most influential decision makers and most people cause a lot of
needless economic suffering because they are missing the fundamentals shown in that template. I know this
first hand because I speak to most countries' finance ministers and central bankers about their challenges and
they agree that this template is more practical and much easier to understand than conventional economic
thinking.
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Paul Volcker said of this template:
"Ray Dalio's "template" may be unconventional but it casts strong light on how the economy actually works,
with its history of repetitive and ultimately destructive excesses in credit creation. The analysis points the way
to practical ways central banks and governments can ease the pain of defaults and de-leveraging. An even
larger lesson for both policy makers and the public would be to understand how to anticipate and moderate the
excesses. The animated video of the template is an intriguing "teaser", but serious economists and officials
should read and absorb the insights of Dalio's written text."
On YouTube there were 3,742 Favorable ratings and 100 Unfavorable ratings.
It is logical and our track record from using it is well established. I now want to share it because I believe that
understanding it could help prevent big economic blunders.
It is based on my belief that everything you need to know comes from following the transactions, the people
behind them and their motivations. Therefore the vague "market" reactions should be a thing of the past and
replaced with much better attributions.
This transactions-based approach implies clear paths for addressing big and controversial issues like whether
"printing money" is inflationary. For example, if we agree that demand is best measured by spending that is
made-up of both money and credit and that an increase in the growth rate of money spent can offset a slowing
of the growth rate of credit spent, then we know that it won't lead to inflation.
It implies that the effects of QE should be understood by tracking transactions though the system (by following
what is bought from whom and why).
It implies that the conventional MV=PG perspective is misleading because there really isn't much "velocity" of
money happening as most of what we call velocity is credit growth, which is very different and has different
reasons for happening. Velocity is made out to be some vague force that drives the rate that money goes
around, and it's not that at all. I believe that we should agree that spending comes from either money (with a
bit of velocity) or credit and we should understand how each is made-up and spent to make nominal GDP.
It implies that traditional supply/demand curves that measure both in terms of quantity don't make much sense
because the price of anything is equal to the total amount of money and credit spent on it divided by the
quantity of it (goods, services and financial assets) sold, and that by tracking this spending back to each
spender of money and credit and each seller of goods, services and financial assets (and knowing their
motivations) everything adds up.
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It helps to explain debt cycles -- what drives starts them, what sustains them and what reverses them -- and
how they affect spending and asset prices, which is different from conventional economic thinking.
If you find it interesting, I'd be happy to discuss it with you and then, if you find it valuable, I'd like you to
pass it to others. Are you willing to do that?
Best Regards,
Ray
httplAvww.economieprinciples.org/
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