My friend Art Cashin forwarded these notes from Reuters to me today, and I pass them on to you. They are comments from the always interesting Ray Dalio on future potential growth and what the Fed should do in the next recession. Essentially, he thinks a helicopter drop would be more useful than QE or negative rates. And intellectually I agree. However, the Fed is not authorized to do a helicopter drop, at least by the current Federal Reserve Act. The fact of the matter is that the Fed is actually very limited in what they can buy when they are trying to do quantitative easing – they can’t purchase stocks or real estate or junk bonds, like the central bank of Israel did. They don't even have the flexibility that the ECB does.
 
I actually think that Congress should amend the Federal Reserve Act to give the Fed more flexibility in what they do in response to recessions, beyond simple interest rate manipulation or quantitative easing using only government-backed bonds. Or let me restate that. I would prefer the Fed never pursue quantitative easing again. Not only do I think it is ineffective, I think it distorts the economy by creating price inflation in the assets held by the rich, and then the Fed turns around and complains about the income and wealth differentials between the rich and the poor. They got exactly what they paid for.
 
But on the premise that they are going to do something anyway, why not let them do something that would be more effective and that would actually benefit Main Street? Infrastructure bonds at 1% for 40 years? Only for projects that are self-amortizing?
 
I'll get off my soapbox now and let you go ahead and read what Ray Dalio said.