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Bridgewater, Westport Ct., Daily Observations
4/30/2019, 19 pgs.,
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Reviewer comment
This is Ray Dalio's personal observations and analysis of the financial and
general economic condition in the United States (and world) with specific
consideration of the 'business cycle' - meaning cycles of 'boom and bust'
related to changes in interest rates. He describes the role of monetary policy
and fiscal policy both as partial causes and as potential sources for
amelioration for the results. His basic idea is that these two policies
(monetary being the tool of the Federal Reserve) and (fiscal being the tool of
the Government) should be structured into a single, coordinated process that
would dampen the booms and moderate the busts. This article is elaborated more
fully in his massive book, Principles For Navigating Big Debt Crises. In
both essays he provides a great amont of detailed description and analysis of
historiacal examples. He names monetary policy as MP1 and fiscal policy as MP2
and his conception of the combined, coordinated application of the two together
as MP3. His concern is the effects of the 'bust' phase and his recommendation
is to institute his ideas during the 'boom' phase.
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Introduction
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Part I - Understanding MP3 and MMT
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Looking at Our Thinking about MP3 and MMT
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What Monetary Policy 3 (MP3) Could Look Like
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Definition of Monetary Policy 3
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Part 2: Historical Cases
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Appendix: Detailed Historical Examples of
Monetary Policy 3
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Example 1: In the US during the 1930's
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Government Response to 1937-38 Downturn
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Example 2: In Japan during the 1930's
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Example 3: In Germany during the 1930's
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Other Historical Examples of Monetary Policy
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