Oligarchy 101: Ray Dalio Rewrites Economics to Place Corporations at the Center
As some readers may know, I have already targeted Ray Dalio once before to rebut his framing of MMT, so I was already aware that the man had some serious flaws in his presentation of our economy. But after watching his video entitled "How the Economic Machine Works by Ray Dalio", I have now gained a much clearer understanding of his position, his motives, and his methods when handling the subject of our economy.
He is an elitist, corporatist oligarch who wants you to believe that he has power over you, simply by virtue of his wealth.
His first mistake is @3:15. Congress created the Fed as they were empowered to do by the US Constitution. All the Fed can do is set interest rates. That's it, no more. Only federal spending and taxation control the amount of currency in the economy, and those are both carried out exclusively by Congress. Only Congress can authorize the creation of new dollars, not the Fed.
His next mistake is at 3:28. Dalio wants to convince you that credit is the most important transaction in the US, the one that our entire economy is based on. Credit may constitute the largest share of the economy, but it is hardly the "most important" one. An important distinction does lie between currency and credit, but credit comes with an inherent liability equal to its value, and sovereign, fiat currency does not. Therefore it is sovereign, fiat currency which is far more important, because it simply does not have that limitation. Credit would be utterly worthless without US dollars, but Dalio wants you to believe that credit trumps dollars in importance.
So far, this video is a blatant attempt to elevate private lending institutions over the US government's sovereign spending power, as if they are what actually drive our economy. This is not only preposterous, but an extremely dangerous idea on many levels.
5:13 Private spending is not what drives the economy, government spending drives the economy. How is anybody else going to spend that money before the government spends it into existence? ...Oh yeah, “credit”.
Everything from here, through the next few minutes, is spent trying to attribute the important aspects of our federal spending power to what I'm going to call "the private economy" described in this video.
"One person's spending is another person's income."
Government spending is private sector income.
"Every dollar you spend, someone else earns."
Every dollar the US government spends, the private & foreign sectors earn.
"Every dollar you earn, someone else has spent."
Every dollar you earn, the US government has already spent into existence.
"So when you spend more, somebody else earns more."
When the US government spends more, the private & foreign sectors earn more.
Do you see what he’s doing? He’s attempting to pervert these important precepts of MMT, and manipulate those who don't know better about economics by doing so. In every case, the important element is intentionally removed, and replaced with private transactions involving lending agencies. Hardly ever is the source of all dollars, the US government, mentioned in this video. When it briefly is, it is presented as something which merely affects ‘the private economy’, taking on a secondary role.
From 5:28 or so onward, the intent is to extol the virtues of having good credit. You are nothing to the great, mighty corporate gods -- around whom our economy revolves -- without this score. It represents the level of opportunity you offer: to generate interest for them.
At 6:15, Dalio talks about debt cycles. You’ve already been told why you deserve to go into debt, now prepare to be told how to do it, and what it will look like when you rely on corporations for every breath you take. “You have to give something in order to get something, and how much you get depends on how much you produce.” While this is logical for non-currency issuers, it is diametrically opposed to Federal spending, where the real power of the public purse lies. Yet this vital role is never mentioned. When people have their critical needs looked after, their healthcare is affordable, their cost of living is manageable, they rely much less on corporate schemes which capitalize on their desperation - and profit from it.
At 6:29, the first shoe drops. Prepare yourself for this garbage:
6:29: "Over time we learned, and over time that accumulated knowledge raises our living standards. We call this "productivity growth". Those who were inventive, and hard-working, raised their productivity and living standards faster than those who were complacent and lazy." - Ray Dalio
You actually read that right. In other words...
‘My inheritance was hard work.’
In other words…
‘Rich = smart, hard working.
Poor = dumb and lazy.’
The elitist entitlement is almost tangible. You could almost punch it in the face. Now, go and look at how many people have watched this piece of corporate drivel. At last count it was over 10.2 million views. I don’t really even know what to say to that, but let’s try and press on. This video is 30 minutes long, and we’re not even 10 minutes into it.
Already it’s a case of 'the more inventive and hard-working person is going to tell us all about the virtues of becoming indebted to him.' Why? Because we are lazy and unmotivated, and therefore deserve to become insolvent for his benefit.
Dalio’s video should be re-titled “How to properly behave in an economy that determines your worth by how much money can be made from you.”
...When it could be entitled “How to understand your true power in an economy which spends for its people.” This video presentation replaces the empowerment of MMT with enslavement by the corporate elite. The mere fact that Dalio seriously tries to discuss MMT in other videos and papers is just astonishing; his core ideology runs counter to it on every level.
He constantly downplays the power of congressional spending for the people, by playing up the powerlessness of non-sovereign currency users. He does this in order to promote the idea that we require the services of rich people for our economy to function.
Can you truly appreciate the difference? Can you see what he’s doing? He’s painting a picture of our economy which omits the actual producer of real dollars completely, in order to divert our attention toward credit (pronounced “private debt”). The reason credit makes up so much of our economy is because credit is debt, and most of the US is suffering from it. Consumer debt was approaching $14-trillion after the second quarter of 2019, according to the New York Federal Reserve. It was the 20th consecutive quarter that it increased. Dalio counts this as ‘wealth’ - not only comparable to US dollars, but superior to them.
None of that credit represents real resources, let alone real cash. It represents debt. It represents the suffering of people, and he’s using it as currency.
In the same way that neoliberals and neoconservatives use the term “national debt” to mean actual, real debt when it simply represents accumulated wealth from US Congressional spending, they use “credit” in the opposite way. It is meant to be ‘the nexus of the wealth in our economy’, when it actually represents a lack of it.
At the 10 minute mark he’s attempting to again stress the superiority of credit over fiat money by stating “Remember, in an economy without credit, the only way to increase your spending is to produce more.” That is true only if you completely omit the source of all real dollars, the federal government, which is Ray Dalio’s favorite thing to do. I know he is focusing on the private sector in this video, but he's doing it to the detriment of your understanding of the public sector's role in spending. He would have you ignore it almost completely, in favor of the private sector. That body is ‘the source of real wealth’, and ‘the true driving force in our economy’, according to his completely broken reasoning.
What he is actually saying about the economy, is that the government doesn't need to be involved in it at any deep level, at all. “Our economy is powered by transactions”, after all, so the people who conduct the most transactions should have the most power. ...Right?
As you have already seen, his is an economy of debt. I mean real, actual debt, not "national debt". They will help you buy ‘all of the things you can’t afford’. Nevermind that they put you in that position in the first place. Nevermind that you are already too broke to afford what you need, and next month you’re going to be even worse off. ...With interest.
This corporate stooge wants you to believe that our US sovereign spending power, which is infinite, non-binding, and stable, is less important to our economy than credit, which is limited by the ability to pay it back, comes with the inherent liability to do so, and is volatile because of that. He wants you to believe this because he wants to instill the idea that billionaires like him actually run our economy… that we actually need people like him in order to spend for the common good. Nothing could be further from the truth. He will have you trade in your constitutional spending power for corporate debt.
At 10:10 he’s arguing in favor of borrowing to increase spending. He admits that credit is “volatile”. Why does he think that is?
Too bad he’s not talking about how our government doesn’t have to borrow to increase spending.
Too bad he simply states that “credit is only bad when it finances ‘over-consumption’ that can’t be paid back.” In other words, if you spiral into debt it’s your own fault. You shouldn’t have charged that 7th set of golf clubs on your credit card. You should have made better decisions.
Never mind that you actually had to charge your insulin. Never mind that you might have scraped by were it not for the interest. Never mind that we have the power to protect ourselves as a nation, without having to rely on parasites like this one. You should have made better decisions in your life, so it’s your fault.
You should have bought a tractor.
...And a farm.
...Instead of buying that $600 TV.
I am not making this up, are you watching this? 10:40.
Take a good look, this is what corporate entitlement looks like. This is a textbook for you to learn why you deserve to be owned and operated by your betters.
It’s also a guidebook on how to develop the type of mindset required to treat people like sacks of shit. It strokes the ego in all the right places required to elicit the proper response: superiority. If you figure out how to exploit people, then congrats. You were smarter than them, and more motivated. They were lazy and useless anyway.
Now go and exert the control that you earned by your inheritance, corruption, bribery, extortion, racketeering, exploitation, and all manner of ruthlessly unethical ‘good business’ practices, and pretend you are superior in any way.
12:15 Okay that does it… he is blatantly ripping the guts out of MMT, superimposing his rubbish onto it, and repackaging it as something else. Now he’s doing it with the fiat nature of our currency, to say that credit has value created out of thin air. It doesn’t. It has value with an equal liability which completely cancels it out.
Meanwhile he’s consistent in his refusal to show how our federal spending contrasts to that, and how that distinction sets it far above credit. The federal government ‘only adjusts interest rates’. Got it. It’s not ‘the sole source of real dollars’ or anything; it’s just ‘an arm with a lever’.
By 14 minutes in, we’re still talking about how parasitic lending practices are the fault of the victim, because “human nature”. We are all whiny babies who keep wanting more and more, and we’re not paying back our debt because we’re spoiled and willful. Meanwhile many people didn’t want to have to use credit to begin with, only did so out of desperation, couldn’t handle the minimum payments, and got swamped by interest. Many of these people had to declare bankruptcy, and this guy is claiming they deserve to be in debt because they can’t tell themselves “NO” like a responsible adult.
From 15 minutes on, we’re talking about how you can avoid credit bubbles simply by making sure that everyone’s incomes continues to rise… perpetually. ...At a time when some of the only truly upwardly mobile people are billionaires like him. This is ‘how rich people get richer’, not ‘how the economy is supposed to work’. Could this man possibly be more out of touch with the realities that most people face every day?
Could the people who are singing his praises possibly be that out of touch with their own situations? Perhaps. Maybe they want to emulate him. Maybe they want to be him.
How can people actually sit and listen to this masturbatory nonsense without vomiting, let alone upvote it? It is kissing the boot of our oppressor, and agreeing with his every attempt to legitimize his own superiority, and with his every attempt to rationalize their murder, without question.
@17:48, Dalio uses "people feeling poor" as a motivating factor in willfully deciding to spend less, therefore hampering the economy as a whole. When all along, it's not our spending that ultimately matters, it's Congress'. When Congress doesn't spend into the economy so that the bulk of Americans can benefit from it, and when wages remain stagnant for decades, there simply is no money in the economy to make purchases with. ...Never mind that being poor is a state of being, not an emotion.
I would absolutely love to hear how a billionaire defined "feeling poor".
The entire rest of the video is spent explaining why a system of credit is horrible, volatile, and needlessly convoluted, although it’s still being held up as the gold standard. All the while our government spending could completely and utterly eliminate the need for credit. Are you seeing that word in bold text? Good, it’s important. A need for credit means that people are not getting the basic necessities that they need to survive. These people need to put their cancer treatments on a credit card, for instance, or their life-saving medications.
It is this need for credit, in spite of what the credit industry might say about it, which mainly fuels the entire industry. This need for credit causes people who are desperate to make decisions that are tailor-made to entrap them.
For far too long we have characterized those who become insolvent due to bad credit as being guilty of ‘over-consumption’, when the truth is that most would have avoided credit altogether if they could have. They only used it out of desperation in the first place. People who use credit in the way Dalio describes are already hugely wealthy. Just the insurance policies alone would be unthinkable for most people, in lieu of social safety nets for ordinary people who can have bad luck in business or life and lose everything.
Over and over again, the US government could have been the star of his little money story, but instead Dalio completely ignores that reality, in favor of a scenario where our economy is driven by those who conduct the most business. He just conveniently happens to be the star of that story.
I told you Dalio didn’t understand MMT, as if it weren’t obvious already. Nowhere is this more on display than at 22:54. He’s been using kernels of MMT truth to misrepresent our economy, while ignoring the role of the federal Government as the currency issuer, for the entire presentation. Now he’s finally getting to the heart of the matter, and showing us where he really stands.
“This is what is happening when you hear about the budget deficit on the news. To fund their deficits, governments need to either raise taxes, or borrow money.”
Dalio may well have understood how things really worked in 2013 when this video was published, but wasn’t about to let anyone else know that Congress can spend as much as it needs on your behalf, in order to promote the common defense and general welfare of you and your fellow citizens. That is not only a constitutional right, it’s a demand.
He’s much more comfortable telling you that the best thing you can do to protect your own future, and exert control over your own life, is to use debt as a leveraging tool to maneuver yourself into a more prosperous (pronounced ‘less precarious’) situation.
In other words, 'do an elaborate tightrope routine with no safety net'.
It’s fine, he and his cronies will catch you. That’s what predators do.
And at 23:00, the second shoe drops.
When the bottom falls out, and everyone is unemployed, who will swoop down and save us all from ourselves? ...The rich. (How did we know that was coming?) Silly little peons like us can’t possibly get anything done, we need the expertise and know-how of someone who really knows how to get ahead of other people, rather than how to get behind them.
At 23:24, Dalio doubles down on proven fallacies.
Ray Dalio is a Fed conspiracy theorist, on top of everything else. According to him, the Fed is “sometimes forced to print money” (rather than collecting it in taxes) which he claims is inherently inflationary. He either had absolutely no idea that only Congress can create new money via budgeting, and had been doing so each time it spent for the last 200 years, or didn’t want you to. He either didn’t know that we could never become insolvent, and could pay any debt in dollars, or he didn’t want you to. Considering how many aspects of our actual economic reality he’s hijacked in order to twist them to his own agenda, I think it’s safe to assume which side he’s speaking from.
Government bad. Private good. That is his message to you. That is the motivation for his mouth opening and closing. If you want anything done right, you’re going to have to rely on the super-rich who got where they are due to their inherent superiority. You are going to have to accept your role as fodder, due to your abject refusal to be born into a family where 12-year-olds spend $300 buying stock in NE Airlines.
That’s the level of blinding entitlement we’re talking about.
And yes, he has a large following, presumably comprised of people who get off on having their prejudices validated by a ‘fellow’ oligarch who gives them a warm fuzzy reason to feel elite. Dalio is widely regarded as a 'humanitarian', due to his donations to charity. Not only are those donations tax-deductible, they reinforce his rhetoric about the US ecomony requiring support from billionaires.
The last few minutes of this trainwreck are a jumbled mass of convenient lies designed to tie up all of the others contained in this video.
There is simply too much to shake my finger at, and it’s totally not worth our time to keep going. This guy was not going to tell you how our actual economy worked in 2013, and he still won’t--yet millions of people have had brain cells evacuated by this irresponsible nonsense for going on 7 years.
While some aspects of what he’s talking about may be true of the private sector economy, the fact that he downplays the role of the Federal government as the source of all dollars, choosing instead to portray our economy as completely dependant upon billionaires, even appropriating aspects of MMT to wear like Salome’s seven veils to do so, says everything.
His entitlement knows no bounds.
No matter what this 30-minute commercial for the credit industry tried to tell you, no matter how many times Atlas shrugged, only the sovereign fiat currency issuer can create dollars, and everyone else is a currency user. ...Including billionaires who think that throwing their money around causes problems to miraculously become fixed.