Average statistics camouflage what is happening in the economy, which could lead to dangerous miscalculations, most importantly by policy makers. For example, looking at average statistics could lead the Federal Reserve to judge the economy for the average man to be healthier than it really is and to misgauge the most important things that are going on with the economy, labor markets, inflation, capital formation, and productivity, rather than if the Fed were to use more granular statistics. That could lead the Fed to run an inappropriate monetary policy. Because the economic, social, and political consequences of an economic downturn would likely be severe, if I were running Fed policy, I would want to take this into consideration and keep an eye on the economy of the bottom 60%. [Link]
It is not clear to me as to what Mr. Ray Dalio is advocating here. Does he want the Federal Reserve not to try to normalise monetary policy. Honestly, they have been doing it so gingerly over the last four years that financial conditions have eased substantially since
they began their ever-so-glacial tightening in 2014.
If he documents the divide between the bottom 60% and the top 40% so eloquently, does he not know that Fed policy has played a big role in creating this chasm?
He wants the Federal Reserve not to reverse it because it would ‘hurt’ the bottom 60%!
I am TOTALLY LOST.