Ray Dalio Sees an Inevitable Shift to MMT

The video discusses the potential shift to a new form of monetary policy, termed 'Monetary Policy 3', which involves fiscal-monetary policy coordination. This shift is seen as inevitable due to limitations of traditional monetary tools and political pressures. The discussion highlights the challenges and risks of this shift, including the potential loss of central bank independence and the difficulty in addressing structural economic issues like inequality. The video emphasizes the need for careful consideration of these changes to avoid negative consequences.

What is the main reason traditional monetary policy tools may not be effective in future downturns?

• Increased global competition

• Lack of political support

• Insufficient room for rate cuts

• Over-reliance on fiscal policy

What is a potential risk of transferring monetary policy control to politicians?

• Loss of central bank independence

• Increased economic stability

• Reduced fiscal spending

• Higher interest rates

Which of the following is NOT mentioned as a driver of income inequality?

• Quantitative easing

• Skill-biased technological change

• Tax policy

• Globalization

Why is monetary policy not considered a solution for structural economic issues?

• It lacks political backing

• It cannot address structural features

• It focuses only on short-term goals

• It is too complex to implement

What is emphasized as a dangerous experiment in the context of monetary policy?

• Reducing government spending

• Increasing interest rates

• Tinkering with central bank independence

• Expanding fiscal policy