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What's government's role in the economy?

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A colleague mentioned Jonathan Jarvis to me the other day, and it sent me on quite the Googling expedition.

Specifically, the colleague started me at Jarvis' latest video, "How the Economic Machine Works," which is basically my entire AP Macroeconomics class done visually in 30 minutes. Jarvis created the video based on a white paper done by Ray Dalio, founder of the investment firm Bridgewater Associates.

And it's fascinating.

What was most fascinating to me was noting where government was brought into the explanation. Yes, much of it is about the market and how stock market reactions affect everyday people's lives, but then you start to notice the subtle (and sometimes not-so-subtle) references to when the federal government can enter, should enter — or often just barrels into — the equation.

It's given me a new perspective on the role of the Fed, in particular, as well as how powerful seemingly simple indicators, such as interest rates, can be.

(On a side note, Jarvis first became known in 2009 for the motion video "The Crisis of Credit Visualized," which packs a lot of info into 11 minutes. Check out his website to see other videos he's created.)

Watch the videos below and give me your perspective. Do you agree with Jarvis and Dalio's assertions? Did they oversimplify government's role (or anything else, for that matter)?

Amy Gulli

Amy Gulli

Amy Gulli is the managing editor of the Central Penn Business Journal. Have a question or tip for her? Email her at amy@cpbj.com. Follow her on Twitter, @amygulli. Circle Amy Gulli on .

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