I like this video, although I think it could be harmful in some unintended ways. I don't want to suggest that Dalio's final remarks are wrong , I think they are right, but not as helpful as they might be if they were more specific. Some of his details, however, are incorrect but probably harmless, others are misleading, and not harmless.. His understanding of money is classical. It is obvious to me that he fails to appreciate the similarity in the core features of gold standard and fiat money so long as gold's price in the units of the money it backs remains constant! But of course this near equivalence is unsustainable because gold's price can not be held constant forever, and that's not because of money printing. As a matter of fact the most recent U.S. foray into the gold standard failed after just 14 years. The failure, wasn't because of money printing as Dalio would have us believe. Rather it was because the demand for gold could no longer be met at a price of only $35/oz; precisely as Keynes, in 1944, predicted would happened. There just was no longer enough gold available at $35/oz to satisfy demand. The U.S. Treasury was redeeming the French Central Bank's dollars for gold at $35/oz while elsewhere gold was selling for $40/oz! Quite obviously this was an unsustainable situation. Fiat money acquires a value according to its demand relative to the demand for competing currencies, and fundamentally from the issuers productivity and tax structure. This makes sense in our 21st Century world; money based on a gold standard does not! Dalio talks of government borrowing and debt. Again, his thinking is classically based and quite incorrect. Our English lexicon doesn't include a word to describe what nations like the U.S. are actually doing when the appear to be 'borrowing'.. We, as a nation, do indeed appear to be acquiring debt, but we are not! Dalio also fails to appreciate the profound difference between the money that our government prints and spends into the economy and the temporary money created by fractional reserve banking as a part of the credit cycle. It's clear Dalio want's to equate features of actual private sector debt with features of the U.S.'s fictitious "National Debt'. Suggesting that if the U.S. spends to much, just like people and companies, it cold go go bankrupt. In the U.S., people and companies go bankrupt; the U.S. government does not. Our government can, however, both increase and decrease the buying power of the money it issues. Because of population and productivity growth, over time some increase in government spending over revenue is likely to be needed to prevent our money from increasing in buying power and causing price deflation and recession. Whereas we think of surpluses as generally good for ourselves, our government can not run continuous surpluses without wrecking our economy. Dalio speaks of the Central Bank Printing. The Central Bank does print, but the Central Bank has nothing to do with deciding how much to print! When the Central Bank buys Treasury's it can appear as though they are creating new money to buy them. They are not. What they are actually doing is exchanging transactional money in the form of bank reserves for non-transactional money in the form of Treasuries. The only net printing happens when the Central Bank covers a Treasury overdraft. The Central Bank has no say in that! Nor does the Treasury! Only Congress decides on how much new money shall be printed; thus what the size of deficits shall be! A correct understanding of the features of our U.S. Fiat money is essential to understanding what the necessary constraints are if we desire to maintain, decrease, or increase our money's buying power per unit. Correct understanding is also critical to understanding the role of tax structure in protecting the buying power of the currency, and in maintaining long range social and financial stability. Because our public and our politicians do not have a good understanding of how our fiat money derives value, what constraints are present and the critical importance of getting tax structure right, they are not doing as well as the could in allocating money efficiently and in regulating tax structure. The majority of people, including Dalio, think classically when it comes to sovereign money. It's quite wrong to do so. They could do far better if they understood our money in a modern context, how it's created and from where it derives value.
I am quite familiar with it and I do like it very much. But he makes the same errors in treating the Central Bank as though it decides how much to print and as though it is independent of government when in fact it is, today, very much part of government. But his descriptions of the short and long business cycles are beautiful. Again, the U.S. Congress decides how much money to print; not the Central Bank. They do that when they decide how much to tax and how much to spend. When they decide to spend more then they tax, the difference is printed (not borrowed as most believe!). This is why Economists who specialize in money theory say "the U.S. always money finances its spending." This is very, very different from going to the credit markets and borrowing the money it needs and then spending, which is what you and I do and what most people, including Ray Dalio, incorrectly think the government does.