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Principles For Dealing With the Changing World Order: Why Nations Succeed and Fail
From legendary investor Ray Dalio, author of the #1 New York Times bestseller Principles, who has spent half a century studying global economies and markets, Principles for Dealing with the Changing World Order examines history’s most turbulent economic and political periods to reveal why the times ahead will likely be radically different from those we’ve experienced in our lifetimes—and to offer practical advice on how to navigate them well.
A few years ago, Ray Dalio noticed a confluence of political and economic conditions he hadn’t encountered before. They included huge debts and zero or near-zero interest rates that led to massive printing of money in the world’s three major reserve currencies; big political and social conflicts within countries, especially the US, due to the largest wealth, political, and values disparities in more than 100 years; and the rising of a world power (China) to challenge the existing world power (US) and the existing world order. The last time that this confluence occurred was between 1930 and 1945. This realization sent Dalio on a search for the repeating patterns and cause/effect relationships underlying all major changes in wealth and power over the last 500 years.
In this remarkable and timely addition to his Principles series, Dalio brings readers along for his study of the major empires—including the Dutch, the British, and the American—putting into perspective the “Big Cycle” that has driven the successes and failures of all the world’s major countries throughout history. He reveals the timeless and universal forces behind these shifts and uses them to look into the future, offering practical principles for positioning oneself for what’s ahead.
A few years ago, Ray Dalio noticed a confluence of political and economic conditions he hadn’t encountered before. They included huge debts and zero or near-zero interest rates that led to massive printing of money in the world’s three major reserve currencies; big political and social conflicts within countries, especially the US, due to the largest wealth, political, and values disparities in more than 100 years; and the rising of a world power (China) to challenge the existing world power (US) and the existing world order. The last time that this confluence occurred was between 1930 and 1945. This realization sent Dalio on a search for the repeating patterns and cause/effect relationships underlying all major changes in wealth and power over the last 500 years.
In this remarkable and timely addition to his Principles series, Dalio brings readers along for his study of the major empires—including the Dutch, the British, and the American—putting into perspective the “Big Cycle” that has driven the successes and failures of all the world’s major countries throughout history. He reveals the timeless and universal forces behind these shifts and uses them to look into the future, offering practical principles for positioning oneself for what’s ahead.
576 pages, Hardcover
First published January 1, 2021
About the author
Ray Dalio
42 books4,450 followersRaymond Dalio (born August 8, 1949) is an American investor, hedge fund manager, and philanthropist. Dalio is the founder of investment firm Bridgewater Associates, one of the world's largest hedge funds.
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Displaying 1 - 30 of 1,080 reviews
July 11, 2023
This isn't a good book. Ray Dalio gets basic facts wrong, e.g. the timing of World War I; the impact of Treaty of Versailles reparations on Germany and Mitteleuropa; the definition of right-wing populism (it isn't about making billionaires wealthier: it is populism);, which US president took us off the gold standard and when. He praises China for its weaknesses (totalitarianism) rather than its strengths. He contradicts himself repeatedly within the same chapter, sometimes even the same page.
So the general problem with The Changing World Order is that Dalio gets historical events muddled up, things that are easily checked and widely accepted, then he uses that incorrect information to draw causal relationships about shifts in global political economy, e.g. US dollar losing its reserve currency status, and as Joe Biden said, "China's going to eat our lunch!" I don't know about that! China has comparable income and wealth inequality as the USA. Also, Chinese and Indian citizens continue to send their children to American universities in droves, so our education system hasn't gotten THAT bad... yet. Oh, and Chinese flight capital lands primarily in big American and Canadian cities. Dalio doesn't mention any of this. Nor does he offer specific investment recommendation for Americans or westerners who want to survive/prosper if his predictions about China's rise are borne out.
Dalio's central focus, about long term money and debt cycles, has been analyzed and refined repeatedly over the past 100 years. I'm referring to Kondratieff waves (circa 1926, capitalist economies are subject to spontaneous and recurrent depressions and recoveries every 50-60 years) and Kuznets business cycles (for which Kuznets won the Nobel prize in economics in 1971). Then there's Peter Turchin; his field of cliodynamics is a bit pseudoscience-y but he is a bona fide mathematical economist. He tries to empirically determine how human societies evolve, and why we see extreme variations in economic performance and in effective or rather, ineffective government. Having read some of Turchin's journal and specialist press articles, I don't think he does as good a job as Simon Kuznets. Oh, and there are also William Strauss and Neil Howe who wrote The Fourth Turning, about recurring social and economic cycles in American and world history. I've read work by the latter two (and studied Kuznets). Their works are factually correct about demography and history.
As other reviews mentioned, The Changing World Order is repetitious. It has some of the most awful time-series graphs ever. I suspect that Dalio's stature as founder and CEO of hedge fund Bridgewater is such that no one dares to edit him. He could have benefited greatly from an editor.
I am a financial economist. I'm STEMy. I work at a bank. I fully realize that Dalio knows how to invest money and make extraordinary returns. That's his forte! It is rather fascinating how disconnected his abilities as an asset manager are from this book.
EDIT: I read the intro, Chapters 1, 2, 3, 4, 5, 6, 8, and 12 to the end. The book will be available on Kindle and in paperback in May 2021. It was published in hardback in November 2020. Dalio made it available early as a series of html web pages. That's how I read it. Update 29 May 2022: Thank you to the person who commented about relative income inequality of the USA and China; I corrected that sentence above. Wrote review in Spring 2021, corrected typos in July 2023.
So the general problem with The Changing World Order is that Dalio gets historical events muddled up, things that are easily checked and widely accepted, then he uses that incorrect information to draw causal relationships about shifts in global political economy, e.g. US dollar losing its reserve currency status, and as Joe Biden said, "China's going to eat our lunch!" I don't know about that! China has comparable income and wealth inequality as the USA. Also, Chinese and Indian citizens continue to send their children to American universities in droves, so our education system hasn't gotten THAT bad... yet. Oh, and Chinese flight capital lands primarily in big American and Canadian cities. Dalio doesn't mention any of this. Nor does he offer specific investment recommendation for Americans or westerners who want to survive/prosper if his predictions about China's rise are borne out.
Dalio's central focus, about long term money and debt cycles, has been analyzed and refined repeatedly over the past 100 years. I'm referring to Kondratieff waves (circa 1926, capitalist economies are subject to spontaneous and recurrent depressions and recoveries every 50-60 years) and Kuznets business cycles (for which Kuznets won the Nobel prize in economics in 1971). Then there's Peter Turchin; his field of cliodynamics is a bit pseudoscience-y but he is a bona fide mathematical economist. He tries to empirically determine how human societies evolve, and why we see extreme variations in economic performance and in effective or rather, ineffective government. Having read some of Turchin's journal and specialist press articles, I don't think he does as good a job as Simon Kuznets. Oh, and there are also William Strauss and Neil Howe who wrote The Fourth Turning, about recurring social and economic cycles in American and world history. I've read work by the latter two (and studied Kuznets). Their works are factually correct about demography and history.
As other reviews mentioned, The Changing World Order is repetitious. It has some of the most awful time-series graphs ever. I suspect that Dalio's stature as founder and CEO of hedge fund Bridgewater is such that no one dares to edit him. He could have benefited greatly from an editor.
I am a financial economist. I'm STEMy. I work at a bank. I fully realize that Dalio knows how to invest money and make extraordinary returns. That's his forte! It is rather fascinating how disconnected his abilities as an asset manager are from this book.
EDIT: I read the intro, Chapters 1, 2, 3, 4, 5, 6, 8, and 12 to the end. The book will be available on Kindle and in paperback in May 2021. It was published in hardback in November 2020. Dalio made it available early as a series of html web pages. That's how I read it. Update 29 May 2022: Thank you to the person who commented about relative income inequality of the USA and China; I corrected that sentence above. Wrote review in Spring 2021, corrected typos in July 2023.
December 20, 2021
"Hard times create strong men.
Strong men create good times.
Good times create weak men.
And, weak men create hard times."
-- G. Michael Hopf, "Those Who Remain"
Dalio's recent book is exactly about these four sentences. Or, to be more precise, about the rise and fall cycle of every powerhouse in history. Dalio approaches the topic carefully and dives deep - but focuses primarily on economics and politics (which are important, but there are other important aspects). The book's 'grande finale' is the analysis of current empires: fading one (US) and the rising one (China). To show their similarities to the past empires (the Netherlands and Britain), Dalio provides blitz walkthroughs through their history.
IMHO this book is a-must-read. It's hard to find an equally important topic these days and Dalio is very straightforward when it comes to his analysis (he doesn't pretend to be a diplomat). It's not that he acts as an alarmist - he aims to be very pragmatic and remains cool-headed. He doesn't demonize China and does quite well in illustrating the cultural differences behind certain occurrences in their history. He also spends a lot of time on the concept of war (and the prospect for the next one coming).
Two points I find particularly interesting:
1. Dalio doesn't even try giving advice on how US could potentially "extend" its supremacy. This is not the goal of this book.
2. There's a lot about monetary policies in this book, and the role they play in the "cycle". What I have missed badly is the impact of the new, decentralized currencies - not even the current situation, but what can happen in the forthcoming years - keeping in mind the liberal approach in Western economies and strict approach in China; IMHO that's a very interesting topic to consider.
In the end. This is a helluva good book. Strongly recommended.
Strong men create good times.
Good times create weak men.
And, weak men create hard times."
-- G. Michael Hopf, "Those Who Remain"
Dalio's recent book is exactly about these four sentences. Or, to be more precise, about the rise and fall cycle of every powerhouse in history. Dalio approaches the topic carefully and dives deep - but focuses primarily on economics and politics (which are important, but there are other important aspects). The book's 'grande finale' is the analysis of current empires: fading one (US) and the rising one (China). To show their similarities to the past empires (the Netherlands and Britain), Dalio provides blitz walkthroughs through their history.
IMHO this book is a-must-read. It's hard to find an equally important topic these days and Dalio is very straightforward when it comes to his analysis (he doesn't pretend to be a diplomat). It's not that he acts as an alarmist - he aims to be very pragmatic and remains cool-headed. He doesn't demonize China and does quite well in illustrating the cultural differences behind certain occurrences in their history. He also spends a lot of time on the concept of war (and the prospect for the next one coming).
Two points I find particularly interesting:
1. Dalio doesn't even try giving advice on how US could potentially "extend" its supremacy. This is not the goal of this book.
2. There's a lot about monetary policies in this book, and the role they play in the "cycle". What I have missed badly is the impact of the new, decentralized currencies - not even the current situation, but what can happen in the forthcoming years - keeping in mind the liberal approach in Western economies and strict approach in China; IMHO that's a very interesting topic to consider.
In the end. This is a helluva good book. Strongly recommended.
February 11, 2022
Summary: This is what people think right now among those that have a lot of influence, so you should read it. While I largely agree with many parts, I do not hold the same framework and these are fundamental differences in how I see the world.
Having read his newsletters for more than a decade, I will never be anything but a huge fan of Dalio. He's brilliant and anyone who believes otherwise has missed the point. The star removal is because we do not agree on a few fundamental things, and I know he's smart AF, so it could only possibly be because he is refusing to see it that way.
My notes are for me, so I'm more citing, b/c I sometimes have to repeat why I feel the way I do. This is not a review in the normal sense.
p.14 "I believe the reason people typically miss the big moments of evolution coming at them inlife is that we each experience only tiny pieces of what is happening."
"From gaining this perspective, I've come to believe that there are only a limited number of personality types going down a limited number of paths that lead them to encounter a limited number of situations to produce only a limited number of stories that repeat over time.
.... something to think about in the context of his previous book and the idea that we can sometimes be academically lazy in reinforcing our own viewpoints.
p. 15 - He talks about how he came to this path of thought of this book. He was studying money and credit cycles and hoping to go backwards with his lens: "... central bank actions push financial asset prices and the economy up, which widen the wealth gap and led to an era of populism and conflict."
p. 36 - He talks about ways to distribute wealth to advance society: ... "... the formula for success has been a system in which educated people come up with innovations, receive funding through capital markets, andn own the means by which their innovations are turned into the production and allocation of resources allowing them to be rewarded by profit making. This happens best in capitalism and the government systems that work symbiotically with it. At the same time, how this is happening continues to evolve. For example, while ages ago agricultural land and agricultural production are worth the most and that evolved into machines and what they produce being worth the most, digital things that have no apparent physical existence (data and information process) are evolving to become worth the most." This is one of a couple of foundation stone in his thought process that implies the way he's thinking about it is waves of preferences. I don't see it that way because this set-up embeds a particular thought process about causality and active action that I don't agree with. I would likely flip it backwards.
p. 44 He states the measure of power and wealth: "1) education, 2) competitiveness 3) technology, 4) economic output, 5) share of world trade, 6) military strength, 7) financial center strength, and 8) reserve currency.
p. 63 "However, unlike what most people intuitively think, there isn't a fixed amount of money and credit in existence. Money and credit can easily be created by governments. Their creating it is liked because it gives people, companies, nonprofit organizations, and governments more spending power." He then talks about the idea that if you have too much debt the paying it back can be difficult. Here is where we are not quite on the same page. Because there is a period of time before money. While some might find that is irrelevant, the challenge with excluding it fails to incorporate the years prior to the dominance of money in politics. In other times, you might have just enslaved a bunch of people (or gone to war and brought back slaves). Alternatively, you can just have very rich people donate it (time, resources, money....etc) outright. That's not money. That's something else, i.e. making a bunch of people do something they don't want, inspiring people to do something you want them to do. That becomes important later to understand a particular unexplored area of cases and solutions in the book.
p. 70 "For example, when the money and credit that central banks are creating no longer go into lending that fuels increases in economic demand and instead go into other currencies and inflation-hedge assets, it fails to stimulate economic activity and instead causes the value of the currency to decline and the value of inflation-hedge assets to rise. At such times high inflation can occur because the supply of money and credit has increased relative to the demand for it, which we call monetary inflation. That can happen at the same time there is weak demand.".... Can't tell if he's implying that is the case right this minute. If yes, I respectfully disagree.
p. 71 "In other words, using market values of what one owns to measure one's wealth gives an illusion of changes in wealth that doesn't really exist. As far as how the economic machine works, the big thing is that money and credit is stimulative when it's given out and depressing when it has to be paid back. That's what normally makes money, credit, and economic growth so cyclical."
p. 76 "Soon people treated these paper "claims on money" as if they were money themselves. After all, they were as good as money because they could be redeemed for tangible money. This type of currency system is called a linked currency system because the value of the currency is linked to the value of something, typically hard money such as gold."
Ok... at this point it became clear to me that he is using the idea of money and currency in a way that is very different from the book "1000 years of debt" that clearly and cleanly demonstrates that even currency is a form of debt. here we are not on the same page, because i agree with that author. In thinking of money in this way he is thinking of money in terms of stored value that can be physically produced. In fact, that is not what money is or is moving toward. Money has always been a store of value and the idea of currency or debt has been surrounding how do store value for portability both geographically and temporarily in a manner that can be confirmed. This means that for a few chapters Dalio and I must agree to disagree, because he goes in the direction of the Gold Standard concepts and produces a history that, while true, is not the way I see it.
p. 78 - "Money is what settles claims - i.e. one pays one's bills and one is done. Debt is a promise to deliver money. In watching how the machine is working it is important to watch a) the amounts of both debt and money that exist relative to the amount of hard money (e.g. gold) in the bank and b) the amount of goods and services that exist, which can vary, remembering that debt cycles happen because most people love to expand their buying power (generally through debt) while central banks tend to want to expand the amount of money in existence because people are happier when they do that." IMO, no. this is merely a framework we've created. What settles a claim is the other person acknowledging the terms, of which money has become the predominant manner to do so. The amount of goods and service and your ability to provide this become the primary relevance, the amount relative to anything specific is irrelevant, as long as you debtor and debtee agree... this has to do with my definition in the previous section and leads to a very different conclusion. We both land on the same idea that the reserve currency is all good, but with different nuances.
p. 81 - "When credit cycles reach their limit it is both the logical and classic response for central governments and their central banks to create a lot of debt and print money that will be spent on goods, services, and investment assets to keep the economy moving. That is what was done during the 2008 debt crisis, when interest rates could no longer be lowered because they had already hit 0%."
p. 85 - "Some people think there needs to be an alternative reserve currency to go to, but that's not true as the same dynamics of the breakdown of the monetary system and the running to other assets happened in cases in which there was no alternative currency to go to(e.g. in China and in the Roman Empire). The debasement of the currency leads it to devalue and have people run from it and debt denominated in it into something else." .... It almost ...and I really mean almost, that this is his pot shot at e-currencies/bitcoin.
p. 86 - "By keeping an eye on the amount of debt that needs to be paid relative to the amount of hard money that there is to pay it, the amount of debt payments that have to be made relative to the amount of cash flow the debtors have to service the debt, and the interest rewards that one is getting for lending one's money, one can assess the risk/reward of holding the time bonds." Yes... but .... and the but has to do with reserve currencies and also the idea that in such a case there is a desire to ignore in this any hard assets a country has that have nothing to do with assets. This is how China has taken over random mines and raw materials in a host of countries, so it's not a kinda nuanced point. A bit of a pet peeve that people talk about balance sheet without incorporating all assets.
p. 96 - "The US dollar now accounts for about 55% of the world's international transactions, savings, and borrowing. The Eurozone's euro accounts for about 25%. The Japanese yen accounts for less than 10%. The Chinese renminbi accounts for about 2%.
p. 104. "There is a real economy and there is a financial economy which are intertwined but different. The real economy and the financial economy each has its own supply and demand dynamics."
p. 115 - Here he talks about why the US was the net beneficiary of WWI and WWII.
p. 120 - Here he talks about not holding bonds late in debt cycles. Interesting....
p. 157 - "At its peak in the 19th century, the UK's 2.5% of the world's population produced 20% of the world's income and the UK controlled over 40% of global exports. This economic strength grew in tandem with a strong military which, along with the privately driven conquests of the British East India Company, drove the creation of a global empire upon which "the sun never set."
p. 158 - it took 20 years after WWII for the US to gain dominance over the British pound. He attributes that to post-war debt. I would say yes and.... the US rise is more important on a relative basis and also what they had already lost from the colonies situation and their ability to exploit cheap later via that route, which dominated the period of imperialism. I know... this book tries to stay away from the idea of slavery for good reason in this political environment, but let's just call it what it is ok....
p. 179 - ok... top paragraph on the Soviets being a rival to the US post WWII.... even if we made them a rival country and did this whole cold war, it's f-in stupid IMO. .. the idea that the Soviets were a comparable rival power at any point is just disrespectful AF to what the Russians suffered post WWII and how that carried through. Super not fair. The scary thing to me is that Dalio knows that so why he's putting it this way is awkward.
p. 182 - this 10 years of economic warfare before we actually take guns out... scary stuff.
p. 206 - talks about the importance of gold and reserve currencies in cross border transactions. I'm gonna say yes... and yet again, but he's not willing to go all the way to where I mentioned atop, i.e. that the point is not money, it's the ability to agree on value portability both temporary and geographically. As such, we then have to listen to all this on gold and ignore any conversation about electronic currencies such as bitcoin which have no sovereignty attached. I'm going to call it a microaggression.
p. 207... This is why I love Dalio. He's willing to admit that Post WWII the US was super rich and as such it paid off a bunch of countries to do certain things.... those countries benefited .... btw... they are all the countries surrounding the borders of Russian and specifically China.
p. 215 -... Ok Look, I get why he's blaming moving from the gold standard. There are so many tellings of this across the board. But seriously.... this love of Volker... really? I mean, let's be really honest.... oil prices and food prices, doesn't matter what you do on a monetary side, it wouldn't have changed things given what was happening with the Middle East Nations and how they felt about it. That would take decades of oil policy that we are currently undoing and it sure as hell wouldn't have undone mother nature making crops not grow and our own stupid AF policies related to the way we paid farmers not to farm... and I KNOW Dalio knows this. so why is this being presented as such??????????
p. 218 - I had no idea that he had an early bad series of calls. Wow. vulnerable. #Respect.
p. 221 - he indicates the rise of EM due to the swap out of middle income American jobs to overseas outsourcing. He indicates he knows this is a massive simplification. I'll allow it.
p. 225 - He puts the rise of income gap to the idea of a Money Financed Capitalist boom. The logic of this is that printing money and buying back stock largely made the wealthy wealthier at the expense of the poor.... I always hate these because another way to look at it is globally and you'll see a very different picture, i.e. the US poor are just middle class in a global scale and the rich are coming up to the global scale. But then you have to incorporate the really poor countries to properly see it over the history of humanity. Still....
This leads to his point that domestically in the US you end up with social and economic inequality that leads to the rise of Trump. Maybe... or ... something else.... I think the something else is even more nuanced than what he's saying here. So I don't love this logical short cut.
p. 237 - He shows how large China's reserves are (in reserve currencies and other...) he then says ... "... the US is very powerful because it can print the world's money and would be very vulnerable if it lost its reserve currency status." This is true.
p.. 238 - "... if the US dollar were to lose its reserve status and significantly depreciate in value it would have a devastating effect on the finances of those countries holding those reserves as well as private-sector holders of dollar-debt assets. Who would be the winners? Those with dollar-debt liabilities and those with non-dollar assets would be the big winners." True... but his path drawing might be abrupt, and the scenarios you'd have to have if someone were to pay me cash money to assess how would you dislodge the US as the reserve currencies… it won’t just be China rising further.
p. 255 - His depiction of China is so spot on... strategic with a far longer history to pull from for that strategy.
p. 259-260 He talks about the idea that there are few wars outside of China but many internally. YESSSSS!!! I have said this over and over again. China is not a European country.... why they would go to war is WAY the heck more limited. Their history tells you this. It’s not their deal to be the aggressor. They are FAAARRR more likely to use other means.
p. 266 - This idea that the Chinese like to save more. I'm not a believer. The public at large doesn't have as many options on the investment side. If there is no lending market at a reasonable rate with a legal system that easily supports it then yeah… people save.
p. 269 - He intro's the Century of Humiliation and the stakes that Taiwan has. Ok... so like this concept is from the last 20 years as a rallying cry for China to centralize together internally against an outside group.
p. 277-279 - He's got a telling of China that is very quick, but largely, it's fine. I do worry how laymen will read it who know nothing of the nuance of how he's saying it.
p. 280... ths is a very fast history of China.. wow... hope people learn more ... while accurate it's a bit glib. But I get it. Dalio's got a lot of ground to cover.
p. 286... The long term goal of Reuniting China is a bit odd to say this way. I mean HK and Macao had specific lease terms during imperialism. If we hadn't done a bunch of stupid shit including the having Taiwan semi be lodged on that island, then possibly the island of Formosa could be "worked out." at this point, I'm not convinced the politicians know how to do this correctly..... I mean you have to dial back the microscope for a better understanding of Chinese territorial history.....but the whole world keeps leaning in to these highly biased nasty pictures of things… particularly recently....
p. 328 - "China will probably advance its technologies and the quality of its decision making that is enabled by them faster than the US will. Big data + Big AI + big computing = superior decision making." Way to skirt the implications of why, which Dalio obviously knows..... and obviously it's not because they are investing more....
p. 332-334 - This idea of the strengthening of China's military... I wish he'd just show the borders and what territory they are trying to control and it would make it less inciting and mysterious as to why they have to do that.
p. 342 - I like how he walks through each of the current reserve currencies and why even at 2% we should care a lot about the state of the RMB.
p. 357 the Enemy is Us is an intriguing one....It's a long list... some of which includes defunding the military. I mean, you could also retool it if it's that controversial.
also... I totally heart this: "The internal wars and challenges in both China and the US are more improtant and bigger than external wars and challenges."
Having read his newsletters for more than a decade, I will never be anything but a huge fan of Dalio. He's brilliant and anyone who believes otherwise has missed the point. The star removal is because we do not agree on a few fundamental things, and I know he's smart AF, so it could only possibly be because he is refusing to see it that way.
My notes are for me, so I'm more citing, b/c I sometimes have to repeat why I feel the way I do. This is not a review in the normal sense.
p.14 "I believe the reason people typically miss the big moments of evolution coming at them inlife is that we each experience only tiny pieces of what is happening."
"From gaining this perspective, I've come to believe that there are only a limited number of personality types going down a limited number of paths that lead them to encounter a limited number of situations to produce only a limited number of stories that repeat over time.
.... something to think about in the context of his previous book and the idea that we can sometimes be academically lazy in reinforcing our own viewpoints.
p. 15 - He talks about how he came to this path of thought of this book. He was studying money and credit cycles and hoping to go backwards with his lens: "... central bank actions push financial asset prices and the economy up, which widen the wealth gap and led to an era of populism and conflict."
p. 36 - He talks about ways to distribute wealth to advance society: ... "... the formula for success has been a system in which educated people come up with innovations, receive funding through capital markets, andn own the means by which their innovations are turned into the production and allocation of resources allowing them to be rewarded by profit making. This happens best in capitalism and the government systems that work symbiotically with it. At the same time, how this is happening continues to evolve. For example, while ages ago agricultural land and agricultural production are worth the most and that evolved into machines and what they produce being worth the most, digital things that have no apparent physical existence (data and information process) are evolving to become worth the most." This is one of a couple of foundation stone in his thought process that implies the way he's thinking about it is waves of preferences. I don't see it that way because this set-up embeds a particular thought process about causality and active action that I don't agree with. I would likely flip it backwards.
p. 44 He states the measure of power and wealth: "1) education, 2) competitiveness 3) technology, 4) economic output, 5) share of world trade, 6) military strength, 7) financial center strength, and 8) reserve currency.
p. 63 "However, unlike what most people intuitively think, there isn't a fixed amount of money and credit in existence. Money and credit can easily be created by governments. Their creating it is liked because it gives people, companies, nonprofit organizations, and governments more spending power." He then talks about the idea that if you have too much debt the paying it back can be difficult. Here is where we are not quite on the same page. Because there is a period of time before money. While some might find that is irrelevant, the challenge with excluding it fails to incorporate the years prior to the dominance of money in politics. In other times, you might have just enslaved a bunch of people (or gone to war and brought back slaves). Alternatively, you can just have very rich people donate it (time, resources, money....etc) outright. That's not money. That's something else, i.e. making a bunch of people do something they don't want, inspiring people to do something you want them to do. That becomes important later to understand a particular unexplored area of cases and solutions in the book.
p. 70 "For example, when the money and credit that central banks are creating no longer go into lending that fuels increases in economic demand and instead go into other currencies and inflation-hedge assets, it fails to stimulate economic activity and instead causes the value of the currency to decline and the value of inflation-hedge assets to rise. At such times high inflation can occur because the supply of money and credit has increased relative to the demand for it, which we call monetary inflation. That can happen at the same time there is weak demand.".... Can't tell if he's implying that is the case right this minute. If yes, I respectfully disagree.
p. 71 "In other words, using market values of what one owns to measure one's wealth gives an illusion of changes in wealth that doesn't really exist. As far as how the economic machine works, the big thing is that money and credit is stimulative when it's given out and depressing when it has to be paid back. That's what normally makes money, credit, and economic growth so cyclical."
p. 76 "Soon people treated these paper "claims on money" as if they were money themselves. After all, they were as good as money because they could be redeemed for tangible money. This type of currency system is called a linked currency system because the value of the currency is linked to the value of something, typically hard money such as gold."
Ok... at this point it became clear to me that he is using the idea of money and currency in a way that is very different from the book "1000 years of debt" that clearly and cleanly demonstrates that even currency is a form of debt. here we are not on the same page, because i agree with that author. In thinking of money in this way he is thinking of money in terms of stored value that can be physically produced. In fact, that is not what money is or is moving toward. Money has always been a store of value and the idea of currency or debt has been surrounding how do store value for portability both geographically and temporarily in a manner that can be confirmed. This means that for a few chapters Dalio and I must agree to disagree, because he goes in the direction of the Gold Standard concepts and produces a history that, while true, is not the way I see it.
p. 78 - "Money is what settles claims - i.e. one pays one's bills and one is done. Debt is a promise to deliver money. In watching how the machine is working it is important to watch a) the amounts of both debt and money that exist relative to the amount of hard money (e.g. gold) in the bank and b) the amount of goods and services that exist, which can vary, remembering that debt cycles happen because most people love to expand their buying power (generally through debt) while central banks tend to want to expand the amount of money in existence because people are happier when they do that." IMO, no. this is merely a framework we've created. What settles a claim is the other person acknowledging the terms, of which money has become the predominant manner to do so. The amount of goods and service and your ability to provide this become the primary relevance, the amount relative to anything specific is irrelevant, as long as you debtor and debtee agree... this has to do with my definition in the previous section and leads to a very different conclusion. We both land on the same idea that the reserve currency is all good, but with different nuances.
p. 81 - "When credit cycles reach their limit it is both the logical and classic response for central governments and their central banks to create a lot of debt and print money that will be spent on goods, services, and investment assets to keep the economy moving. That is what was done during the 2008 debt crisis, when interest rates could no longer be lowered because they had already hit 0%."
p. 85 - "Some people think there needs to be an alternative reserve currency to go to, but that's not true as the same dynamics of the breakdown of the monetary system and the running to other assets happened in cases in which there was no alternative currency to go to(e.g. in China and in the Roman Empire). The debasement of the currency leads it to devalue and have people run from it and debt denominated in it into something else." .... It almost ...and I really mean almost, that this is his pot shot at e-currencies/bitcoin.
p. 86 - "By keeping an eye on the amount of debt that needs to be paid relative to the amount of hard money that there is to pay it, the amount of debt payments that have to be made relative to the amount of cash flow the debtors have to service the debt, and the interest rewards that one is getting for lending one's money, one can assess the risk/reward of holding the time bonds." Yes... but .... and the but has to do with reserve currencies and also the idea that in such a case there is a desire to ignore in this any hard assets a country has that have nothing to do with assets. This is how China has taken over random mines and raw materials in a host of countries, so it's not a kinda nuanced point. A bit of a pet peeve that people talk about balance sheet without incorporating all assets.
p. 96 - "The US dollar now accounts for about 55% of the world's international transactions, savings, and borrowing. The Eurozone's euro accounts for about 25%. The Japanese yen accounts for less than 10%. The Chinese renminbi accounts for about 2%.
p. 104. "There is a real economy and there is a financial economy which are intertwined but different. The real economy and the financial economy each has its own supply and demand dynamics."
p. 115 - Here he talks about why the US was the net beneficiary of WWI and WWII.
p. 120 - Here he talks about not holding bonds late in debt cycles. Interesting....
p. 157 - "At its peak in the 19th century, the UK's 2.5% of the world's population produced 20% of the world's income and the UK controlled over 40% of global exports. This economic strength grew in tandem with a strong military which, along with the privately driven conquests of the British East India Company, drove the creation of a global empire upon which "the sun never set."
p. 158 - it took 20 years after WWII for the US to gain dominance over the British pound. He attributes that to post-war debt. I would say yes and.... the US rise is more important on a relative basis and also what they had already lost from the colonies situation and their ability to exploit cheap later via that route, which dominated the period of imperialism. I know... this book tries to stay away from the idea of slavery for good reason in this political environment, but let's just call it what it is ok....
p. 179 - ok... top paragraph on the Soviets being a rival to the US post WWII.... even if we made them a rival country and did this whole cold war, it's f-in stupid IMO. .. the idea that the Soviets were a comparable rival power at any point is just disrespectful AF to what the Russians suffered post WWII and how that carried through. Super not fair. The scary thing to me is that Dalio knows that so why he's putting it this way is awkward.
p. 182 - this 10 years of economic warfare before we actually take guns out... scary stuff.
p. 206 - talks about the importance of gold and reserve currencies in cross border transactions. I'm gonna say yes... and yet again, but he's not willing to go all the way to where I mentioned atop, i.e. that the point is not money, it's the ability to agree on value portability both temporary and geographically. As such, we then have to listen to all this on gold and ignore any conversation about electronic currencies such as bitcoin which have no sovereignty attached. I'm going to call it a microaggression.
p. 207... This is why I love Dalio. He's willing to admit that Post WWII the US was super rich and as such it paid off a bunch of countries to do certain things.... those countries benefited .... btw... they are all the countries surrounding the borders of Russian and specifically China.
p. 215 -... Ok Look, I get why he's blaming moving from the gold standard. There are so many tellings of this across the board. But seriously.... this love of Volker... really? I mean, let's be really honest.... oil prices and food prices, doesn't matter what you do on a monetary side, it wouldn't have changed things given what was happening with the Middle East Nations and how they felt about it. That would take decades of oil policy that we are currently undoing and it sure as hell wouldn't have undone mother nature making crops not grow and our own stupid AF policies related to the way we paid farmers not to farm... and I KNOW Dalio knows this. so why is this being presented as such??????????
p. 218 - I had no idea that he had an early bad series of calls. Wow. vulnerable. #Respect.
p. 221 - he indicates the rise of EM due to the swap out of middle income American jobs to overseas outsourcing. He indicates he knows this is a massive simplification. I'll allow it.
p. 225 - He puts the rise of income gap to the idea of a Money Financed Capitalist boom. The logic of this is that printing money and buying back stock largely made the wealthy wealthier at the expense of the poor.... I always hate these because another way to look at it is globally and you'll see a very different picture, i.e. the US poor are just middle class in a global scale and the rich are coming up to the global scale. But then you have to incorporate the really poor countries to properly see it over the history of humanity. Still....
This leads to his point that domestically in the US you end up with social and economic inequality that leads to the rise of Trump. Maybe... or ... something else.... I think the something else is even more nuanced than what he's saying here. So I don't love this logical short cut.
p. 237 - He shows how large China's reserves are (in reserve currencies and other...) he then says ... "... the US is very powerful because it can print the world's money and would be very vulnerable if it lost its reserve currency status." This is true.
p.. 238 - "... if the US dollar were to lose its reserve status and significantly depreciate in value it would have a devastating effect on the finances of those countries holding those reserves as well as private-sector holders of dollar-debt assets. Who would be the winners? Those with dollar-debt liabilities and those with non-dollar assets would be the big winners." True... but his path drawing might be abrupt, and the scenarios you'd have to have if someone were to pay me cash money to assess how would you dislodge the US as the reserve currencies… it won’t just be China rising further.
p. 255 - His depiction of China is so spot on... strategic with a far longer history to pull from for that strategy.
p. 259-260 He talks about the idea that there are few wars outside of China but many internally. YESSSSS!!! I have said this over and over again. China is not a European country.... why they would go to war is WAY the heck more limited. Their history tells you this. It’s not their deal to be the aggressor. They are FAAARRR more likely to use other means.
p. 266 - This idea that the Chinese like to save more. I'm not a believer. The public at large doesn't have as many options on the investment side. If there is no lending market at a reasonable rate with a legal system that easily supports it then yeah… people save.
p. 269 - He intro's the Century of Humiliation and the stakes that Taiwan has. Ok... so like this concept is from the last 20 years as a rallying cry for China to centralize together internally against an outside group.
p. 277-279 - He's got a telling of China that is very quick, but largely, it's fine. I do worry how laymen will read it who know nothing of the nuance of how he's saying it.
p. 280... ths is a very fast history of China.. wow... hope people learn more ... while accurate it's a bit glib. But I get it. Dalio's got a lot of ground to cover.
p. 286... The long term goal of Reuniting China is a bit odd to say this way. I mean HK and Macao had specific lease terms during imperialism. If we hadn't done a bunch of stupid shit including the having Taiwan semi be lodged on that island, then possibly the island of Formosa could be "worked out." at this point, I'm not convinced the politicians know how to do this correctly..... I mean you have to dial back the microscope for a better understanding of Chinese territorial history.....but the whole world keeps leaning in to these highly biased nasty pictures of things… particularly recently....
p. 328 - "China will probably advance its technologies and the quality of its decision making that is enabled by them faster than the US will. Big data + Big AI + big computing = superior decision making." Way to skirt the implications of why, which Dalio obviously knows..... and obviously it's not because they are investing more....
p. 332-334 - This idea of the strengthening of China's military... I wish he'd just show the borders and what territory they are trying to control and it would make it less inciting and mysterious as to why they have to do that.
p. 342 - I like how he walks through each of the current reserve currencies and why even at 2% we should care a lot about the state of the RMB.
p. 357 the Enemy is Us is an intriguing one....It's a long list... some of which includes defunding the military. I mean, you could also retool it if it's that controversial.
also... I totally heart this: "The internal wars and challenges in both China and the US are more improtant and bigger than external wars and challenges."
August 12, 2022
To his credit, hedge fund guru and author Ray Dalio studies the past, to better understand the future. He observes that empires, like people and companies, have life cycles that include distinct phases. Fair enough.
Dalio’s analysis of previous fallen empires, such as the Dutch and British, suggests that America is about to cede its global dominance to Communist China, which has caught up to the USA on some measures. Here, he is less convincing.
Granted, North American and European media are full of gleeful stories documenting America’s decline and China’s ascent, stressing Chinese rapid economic growth, massive population, work ethic and educational success. Clearly, the current Western tendency to obsess over our so-called “Social Justice” issues related to the horrors of Liberal democracies’ colonial, slave owning, racist, sexist past is undermining self-confidence in liberal democracies around the world.
China’s dictators must be laughing at our endless self-flagellation, which boosts their case for the alleged superiority of China’s corrupt, brutal Communism among naïve, Woke Westerners, who haven’t read any history nor economics. We’ve forgotten how good we have it compared to our own past, let alone versus the grim present in the world’s many autocracies.
While Ray Dalio may be a brilliant money manager, he is not a great writer. This book could have been about 75% shorter. Not only is it not concisely worded, but Dalio includes endless graphs with dubious, poorly marked axes. The frustrating lack of meaningful units on most of these graphs undermines his contentions.
The fact that this book appeared immediately before Dalio’s Bridgewater Associates launched another private China investment fund suggests a financial conflict of interest that taints his conclusions. Dalio appears to be flattering the brittle, thuggish Communist Party of China leadership, while goosing his own fund’s sales prospects.
This is known in the investing world as “Talking one’s own book.” American private equity investor and politician Mitt Romney calls Dalio’s breezy failure to acknowledge China’s brutality a “moral lapse”. Leaving morality aside, the book suffers from a selective analysis that undermines Dalio’s arguments.
The author makes almost no mention of demographics, which in China are unfavourable thanks to China’s multi decade, “One Child” policy.
He notes the enormous power vested in whatever country issues the world’s reserve currency (currently the USA) and implies that China is about to usurp that enviable position. Investors abhor uncertainty and regulatory randomness. It is very hard to imagine world financial markets adopting as a reserve currency, the money of a corrupt, brutal dictatorship that uses currency controls, separate classes of money for foreigners and opaque, arbitrary rule changes.
Worse, Dalio’s own criteria for national success, including the rule of law, lack of corruption, efficiency of resource allocation, openness, and low indebtedness, all underscore China’s unsuitability for global leadership.
For someone who has generated so much wealth for himself and others by understanding numbers, Dalio is mesmerized by recency bias. He’s rightly impressed by China’s rapid growth from a low base, but seems to believe that his vague, cartoon graphs will just continue on their current trend.
China suffers weak demography, political oppression, a debt shell game, rampant corruption, inflated growth statistics, regulatory opacity, a non-independent kangaroo court system and a central planning process that created “ghost cities” full of empty apartment blocks. All these faults violate Dalio’s own success criteria and appall investors, yet he pretends they pose no barrier to China’s future, glorious rise.
Surely, they do undermine China’s future and make his analysis appear flawed.
This is an interesting book, but it’s neither well edited nor persuasive. It reads more like a long marketing brochure for Bridgewater and Dalio’s new friends in China’s Communist Party.
For a rebuttal of Dalio’s thesis, read Peter Zeihan’s books, which, while not perfect, are more logically consistent.
Dalio’s analysis of previous fallen empires, such as the Dutch and British, suggests that America is about to cede its global dominance to Communist China, which has caught up to the USA on some measures. Here, he is less convincing.
Granted, North American and European media are full of gleeful stories documenting America’s decline and China’s ascent, stressing Chinese rapid economic growth, massive population, work ethic and educational success. Clearly, the current Western tendency to obsess over our so-called “Social Justice” issues related to the horrors of Liberal democracies’ colonial, slave owning, racist, sexist past is undermining self-confidence in liberal democracies around the world.
China’s dictators must be laughing at our endless self-flagellation, which boosts their case for the alleged superiority of China’s corrupt, brutal Communism among naïve, Woke Westerners, who haven’t read any history nor economics. We’ve forgotten how good we have it compared to our own past, let alone versus the grim present in the world’s many autocracies.
While Ray Dalio may be a brilliant money manager, he is not a great writer. This book could have been about 75% shorter. Not only is it not concisely worded, but Dalio includes endless graphs with dubious, poorly marked axes. The frustrating lack of meaningful units on most of these graphs undermines his contentions.
The fact that this book appeared immediately before Dalio’s Bridgewater Associates launched another private China investment fund suggests a financial conflict of interest that taints his conclusions. Dalio appears to be flattering the brittle, thuggish Communist Party of China leadership, while goosing his own fund’s sales prospects.
This is known in the investing world as “Talking one’s own book.” American private equity investor and politician Mitt Romney calls Dalio’s breezy failure to acknowledge China’s brutality a “moral lapse”. Leaving morality aside, the book suffers from a selective analysis that undermines Dalio’s arguments.
The author makes almost no mention of demographics, which in China are unfavourable thanks to China’s multi decade, “One Child” policy.
He notes the enormous power vested in whatever country issues the world’s reserve currency (currently the USA) and implies that China is about to usurp that enviable position. Investors abhor uncertainty and regulatory randomness. It is very hard to imagine world financial markets adopting as a reserve currency, the money of a corrupt, brutal dictatorship that uses currency controls, separate classes of money for foreigners and opaque, arbitrary rule changes.
Worse, Dalio’s own criteria for national success, including the rule of law, lack of corruption, efficiency of resource allocation, openness, and low indebtedness, all underscore China’s unsuitability for global leadership.
For someone who has generated so much wealth for himself and others by understanding numbers, Dalio is mesmerized by recency bias. He’s rightly impressed by China’s rapid growth from a low base, but seems to believe that his vague, cartoon graphs will just continue on their current trend.
China suffers weak demography, political oppression, a debt shell game, rampant corruption, inflated growth statistics, regulatory opacity, a non-independent kangaroo court system and a central planning process that created “ghost cities” full of empty apartment blocks. All these faults violate Dalio’s own success criteria and appall investors, yet he pretends they pose no barrier to China’s future, glorious rise.
Surely, they do undermine China’s future and make his analysis appear flawed.
This is an interesting book, but it’s neither well edited nor persuasive. It reads more like a long marketing brochure for Bridgewater and Dalio’s new friends in China’s Communist Party.
For a rebuttal of Dalio’s thesis, read Peter Zeihan’s books, which, while not perfect, are more logically consistent.
August 26, 2023
Dalio is an archetypal hedgehog, Isaiah Berlin's model of a writer and thinker who relates everything to one big central vision. In Dalio's case, his vision is that human economic activity moves in cycles and patterns that transcend cultures, empires and even centuries. To this organizing principle, he brings research, data and repetition that yields a persuasiveness to his perspectives on where the world has been and where it’s going regarding the economic conditions of many countries, past and present, and the well-being and developing situations in the US and China. The future isn't written, but the patterns it goes through are predictable and ineluctable. We can't know when things will happen or exactly how, but that they will, and that stepping back to look for tell-tale signs can show where in the cycle a country (or empire) is and what to expect next.
Part history, part macroeconomic financial literacy primer and DIY investment guide, part op-ed column, Dalio's book is cogent and convincing. He sees a big picture through all the static and noise. No doubt experts in any field that he touches on could argue about details or his specific interpretations of them, but the classifications and categories of the data he combines into the stages of the cycle, and why, and the overall vision he creates from them, sort of feels like the Periodic Chart - did it always exist and a man "discovered" it, or was it invented? He made me think "of course, this is how we should be looking at the elements of the economic welfare of nations."
A really good read that makes me feel educated on things we as humans, as part of an economic environment, should be aware of. After all, it affects us all in myriad, innumerable ways.
Note: His repetitiveness isn’t a fault in my eyes, but evidence illustrating the recurring patterns and cycles he propounds, making manifest his vision, and his rhetoric persuasive.
4 and 1/2 stars.
Part history, part macroeconomic financial literacy primer and DIY investment guide, part op-ed column, Dalio's book is cogent and convincing. He sees a big picture through all the static and noise. No doubt experts in any field that he touches on could argue about details or his specific interpretations of them, but the classifications and categories of the data he combines into the stages of the cycle, and why, and the overall vision he creates from them, sort of feels like the Periodic Chart - did it always exist and a man "discovered" it, or was it invented? He made me think "of course, this is how we should be looking at the elements of the economic welfare of nations."
A really good read that makes me feel educated on things we as humans, as part of an economic environment, should be aware of. After all, it affects us all in myriad, innumerable ways.
Note: His repetitiveness isn’t a fault in my eyes, but evidence illustrating the recurring patterns and cycles he propounds, making manifest his vision, and his rhetoric persuasive.
4 and 1/2 stars.
September 13, 2022
Despite I think this book is poorly edited (e.g. repetitions, unnecessary countless references to earlier/later chapters, many disclaimers, verbosity, structure of explaining topics: first in general and then again in more detail) and despite large chunks are not unique (filled with texts out of Ray Dalio's book "Big Debt Crises" and random history books), I gave it a 5* rating.
Much of what most people, including myself, read each day is for collecting information. However, I think the greater purpose for reading is to gain understanding. This book does that by delivering me great new insights.
Mark Twain stated: "History doesn't repeat itself, but it often rhymes". That is exactly what Ray Dalio proves with this study. Out of the previous 500 years he distills the archetypical big cycle behind the rises and declines of empires. This increases my understanding enormously of the cause/effect relationships within this cycle.
The most relevant historical arcs seem about 100-plus years. Therefore some events happen only once every couple of generations. People on average have a few decades of life experience and are usually caught by surprise by major events. Now I understand that these events logically happen within a big cycle and that these have happened many times before in history.
In addition, the author shares valuable insights from his connections/friends, ranging from the common man to the elite in many parts of the world. Furthermore, Ray Dalio projects his findings on the present / near future with the big cycle decline of the United States / Dollar and the big cycle rise of China / Renminbi. He does this in a very openminded way for both the US and China.
After reading The Changing World Order, you see the world through a different lens.
Much of what most people, including myself, read each day is for collecting information. However, I think the greater purpose for reading is to gain understanding. This book does that by delivering me great new insights.
Mark Twain stated: "History doesn't repeat itself, but it often rhymes". That is exactly what Ray Dalio proves with this study. Out of the previous 500 years he distills the archetypical big cycle behind the rises and declines of empires. This increases my understanding enormously of the cause/effect relationships within this cycle.
The most relevant historical arcs seem about 100-plus years. Therefore some events happen only once every couple of generations. People on average have a few decades of life experience and are usually caught by surprise by major events. Now I understand that these events logically happen within a big cycle and that these have happened many times before in history.
In addition, the author shares valuable insights from his connections/friends, ranging from the common man to the elite in many parts of the world. Furthermore, Ray Dalio projects his findings on the present / near future with the big cycle decline of the United States / Dollar and the big cycle rise of China / Renminbi. He does this in a very openminded way for both the US and China.
After reading The Changing World Order, you see the world through a different lens.
February 11, 2023
After a rather repetitive and simplistic start, I started to get convinced by the big picture view Dalio sketches. Thoroughly thought provoking
To have peace and prosperity a society needs productivity that benefits most people.
Do you think we have this today?
Far from a perfect book but I can’t say I don’t agree with the overall view on the broad trends of economical development. Like Yuval Hariri but on a different topic.
More thoughts to follow 💰📈💥
To have peace and prosperity a society needs productivity that benefits most people.
Do you think we have this today?
Far from a perfect book but I can’t say I don’t agree with the overall view on the broad trends of economical development. Like Yuval Hariri but on a different topic.
More thoughts to follow 💰📈💥
September 30, 2020
This book dispels the common narrative that "China copies stuff from the west and is run by an inferior top-down governance system with the communist way of resource allocation". Before reading the chapters in the book, even I used to feel that China is the evil side and USA is the superior side. But the studies about the historical events depicted in the book with a perspective of looking at the recurring patterns (The economic cycles, and the rise and fall of the reserve currency empires) provides enough evidence to think otherwise.
Though all the chapters are being structured to provide the necessary framework to evaluate the current state of affairs between China and USA, the principles discussed in the book timeless and general enough to apply to other economies too.
A book worth reading for sure!
Though all the chapters are being structured to provide the necessary framework to evaluate the current state of affairs between China and USA, the principles discussed in the book timeless and general enough to apply to other economies too.
A book worth reading for sure!
January 23, 2022
"The empire long divided must unite and long united must divide. Thus it has ever been, and He who lives by the crystal ball is destined to eat ground glass"
Ray Dalio created a powerful model to understand and to predict the future of empires: to understand what was happening and deal with what would be coming you have too study past analogous periods : the rises and declines of empires, their reserve currencies, and their markets. In other words, to develop an understanding of what is happening now and might happen over the next few years.
Ray studied history, he saw that it typically transpires via relatively well defned life cycles, like those of organisms, that evolve as each generation transitions to the next and he created his theory of BIG CYCLES and DETERMINANTS
THE BIG CYCLE IN A TINY NUTSHELL:
The Rise: The rise is the prosperous period of building that comes after a new order.
The Top: This period is characterized by excesses
The Decline: This is the painful period of fighting and restructuring that leads to great conflicts and great changes and the establishment of new internal and external orders
THE DETERMINANTS
Just as we can see the arc of the human life cycle from birth to death and how one generation impacts the next, we can do the same with countries and empires. We can see how values, assets, liabilities, and experiences are handed down and how their evolutionary effects ripple out across the generations. We can tell when an empire is approaching its peak and when it is in decline
Ray share his description of the workings of the perpetual-motion machine that drives the rises and declines of empires and their reserve currencies
The three big determinants:
1) the cycle of good and bad finances .
2) the cycle of internal order and disorder.
3) the cycle of external order and disorder (due to the degrees of the competitiveness of existing powers in fighting for wealth and power).
(The three big cycles are 1 ,2 ,3)
4) the pace of innovation and technological development to solve problems and make improvements
5) acts of nature, most importantly droughts, foods and diseases
(The Big Five : 1 ,2,3,4,5)
EIGHT DETERMINANTS OF WEALTH AND POWER
1) education,
2) competitiveness,
3) innovation and technology,
4) economic output,
5) share of world trade,
6) military strength,
7) fionacial center strength,
8) reserve currency status.
Each of these types of power rising and declining in cycles comes together with the other cycles to make the one Big Cycle of the empire’s rise and decline
AND other determinants such as geology/geography,rule of law, and infrastructure that matter too.
THE BIG CYCLE OF MONEY, CREDIT, DEBT, AND ECONOMIC ACTIVITY
What most people and their countries want most is wealth and power, and money and credit are the biggest influences on how wealth and power rise and decline. If you don’t understand how money and credit work, you can’t understand how the system works, and if you don’t understand how the system works, you can’t understand what’s coming at you
let's see how the whole thing works:
Take a moment to think about your own fnancial situation. How much income do you have now relative to your expenses and how much will you have in the future? How much savings do you have and what are those savings invested in? Now play things out. if your income fell or disappeared, how long would your savings last? How much risk do you have in the value of your investments and savings? What are your other sources of money. These are the most important calculations you can make to ensure your economic well-being. Now look at others—other people realizing that the same is true for them. See how we are interconnected and what changes in conditions might mean for you and others who might affect you. Since the economy is the sum of these entities operating in this way, it will help you understand what is happening and what is likely to happen.
THE BIG CYCLE OF INTERNAL ORDER AND DISORDER
The biggest thing affecting most people in most countries through time is how people struggle to make, take, and distribute wealth and power, though they also struggle over other things, most importantly ideology and religion.
THE SIX STAGES OF THE INTERNAL CYCLE
Stage 1: when the new order begins and the new leadership consolidates power
Stage 2: when the resource-allocation systems and government bureaucracies are built
Stage 3: when there is peace and prosperity
Stage 4: when there are great excesses in spending and debt and the widening of wealth and political gaps
Stage 5: when there are very bad financial conditions
Stage 6: when there are civil wars/revolutions
Nothing is forever other than evolution, and within evolution there are cycles that are like tides that come in and go out and that are hard to change or fight against. To handle these changes well it is essential to know which stage of the cycle one is in and to know timeless and universal principles for dealing with it.
THE BIG CYCLE OF EXTERNAL ORDER AND DISORDER
International relations are driven much more by raw power dynamics. That is because all governance systems require effective and agreed-upon
1) laws and law-making abilities
2) law enforcement capabilities ( police)
3) ways of adjudicating (judges),
4) clear and specified consequences that both suit crimes and are enforced and those things either don’t exist or are not as effective in guiding relations between countries as they are in guiding relations within them.
The specific items that help make a great empire are :
1- leadership that is strong enough and capable enough to provide the essential ingredients for success
2-strong education.
3-strong character, civility, and a strong work ethic
4-low corruption and high respect for rules, such as the rule of law.
5-People being able to work well together, united behind a common view of how they should be together
6-a good system for allocating resources,
7-being open to the best global thinking
8-greater competitiveness in global markets
9-strong income growth
10-increased investments to improve infrastructure, education, and research and development
11-rapidly increasing productivity
12-new technologies
13-a rising and significant share of world trade
14-a strong military
15-strong and widely used currency, equity, and credit markets.
16-at least one of the world’s leading
For me this is one of the most powerful models, am thinking seriously to implement it in a context of IA project,
4.5 ⭐
Ray Dalio created a powerful model to understand and to predict the future of empires: to understand what was happening and deal with what would be coming you have too study past analogous periods : the rises and declines of empires, their reserve currencies, and their markets. In other words, to develop an understanding of what is happening now and might happen over the next few years.
Ray studied history, he saw that it typically transpires via relatively well defned life cycles, like those of organisms, that evolve as each generation transitions to the next and he created his theory of BIG CYCLES and DETERMINANTS
THE BIG CYCLE IN A TINY NUTSHELL:
The Rise: The rise is the prosperous period of building that comes after a new order.
The Top: This period is characterized by excesses
The Decline: This is the painful period of fighting and restructuring that leads to great conflicts and great changes and the establishment of new internal and external orders
THE DETERMINANTS
Just as we can see the arc of the human life cycle from birth to death and how one generation impacts the next, we can do the same with countries and empires. We can see how values, assets, liabilities, and experiences are handed down and how their evolutionary effects ripple out across the generations. We can tell when an empire is approaching its peak and when it is in decline
Ray share his description of the workings of the perpetual-motion machine that drives the rises and declines of empires and their reserve currencies
The three big determinants:
1) the cycle of good and bad finances .
2) the cycle of internal order and disorder.
3) the cycle of external order and disorder (due to the degrees of the competitiveness of existing powers in fighting for wealth and power).
(The three big cycles are 1 ,2 ,3)
4) the pace of innovation and technological development to solve problems and make improvements
5) acts of nature, most importantly droughts, foods and diseases
(The Big Five : 1 ,2,3,4,5)
EIGHT DETERMINANTS OF WEALTH AND POWER
1) education,
2) competitiveness,
3) innovation and technology,
4) economic output,
5) share of world trade,
6) military strength,
7) fionacial center strength,
8) reserve currency status.
Each of these types of power rising and declining in cycles comes together with the other cycles to make the one Big Cycle of the empire’s rise and decline
AND other determinants such as geology/geography,rule of law, and infrastructure that matter too.
THE BIG CYCLE OF MONEY, CREDIT, DEBT, AND ECONOMIC ACTIVITY
What most people and their countries want most is wealth and power, and money and credit are the biggest influences on how wealth and power rise and decline. If you don’t understand how money and credit work, you can’t understand how the system works, and if you don’t understand how the system works, you can’t understand what’s coming at you
let's see how the whole thing works:
Take a moment to think about your own fnancial situation. How much income do you have now relative to your expenses and how much will you have in the future? How much savings do you have and what are those savings invested in? Now play things out. if your income fell or disappeared, how long would your savings last? How much risk do you have in the value of your investments and savings? What are your other sources of money. These are the most important calculations you can make to ensure your economic well-being. Now look at others—other people realizing that the same is true for them. See how we are interconnected and what changes in conditions might mean for you and others who might affect you. Since the economy is the sum of these entities operating in this way, it will help you understand what is happening and what is likely to happen.
THE BIG CYCLE OF INTERNAL ORDER AND DISORDER
The biggest thing affecting most people in most countries through time is how people struggle to make, take, and distribute wealth and power, though they also struggle over other things, most importantly ideology and religion.
THE SIX STAGES OF THE INTERNAL CYCLE
Stage 1: when the new order begins and the new leadership consolidates power
Stage 2: when the resource-allocation systems and government bureaucracies are built
Stage 3: when there is peace and prosperity
Stage 4: when there are great excesses in spending and debt and the widening of wealth and political gaps
Stage 5: when there are very bad financial conditions
Stage 6: when there are civil wars/revolutions
Nothing is forever other than evolution, and within evolution there are cycles that are like tides that come in and go out and that are hard to change or fight against. To handle these changes well it is essential to know which stage of the cycle one is in and to know timeless and universal principles for dealing with it.
THE BIG CYCLE OF EXTERNAL ORDER AND DISORDER
International relations are driven much more by raw power dynamics. That is because all governance systems require effective and agreed-upon
1) laws and law-making abilities
2) law enforcement capabilities ( police)
3) ways of adjudicating (judges),
4) clear and specified consequences that both suit crimes and are enforced and those things either don’t exist or are not as effective in guiding relations between countries as they are in guiding relations within them.
The specific items that help make a great empire are :
1- leadership that is strong enough and capable enough to provide the essential ingredients for success
2-strong education.
3-strong character, civility, and a strong work ethic
4-low corruption and high respect for rules, such as the rule of law.
5-People being able to work well together, united behind a common view of how they should be together
6-a good system for allocating resources,
7-being open to the best global thinking
8-greater competitiveness in global markets
9-strong income growth
10-increased investments to improve infrastructure, education, and research and development
11-rapidly increasing productivity
12-new technologies
13-a rising and significant share of world trade
14-a strong military
15-strong and widely used currency, equity, and credit markets.
16-at least one of the world’s leading
For me this is one of the most powerful models, am thinking seriously to implement it in a context of IA project,
4.5 ⭐
April 2, 2022
Pros:
1. Interesting topic choice with lots of insightful analysis of historical and geopolitical events.
2. I really liked all the graphs and tables. Anyone with scientific/analytical edge will enjoy it.
3. The summary and author's observations seem to be quite objective and accurate. His thinking process is convincing but conclusions will probably not keep many Americans pleased (most negative reviews here point out China glorification and US downplay).
Cons:
1. The author is certainly a good investor but ...... a terrible writer. Incredibly verbose and repetitive. He talks about what he will be talking about and what he talked about previously and the same thing over and over again. This book, if well edited, should be 75% shorter. The writing style was a killer for me.
2. I am not exactly sure who was a target audience here. Some fragments are very basic and are waste of time for any readers with even street level knowledge of economics. However, some parts are quite challenging and data analysis requires probably more advanced education and analytical skills.
3. Overall, the cyclical concept is not new and you will very likely know most (if not all) presented information. What's interesting here, is the way it was analyzed and if we will accept obvious conclusions on the emotional level.
We may like it or not, but all Empires fall sooner or later and this book explains in a very convincing way how and why. The competitors may win by stealing intellectual property, morally questionable actions, cold pragmatism, humanitarian violations or any other way. But win is a win, regardless if we approve it or not. We can pretend it's not happening or just look at the data.
The question is not if, but when.
1. Interesting topic choice with lots of insightful analysis of historical and geopolitical events.
2. I really liked all the graphs and tables. Anyone with scientific/analytical edge will enjoy it.
3. The summary and author's observations seem to be quite objective and accurate. His thinking process is convincing but conclusions will probably not keep many Americans pleased (most negative reviews here point out China glorification and US downplay).
Cons:
1. The author is certainly a good investor but ...... a terrible writer. Incredibly verbose and repetitive. He talks about what he will be talking about and what he talked about previously and the same thing over and over again. This book, if well edited, should be 75% shorter. The writing style was a killer for me.
2. I am not exactly sure who was a target audience here. Some fragments are very basic and are waste of time for any readers with even street level knowledge of economics. However, some parts are quite challenging and data analysis requires probably more advanced education and analytical skills.
3. Overall, the cyclical concept is not new and you will very likely know most (if not all) presented information. What's interesting here, is the way it was analyzed and if we will accept obvious conclusions on the emotional level.
We may like it or not, but all Empires fall sooner or later and this book explains in a very convincing way how and why. The competitors may win by stealing intellectual property, morally questionable actions, cold pragmatism, humanitarian violations or any other way. But win is a win, regardless if we approve it or not. We can pretend it's not happening or just look at the data.
The question is not if, but when.
December 29, 2021
The "I did my own research" for economists.
I'm most surprised that anyone read this beyond the prologue.
The author, a popular hedge fund manager, figures his investment success is largely due to his understanding of long-term intra and inter-national trends in debt and politics.
He literally says he's going to look back at historical events, figure the 'cause and effects' and apply them to present day trends. That's when he convinced me to return the book for a refund.
IMO the great irony of this book is that the unchallenged hubris of billionaires is likely the cause of more political and economic strife than the "causes" he hopes to find in his historical research.
A sincere thank-you to Audible for allowing me to get a full refund for this.
I'm most surprised that anyone read this beyond the prologue.
The author, a popular hedge fund manager, figures his investment success is largely due to his understanding of long-term intra and inter-national trends in debt and politics.
He literally says he's going to look back at historical events, figure the 'cause and effects' and apply them to present day trends. That's when he convinced me to return the book for a refund.
IMO the great irony of this book is that the unchallenged hubris of billionaires is likely the cause of more political and economic strife than the "causes" he hopes to find in his historical research.
A sincere thank-you to Audible for allowing me to get a full refund for this.
December 18, 2021
Purely from technical and historical perspectives, it’s a great book, particularly I’m not a finance person while his clear explanation of the cause/effect of various fiscal and monetary policies has enlightened me a lot.
However, his take on the US and China rivalry has tarnished my otherwise high regards for this book. Per Ray, all superpowers are going through ups and downs, like cycles and each of them would be overtaken by other newly emerged powers.
As a reader, what I got is his pitching for others to accept this unavoidable course of history. So just sit back and make sure to place the right bets on China because the US is doomed to fade out in history. Hence, don't take offence of Chinese practices. Just a few cases in point:
p.449-450: “The Chinese hierarchical culture makes it natural for the Chinese to simply accept the government’s direction, while the American nonhierarchical culture makes it acceptable for Americans to fight with their government over what to do. Similarly, different cultural inclinations influenced how Americans and the Chinese reacted to being told that they had to wear masks in response to COVID-19, which led to second-order consequences because the Chinese followed the instructions and Americans often didn’t, affecting the numbers of cases and deaths and the economic impact.” If he's not so ignorant, he should recall that the Chinese doctor turned whistleblower, warning the highly infectious virus at the very beginning, was forced by the Chinese government to confess of spreading the fake news. Just imagine the number of cases and deaths and the economic impact could be reduced should the censorship be not so aggressive.
p.453: “That is the cultural inclination / style of Chinese leadership. They can also be wonderful friends who will provide support when needed. For example, when the governor of Connecticut was desperate to get personal protective equipment in the first big wave of COVID-19 illnesses and deaths……… I turned to my Chinese friends for help and they provided what was needed, which was a lot.” I couldn’t believe what I read! Hasn’t he heard about Chinese mask / PPE diplomacy? He’s right into this, being used as a propaganda tool and yet he thought this is something to be boasted of?
p.436: “from my discussions it is my belief that China has a strong desire not to have a hot war with the US or to forcibly control other countries (as distinct from having the desire to be all it can be and to influence countries within its region).” To me, it may be true that China doesn’t want to declare wars against other nations but if other nations dare not to respect for Chinese people’s sentiments, China will retaliate by economic sanctions. Is this what Ray can praise for China’s stance of not making wars with others?
p.426: “Now we need to drop down and look at where we are in more detail, hopefully without losing sight of that big picture. As we drop down, things that seem imperceptibly small in retrospect – Huawei, Hong Kong sanctions, closing consulates, moving battleships, unprecedented monetary policies, political fights, social conflicts, and many others – will at the time appear much larger….”
Having said, this book might be interpreted in a more constructive way, by using it as a wake-up call to all Americans, to fight for their freedoms and values.
However, his take on the US and China rivalry has tarnished my otherwise high regards for this book. Per Ray, all superpowers are going through ups and downs, like cycles and each of them would be overtaken by other newly emerged powers.
As a reader, what I got is his pitching for others to accept this unavoidable course of history. So just sit back and make sure to place the right bets on China because the US is doomed to fade out in history. Hence, don't take offence of Chinese practices. Just a few cases in point:
p.449-450: “The Chinese hierarchical culture makes it natural for the Chinese to simply accept the government’s direction, while the American nonhierarchical culture makes it acceptable for Americans to fight with their government over what to do. Similarly, different cultural inclinations influenced how Americans and the Chinese reacted to being told that they had to wear masks in response to COVID-19, which led to second-order consequences because the Chinese followed the instructions and Americans often didn’t, affecting the numbers of cases and deaths and the economic impact.” If he's not so ignorant, he should recall that the Chinese doctor turned whistleblower, warning the highly infectious virus at the very beginning, was forced by the Chinese government to confess of spreading the fake news. Just imagine the number of cases and deaths and the economic impact could be reduced should the censorship be not so aggressive.
p.453: “That is the cultural inclination / style of Chinese leadership. They can also be wonderful friends who will provide support when needed. For example, when the governor of Connecticut was desperate to get personal protective equipment in the first big wave of COVID-19 illnesses and deaths……… I turned to my Chinese friends for help and they provided what was needed, which was a lot.” I couldn’t believe what I read! Hasn’t he heard about Chinese mask / PPE diplomacy? He’s right into this, being used as a propaganda tool and yet he thought this is something to be boasted of?
p.436: “from my discussions it is my belief that China has a strong desire not to have a hot war with the US or to forcibly control other countries (as distinct from having the desire to be all it can be and to influence countries within its region).” To me, it may be true that China doesn’t want to declare wars against other nations but if other nations dare not to respect for Chinese people’s sentiments, China will retaliate by economic sanctions. Is this what Ray can praise for China’s stance of not making wars with others?
p.426: “Now we need to drop down and look at where we are in more detail, hopefully without losing sight of that big picture. As we drop down, things that seem imperceptibly small in retrospect – Huawei, Hong Kong sanctions, closing consulates, moving battleships, unprecedented monetary policies, political fights, social conflicts, and many others – will at the time appear much larger….”
Having said, this book might be interpreted in a more constructive way, by using it as a wake-up call to all Americans, to fight for their freedoms and values.
Want to read
December 13, 2023https://www.principles.com/the-changi...
Salt conference 2021
https://youtu.be/CVWAxZU89Ys
Yahoo interview Dec 2021
https://youtu.be/d5IWZsoK8Jw
CSIS Ray Dalio & Henry Kissinger
https://youtu.be/8MtNRO1DIQs
Money, Power & the Collapse of Empires - Lex Friedman
https://youtu.be/TISMidxdZoc
TIP podcast Jan 2, 2022
https://podcasts.apple.com/sg/podcast...
Masters in Biz interview Jan 8, 2022
https://podcasts.apple.com/sg/podcast...
YouTube Summary Video
https://www.youtube.com/watch?v=xguam...
The Changing World Order: The New Paradigm - Jan 4, 2022
https://www.linkedin.com/pulse/changi...
The assets and liabilities that you would most like to have, and those that you would most like to avoid, change with the paradigm that exists at the time. For example, in the Roaring ’20s you’d want to own stocks and avoid bonds, while in the depressionary 1930s it would be the opposite; in the inflationary 1970s you’d want to own hard assets like gold and avoid bonds, while in the disinflationary 1980s you’d want to own financial assets and avoid hard assets.
One should consider minimizing one’s ownership of cash and bonds in dollars, euros, and yen (and/or borrow in these) and putting funds into a highly diversified portfolio of assets, including stocks and inflation-hedge assets, especially in countries with healthy finances and well-educated and civil populations that have internal order. These things are especially important in this paradigm. In brief, I think one’s assets and liabilities should be well-balanced with minimum exposures to dollar, euro, and yen currency and debt assets. During this time, I also think it will pay to be short cash (i.e., borrow cash [on fixed rates]).
https://www.linkedin.com/pulse/2022-y...
Tweets
https://twitter.com/raydalio/status/1...
Where We Are in the Big Cycle: On the Brink of a Period of Great Disorder - 20 Apr 2023
https://www.linkedin.com/pulse/where-...
What I Think Is Going On 1) with China-US Relations, 2) with Their Relations with Other Countries, and 3) in China - 27 Apr 2023
https://www.linkedin.com/pulse/what-i...
Interview w/ Hank Paulson
https://podcasts.apple.com/sg/podcast...
https://podcasts.apple.com/sg/podcast...
Jordan Harbinger interview May 2022
https://youtu.be/zrmGs7uD278
Bloomberg interview Oct 2022
https://youtu.be/Y3LufB6DK4k
It starts w/ inflation
https://twitter.com/sanfordchee/statu...
Thomas Friedman interview Jun 2023
https://youtu.be/AEy3FgvWC0M
Taking the other side: Why China will fail - Peter Zeihan
https://youtu.be/1zGQFceDrIM
George Yeo on ‘Storm Clouds in the US-China relations’ Aug 2022
https://youtu.be/W7qc5dBsats
Ray Dalio @All-in Summit 2023
https://youtu.be/7TGJRzRSzL4?si=AV5UQ...
'It’s time for the west and the rest to talk to each other as equals' -Kishore Mahbubani, FT 12 Dec 2023
https://www.ft.com/content/ed18d1a2-5...
Principles for Navigating Big Debt Crises, and 2. How They Apply to What’s Happening Now (Part 1/2) Jan 2023
https://www.linkedin.com/pulse/two-pa...
Principles for Navigating Big Debt Crises, and 2. How They Apply to What’s Happening Now (Part 2/2) Feb 2023
https://www.linkedin.com/pulse/part-2...
5 important drivers of changing world order:
1/ The debt-money-economic dynamic
2/ The internal conflict dynamic
3/ The external conflict dynamic
4/ Acts of nature (droughts, floods, pandemics etc)
5/ Human invention and technology development
(A) The BIG Cycles
1. Debt-money-economic dynamic: economic/financial position
1.1 Debt burden (big economic cycle)
1.2 Expected growth (big economic cycle)
2. Internal conflict dynamic
2.1 Wealth inequality (Gini coefficient), opportunities gap & values clashes (e.g. Left vs Right; populism etc)
2.2 Internal conflict/internal order
Civil War
https://www.linkedin.com/pulse/rising...
3. External conflict dynamic
US-China Relations and Wars Sep 2020
https://www.linkedin.com/pulse/chapte...
5 types of wars: (1) trade/economic wars; (2) technology wars; (3) geopolitical wars; (4) capital wars; (5) military wars
Approaching Stage 6 (The War Stage) Nov 2022
https://www.linkedin.com/pulse/changi...
(B) 8 key measures of Power:
1) Education
2) Innovation & Technology
3) Cost competitiveness
4) Military strength
5) Trade
6) Economic output
7) Markets & Financial Centre
8) Reserve currency status
Other measures of power: geology; resource-allocation efficiency; Acts of nature (droughts, floods, pandemics etc); infrastructure & investments; character/civility/determination; governance/rule of law
Country Power Index 2022
https://economicprinciples.org/downlo...
Salt conference 2021
https://youtu.be/CVWAxZU89Ys
Yahoo interview Dec 2021
https://youtu.be/d5IWZsoK8Jw
CSIS Ray Dalio & Henry Kissinger
https://youtu.be/8MtNRO1DIQs
Money, Power & the Collapse of Empires - Lex Friedman
https://youtu.be/TISMidxdZoc
TIP podcast Jan 2, 2022
https://podcasts.apple.com/sg/podcast...
Masters in Biz interview Jan 8, 2022
https://podcasts.apple.com/sg/podcast...
YouTube Summary Video
https://www.youtube.com/watch?v=xguam...
The Changing World Order: The New Paradigm - Jan 4, 2022
https://www.linkedin.com/pulse/changi...
The assets and liabilities that you would most like to have, and those that you would most like to avoid, change with the paradigm that exists at the time. For example, in the Roaring ’20s you’d want to own stocks and avoid bonds, while in the depressionary 1930s it would be the opposite; in the inflationary 1970s you’d want to own hard assets like gold and avoid bonds, while in the disinflationary 1980s you’d want to own financial assets and avoid hard assets.
One should consider minimizing one’s ownership of cash and bonds in dollars, euros, and yen (and/or borrow in these) and putting funds into a highly diversified portfolio of assets, including stocks and inflation-hedge assets, especially in countries with healthy finances and well-educated and civil populations that have internal order. These things are especially important in this paradigm. In brief, I think one’s assets and liabilities should be well-balanced with minimum exposures to dollar, euro, and yen currency and debt assets. During this time, I also think it will pay to be short cash (i.e., borrow cash [on fixed rates]).
https://www.linkedin.com/pulse/2022-y...
Tweets
https://twitter.com/raydalio/status/1...
Where We Are in the Big Cycle: On the Brink of a Period of Great Disorder - 20 Apr 2023
https://www.linkedin.com/pulse/where-...
What I Think Is Going On 1) with China-US Relations, 2) with Their Relations with Other Countries, and 3) in China - 27 Apr 2023
https://www.linkedin.com/pulse/what-i...
Interview w/ Hank Paulson
https://podcasts.apple.com/sg/podcast...
https://podcasts.apple.com/sg/podcast...
Jordan Harbinger interview May 2022
https://youtu.be/zrmGs7uD278
Bloomberg interview Oct 2022
https://youtu.be/Y3LufB6DK4k
It starts w/ inflation
https://twitter.com/sanfordchee/statu...
Thomas Friedman interview Jun 2023
https://youtu.be/AEy3FgvWC0M
Taking the other side: Why China will fail - Peter Zeihan
https://youtu.be/1zGQFceDrIM
George Yeo on ‘Storm Clouds in the US-China relations’ Aug 2022
https://youtu.be/W7qc5dBsats
Ray Dalio @All-in Summit 2023
https://youtu.be/7TGJRzRSzL4?si=AV5UQ...
'It’s time for the west and the rest to talk to each other as equals' -Kishore Mahbubani, FT 12 Dec 2023
https://www.ft.com/content/ed18d1a2-5...
Principles for Navigating Big Debt Crises, and 2. How They Apply to What’s Happening Now (Part 1/2) Jan 2023
https://www.linkedin.com/pulse/two-pa...
Principles for Navigating Big Debt Crises, and 2. How They Apply to What’s Happening Now (Part 2/2) Feb 2023
https://www.linkedin.com/pulse/part-2...
5 important drivers of changing world order:
1/ The debt-money-economic dynamic
2/ The internal conflict dynamic
3/ The external conflict dynamic
4/ Acts of nature (droughts, floods, pandemics etc)
5/ Human invention and technology development
(A) The BIG Cycles
1. Debt-money-economic dynamic: economic/financial position
1.1 Debt burden (big economic cycle)
1.2 Expected growth (big economic cycle)
2. Internal conflict dynamic
2.1 Wealth inequality (Gini coefficient), opportunities gap & values clashes (e.g. Left vs Right; populism etc)
2.2 Internal conflict/internal order
Civil War
https://www.linkedin.com/pulse/rising...
3. External conflict dynamic
US-China Relations and Wars Sep 2020
https://www.linkedin.com/pulse/chapte...
5 types of wars: (1) trade/economic wars; (2) technology wars; (3) geopolitical wars; (4) capital wars; (5) military wars
Approaching Stage 6 (The War Stage) Nov 2022
https://www.linkedin.com/pulse/changi...
(B) 8 key measures of Power:
1) Education
2) Innovation & Technology
3) Cost competitiveness
4) Military strength
5) Trade
6) Economic output
7) Markets & Financial Centre
8) Reserve currency status
Other measures of power: geology; resource-allocation efficiency; Acts of nature (droughts, floods, pandemics etc); infrastructure & investments; character/civility/determination; governance/rule of law
Country Power Index 2022
https://economicprinciples.org/downlo...
April 8, 2021
This is really interesting book which gives a grand perspective on a current world order.
Thought #1 - Everything is cyclical - History has taught us that nothing is forever other than evolution, and within evolution there are cycles that are like tides that come in and go out and that are hard to change or fight against.
After the creation of a new set of rules establishes the new world order, there is typically a peaceful and prosperous period. As people get used to this they increasingly bet on the prosperity continuing, and they increasingly borrow money to do that, which eventually leads to a bubble. As the prosperity increases the wealth gap grows. Eventually the debt bubble bursts, which leads to the printing of money and credit and increased internal conflict, which leads to some sort of wealth redistribution revolution that can be peaceful or violent. Out of these debt, economic, domestic, and world-order breakdowns that take the forms of revolutions and wars come new winners and losers. Then the winners get together to create the new domestic and world orders.
Thought #2 - Chinese are more strategic and long term thinkers. Chinese empire is on a rise now. - As a result of their longer history , the Chinese are much more interested in evolving well over much longer time frames than Americans, who are much more interested in making quick hits—i.e., the Chinese are more strategic than Americans, who are more tactical. The arc that Chinese leaders pay the most attention to is well over a hundred years long (because that’s how long good dynasties last) and they understand that the typical arc of development has different multidecade phases in it, and they plan for them.
Thought #3 - US empire has passed its zenith in 60-70s and started inevitable decline(everything is cyclical)
Thought #4 - US and China relationship are complicated ones as the world order is rapidly changing.
Thought #1 - Everything is cyclical - History has taught us that nothing is forever other than evolution, and within evolution there are cycles that are like tides that come in and go out and that are hard to change or fight against.
After the creation of a new set of rules establishes the new world order, there is typically a peaceful and prosperous period. As people get used to this they increasingly bet on the prosperity continuing, and they increasingly borrow money to do that, which eventually leads to a bubble. As the prosperity increases the wealth gap grows. Eventually the debt bubble bursts, which leads to the printing of money and credit and increased internal conflict, which leads to some sort of wealth redistribution revolution that can be peaceful or violent. Out of these debt, economic, domestic, and world-order breakdowns that take the forms of revolutions and wars come new winners and losers. Then the winners get together to create the new domestic and world orders.
Thought #2 - Chinese are more strategic and long term thinkers. Chinese empire is on a rise now. - As a result of their longer history , the Chinese are much more interested in evolving well over much longer time frames than Americans, who are much more interested in making quick hits—i.e., the Chinese are more strategic than Americans, who are more tactical. The arc that Chinese leaders pay the most attention to is well over a hundred years long (because that’s how long good dynasties last) and they understand that the typical arc of development has different multidecade phases in it, and they plan for them.
Thought #3 - US empire has passed its zenith in 60-70s and started inevitable decline(everything is cyclical)
Thought #4 - US and China relationship are complicated ones as the world order is rapidly changing.
October 4, 2023
I have a ten-year-old granddaughter who for the past few years has had something that ranges from an infatuation to an obsession with dinosaurs. At the height of her passion she would fill 16 tournament brackets with various species of dinosaur and conduct thought experiments about who would win a fight to the death for each pairing. She would then work her way through the tournament algorithm until a champion dinosaur species was crowned.
Aside from what this says about the OCD genes rampant in my lineage, I was reminded of her activities by this book in which Ray Dalio does something similar, replacing dinosaurs with countries. Although Dalio does not contemplate fights to the death, his impressive system of rankings of countries, using 18 determinants based more or less on statistics about each country, could easily be used for such a purpose. While I might quibble with the author on the weight given each determinant or exactly how it should be quantified, the effort that went into his ranking system is certainly praiseworthy.
As might be expected from an author whose day job is as a hedge fund manager, economic criteria appear to have pride of place in his rankings. The economic advances made by China in the last 40 years have not gone unnoticed by Dalio, neither has the inability of the US to tax itself for the government services it provides and the resulting indebtedness. The author sees history as cyclical in that countries become powerful, then decadent, then fall by the wayside, to be replaced by another at the top of the heap. In this regard, he regards the US as on the down side of the cycle and China on the upside. Indeed a cynic might consider the author's entire effort as an elaborate rationale for explaining why his clients' pension funds have been invested in a tool and die works in Sichuan.
Regardless of his motivation, for those who have wondered where world history is headed, the author is not shy about letting you know what he thinks and why.
Aside from what this says about the OCD genes rampant in my lineage, I was reminded of her activities by this book in which Ray Dalio does something similar, replacing dinosaurs with countries. Although Dalio does not contemplate fights to the death, his impressive system of rankings of countries, using 18 determinants based more or less on statistics about each country, could easily be used for such a purpose. While I might quibble with the author on the weight given each determinant or exactly how it should be quantified, the effort that went into his ranking system is certainly praiseworthy.
As might be expected from an author whose day job is as a hedge fund manager, economic criteria appear to have pride of place in his rankings. The economic advances made by China in the last 40 years have not gone unnoticed by Dalio, neither has the inability of the US to tax itself for the government services it provides and the resulting indebtedness. The author sees history as cyclical in that countries become powerful, then decadent, then fall by the wayside, to be replaced by another at the top of the heap. In this regard, he regards the US as on the down side of the cycle and China on the upside. Indeed a cynic might consider the author's entire effort as an elaborate rationale for explaining why his clients' pension funds have been invested in a tool and die works in Sichuan.
Regardless of his motivation, for those who have wondered where world history is headed, the author is not shy about letting you know what he thinks and why.
December 24, 2021
The Changing World Order is a sober, almost surgical, distillation of some of the grand macroeconomic principles that have driven historical empires to their heights and through their collapse. Ray's monstrous research project covers two key topics: 1) a 30,000 ft view on the factors and cycles that led recorded history's leading empires to take the global mantle and subsequently lose it, and 2) a close-up view on current US-China relations, where, he argues, will be the location of next baton pass in global leadership.
Admittedly, Ray takes a crack at quantifying all human history - a hilariously impossible task. It is far from perfect, but it has dramatically changed the lens by which I try to sift through the chaff of current events. It will take me loads of rereads to fully internalize the depth and complexity he walks though, but I highly recommend it. He is unabashedly bearish on where the US resides on its arc as a global power (Spoiler: Hanging on by a thread), which will ruffle lots of feathers but may also need to be reflected on more widely.
Given Dalio's unique perspective as a hedge fund titan with global interests and his personal history with China's great unleashing of economic capabilities, I especially admire the empathy he gives to each perspective in today's global tango. He refrains from taking an "Us versus China" footing, but rather takes an almost detached view for each empire (as only an investor can) to help build context and understanding as to why certain flashpoints today (eg. Taiwan conflict) matter so greatly.
“In the markets and in life, to be successful one should bet on the upside that comes from a) evolution that leads to productivity improvements, but not so aggressively that b) cycles and bumps along the way knock you out of the game.”
Admittedly, Ray takes a crack at quantifying all human history - a hilariously impossible task. It is far from perfect, but it has dramatically changed the lens by which I try to sift through the chaff of current events. It will take me loads of rereads to fully internalize the depth and complexity he walks though, but I highly recommend it. He is unabashedly bearish on where the US resides on its arc as a global power (Spoiler: Hanging on by a thread), which will ruffle lots of feathers but may also need to be reflected on more widely.
Given Dalio's unique perspective as a hedge fund titan with global interests and his personal history with China's great unleashing of economic capabilities, I especially admire the empathy he gives to each perspective in today's global tango. He refrains from taking an "Us versus China" footing, but rather takes an almost detached view for each empire (as only an investor can) to help build context and understanding as to why certain flashpoints today (eg. Taiwan conflict) matter so greatly.
“In the markets and in life, to be successful one should bet on the upside that comes from a) evolution that leads to productivity improvements, but not so aggressively that b) cycles and bumps along the way knock you out of the game.”
December 23, 2021
The entire first half of the book is a highly oversimplified history crash course "à l'américaine". Which might have been just fine, shouldn't there be so many factual errors and logical fallacies. If you're American or a really poorly educated European, I guess you may find something new or exciting.
«Unlike European countries, the US has fewer natural barriers, such as mountains and seas, that might have decided it into separate nations; therefore, it is a united homogeneous country.»
*laughs in Native American*
His considerations regarding future escalation of the US-China relations are somewhat interesting and I did in fact find quite a few perspectives I've never considered earlier. Still, it became hard to estimate how valid they could be given wild inaccuracies in the first several chapters. Ray Dalio is undoubtfully a titan in IB/PE, but his expertise in other matters turned out to be rather awkward.
«Unlike European countries, the US has fewer natural barriers, such as mountains and seas, that might have decided it into separate nations; therefore, it is a united homogeneous country.»
*laughs in Native American*
His considerations regarding future escalation of the US-China relations are somewhat interesting and I did in fact find quite a few perspectives I've never considered earlier. Still, it became hard to estimate how valid they could be given wild inaccuracies in the first several chapters. Ray Dalio is undoubtfully a titan in IB/PE, but his expertise in other matters turned out to be rather awkward.
April 14, 2022
Every now and then I encounter a book that is colossal in most senses. This is one of them. It takes a broad view of the past 500 years to discern patterns of change in the world order. These patterns are then collated to derive an over-arching theory of change. Just when you get the hang of that, the overall big cycle is then broken down into it's constituent parts and the individual drivers of change are then analysed. Like I said, it's a big work.
The author then goes on to spend the bulk of the book to sift through the evidence and to make his case. I found the arguments to be quite compelling. They are certainly well researched and well made. The cycle is distilled into a narrative, where one thing is shown to lead to another, as part of a natural progression. Every rise is shown to contain the seeds of its own destruction, so decline and fall are part of a natural process. Over the past 500 years, this cycle is applied to the Dutch, British, American, and Chinese empires.
That's where the story becomes interesting. In looking at the transition between the American and the Chinese world, the story becomes contemporary and then moves into the future. This has my attention. The author suggests that future events will follow a familiar trajectory. He may well be right. However, whilst he can point to the direction of the flow, the timing of future events remains a matter of conjecture. For example, he says that the US Dollar will lose it's pre-eminence. I agree, but this isn't entirely helpful. When will that happen? And by what mechanism will that happen? These are gaps in the thinking that need to be filled in.
In that respect, the book is a great first step. The author admits this. The model needs further refinement to provide some indications for a timeline. This is a gap that I am keen to cover. That defines how I see the book. It is one of those books to which we shall return from time to time. There is something really big in here and unlocking it ought not to be too much of a problem.
The size of the book - 500+ pages - is an impediment. It isn't written particularly well, but there are a good number of charts to break up the reading process. Going through it is hard work, but I found it to be very rewarding. I would imagine that I shall return to the basic model fairly soon, in an attempt to blend it with other long term models of change, such as Peter Turchin's. I quite like this hybrid approach, and I think that will be my next step.
The author then goes on to spend the bulk of the book to sift through the evidence and to make his case. I found the arguments to be quite compelling. They are certainly well researched and well made. The cycle is distilled into a narrative, where one thing is shown to lead to another, as part of a natural progression. Every rise is shown to contain the seeds of its own destruction, so decline and fall are part of a natural process. Over the past 500 years, this cycle is applied to the Dutch, British, American, and Chinese empires.
That's where the story becomes interesting. In looking at the transition between the American and the Chinese world, the story becomes contemporary and then moves into the future. This has my attention. The author suggests that future events will follow a familiar trajectory. He may well be right. However, whilst he can point to the direction of the flow, the timing of future events remains a matter of conjecture. For example, he says that the US Dollar will lose it's pre-eminence. I agree, but this isn't entirely helpful. When will that happen? And by what mechanism will that happen? These are gaps in the thinking that need to be filled in.
In that respect, the book is a great first step. The author admits this. The model needs further refinement to provide some indications for a timeline. This is a gap that I am keen to cover. That defines how I see the book. It is one of those books to which we shall return from time to time. There is something really big in here and unlocking it ought not to be too much of a problem.
The size of the book - 500+ pages - is an impediment. It isn't written particularly well, but there are a good number of charts to break up the reading process. Going through it is hard work, but I found it to be very rewarding. I would imagine that I shall return to the basic model fairly soon, in an attempt to blend it with other long term models of change, such as Peter Turchin's. I quite like this hybrid approach, and I think that will be my next step.
January 8, 2022
IMO this is a 'must read' book in the current, but also in a future situations. It is a book building also on concepts Ray Dalio described in his "Principles for Navigating Big Debt Crises" book from financial point of view.
In this book Ray Dalio goes through the analysis of a cycle or power's rise and fall and factors contributing to it. He is sharing his approach to looking at those factors and how those cycles plays out from the financial and political point of view.
Through this lens he guides us through the rise and fall of powers in last centuries - Netherlands, UK and currently unfolding US - China situation.
This book is dense. There is not a lot of "foam" or examples, but there is a lot of data and charts to back his points of view. On this, some people might feel unease that you don't know how those are plotted but Ray Dalio makes it clear, that it is something he build for himself and company. He also shares his scoring in the book and what factors are evaluated.
It isn't a guiding book. It gives you a model of the world built by Ray Dalio and what might be the consequences + possible time frame of changes. It stresses out that change might be turbulent and that you need to prepare for it, but it isn't a doomsday scenario.
It also discusses potential dynamics on the US - China transition as a worlds power and what might be the consequences.
One metric which shows that it was an interesting read (subjective) is that in total I've made 122 notes/highlights through the book.
Recommended additional reads are "Principles for Navigating Big Debt Crises" from the same author and "The Dragons and the Snakes: How the Rest Learned to Fight the West".
If you want to get the main points there is also and article with summary of the book on Ray Dalio's Linkedin profile.
In this book Ray Dalio goes through the analysis of a cycle or power's rise and fall and factors contributing to it. He is sharing his approach to looking at those factors and how those cycles plays out from the financial and political point of view.
Through this lens he guides us through the rise and fall of powers in last centuries - Netherlands, UK and currently unfolding US - China situation.
This book is dense. There is not a lot of "foam" or examples, but there is a lot of data and charts to back his points of view. On this, some people might feel unease that you don't know how those are plotted but Ray Dalio makes it clear, that it is something he build for himself and company. He also shares his scoring in the book and what factors are evaluated.
It isn't a guiding book. It gives you a model of the world built by Ray Dalio and what might be the consequences + possible time frame of changes. It stresses out that change might be turbulent and that you need to prepare for it, but it isn't a doomsday scenario.
It also discusses potential dynamics on the US - China transition as a worlds power and what might be the consequences.
One metric which shows that it was an interesting read (subjective) is that in total I've made 122 notes/highlights through the book.
Recommended additional reads are "Principles for Navigating Big Debt Crises" from the same author and "The Dragons and the Snakes: How the Rest Learned to Fight the West".
If you want to get the main points there is also and article with summary of the book on Ray Dalio's Linkedin profile.
January 16, 2022
Хэтэрхий уртын дээр олон давтамжтай өгүүлбэр, утга санаанууд дүүрэн. Үр дүнд нь тогтож уншихад тун хүндрэлтэй болж. Эдиторууд нь муу ажиллаж гэж бодогдов.
Санхүү��ийн хэдэн нэр томъёо, ойлголтуудын талаар тодорхой мэдэж авав. Бусдаар ч нэг их нөлөөлөл үзүүлэхээр ном биш. Америкийн хувьд их гүрний нөлөөлөл нь уруудаж байхын зэрэгцээ Хятад өсөж яваа.
Санхүү��ийн хэдэн нэр томъёо, ойлголтуудын талаар тодорхой мэдэж авав. Бусдаар ч нэг их нөлөөлөл үзүүлэхээр ном биш. Америкийн хувьд их гүрний нөлөөлөл нь уруудаж байхын зэрэгцээ Хятад өсөж яваа.
June 23, 2022
God I hated this book. I have immense respect for Ray Dalio, the founder of the world's biggest hedge fund. His goal with this book, to turn his immense resources and connections towards mapping the world order and its challenges is noble. It's just a tremendously bad book.
The fundamental problem is laid out on the book's first page, where he name-drops a bunch of famous people he talked to to develop his world view. The list seems superficially diverse, but most of, and the most impressive of, his sources boil down into two categories that seem very different, but were united in serving him the same faulty vision of the world. The first is highly placed Asian thinkers and politicians, who are deeply invested in proselytizing about the coming Asian century. The second is hyper-glorified US weapons salesman like Henry Kissinger, and H.R. McMaster. You might think these weapons salesman might be selling US power as hard as the Asians are selling China, but it's in fact the complete opposite. They're just as invested in rising Chinese power, though pitched as a threat rather than a happy story.
This book says it's all about data. I don't doubt that many of these figures are useful, and it was good of Dalio to centralize them and publish them, in this book and on his website. But when you drill down on the individual metrics, it's clear that almost every non-financial piece of data, and a lot of the financial stuff as well, is deeply squishy. They are based on numerous assumptions and choices about how things are going, and what the overall trajectory is. This is normal, and is the case with every model of the world. But because Dalio's top level assumptions are so uni-directional, assuming China's rise, and the US's fall, the whole product is deeply suspect.
But not as suspect as his glosses on history. These go beyond the questionable to the fraudulent. He claims to have studied multiple historical powers, but it seems likely that he only studied the British Empire. This is a good empire to study. In fact it's the only real model for the United States, as it's the only entity that put together a true world-wide system before the United States did. But what Dalio does is use the British Empire, a sample size of one, to develop a model of the rise and fall of a great power and then claim it's universal.
Dalio asserts that his models are "timeless and universal" over and over again. But it doesn't even apply to the other main historical model in the book, like at all. I've only read two door-stop books on the Dutch empire, but on the basis of that alone, I can tell you that his treatment of the Dutch Empire is completely erroneous.
I got so angry about the uses of history in this book that I made an angry video about it, which you can watch here: https://youtu.be/qtGNiYQbK40
Dalio is an important figure with a lot of resources. He mentions that his analysis of world order is meant to be iterative. I really hope so, because the project as it stands today is a failure. Hopefully the next effort will be better.
The fundamental problem is laid out on the book's first page, where he name-drops a bunch of famous people he talked to to develop his world view. The list seems superficially diverse, but most of, and the most impressive of, his sources boil down into two categories that seem very different, but were united in serving him the same faulty vision of the world. The first is highly placed Asian thinkers and politicians, who are deeply invested in proselytizing about the coming Asian century. The second is hyper-glorified US weapons salesman like Henry Kissinger, and H.R. McMaster. You might think these weapons salesman might be selling US power as hard as the Asians are selling China, but it's in fact the complete opposite. They're just as invested in rising Chinese power, though pitched as a threat rather than a happy story.
This book says it's all about data. I don't doubt that many of these figures are useful, and it was good of Dalio to centralize them and publish them, in this book and on his website. But when you drill down on the individual metrics, it's clear that almost every non-financial piece of data, and a lot of the financial stuff as well, is deeply squishy. They are based on numerous assumptions and choices about how things are going, and what the overall trajectory is. This is normal, and is the case with every model of the world. But because Dalio's top level assumptions are so uni-directional, assuming China's rise, and the US's fall, the whole product is deeply suspect.
But not as suspect as his glosses on history. These go beyond the questionable to the fraudulent. He claims to have studied multiple historical powers, but it seems likely that he only studied the British Empire. This is a good empire to study. In fact it's the only real model for the United States, as it's the only entity that put together a true world-wide system before the United States did. But what Dalio does is use the British Empire, a sample size of one, to develop a model of the rise and fall of a great power and then claim it's universal.
Dalio asserts that his models are "timeless and universal" over and over again. But it doesn't even apply to the other main historical model in the book, like at all. I've only read two door-stop books on the Dutch empire, but on the basis of that alone, I can tell you that his treatment of the Dutch Empire is completely erroneous.
I got so angry about the uses of history in this book that I made an angry video about it, which you can watch here: https://youtu.be/qtGNiYQbK40
Dalio is an important figure with a lot of resources. He mentions that his analysis of world order is meant to be iterative. I really hope so, because the project as it stands today is a failure. Hopefully the next effort will be better.
March 2, 2022
Pretty crazy to be reading this as Russia invades Ukraine in what I can only imagine to be the last futile power grab of a disillusioned once-great empire.
This book is very popular in the crypto-verse and with investment influencers on Youtube. As I watch people line up outside of banks in both Russia and Ukraine to get their life savings out while they still might be worth something I can see why.
This is one of those singular idea books - the main thrust is delivered in the beginning and is supported by argument, statistics, indexes, etc.
What Ray Dalio wants to transmit to his readers is that throughout time one can see a cycle of Empire. This cycle can be broken down into six rough stages. By examining empires in this way, one can get a rough sense of where the current world powers are on the arc of this repeating cycle.
He doesn't have great news for those of us invested (emotionally above all else) in the future of the United States. But I don't think his reflections are inaccurate.
He also points towards China as the up-and-coming world power. I just hope the transition is peaceful and orderly. And that America will then have the chance to pull itself together again to become more competitive in the educational, technological, civil consciousness kinds of ways.
While I hope that some of Dalio's predictions don't come to pass, for example : increased polarization in America, potential for greater political disturbance and civil war, increasing inflation and debasement of currency, etc. I can still take what Dalio says and try to 'hedge' my bets in my personal life, though real life bets are built in relationships, with time and with heart and it is not as easy to divide these things like a hedge fund manager might.
Dalio also gave me a new idea that I'm surprised I haven't run into before. That there are a myriad of different kinds of wars: trade/economic, technological, geopolitical, capital, military, cultural, and internal.
When you look for these kinds of conflicts in the world you can see much clearer the rivalry between nations.
This book is very popular in the crypto-verse and with investment influencers on Youtube. As I watch people line up outside of banks in both Russia and Ukraine to get their life savings out while they still might be worth something I can see why.
This is one of those singular idea books - the main thrust is delivered in the beginning and is supported by argument, statistics, indexes, etc.
What Ray Dalio wants to transmit to his readers is that throughout time one can see a cycle of Empire. This cycle can be broken down into six rough stages. By examining empires in this way, one can get a rough sense of where the current world powers are on the arc of this repeating cycle.
He doesn't have great news for those of us invested (emotionally above all else) in the future of the United States. But I don't think his reflections are inaccurate.
He also points towards China as the up-and-coming world power. I just hope the transition is peaceful and orderly. And that America will then have the chance to pull itself together again to become more competitive in the educational, technological, civil consciousness kinds of ways.
While I hope that some of Dalio's predictions don't come to pass, for example : increased polarization in America, potential for greater political disturbance and civil war, increasing inflation and debasement of currency, etc. I can still take what Dalio says and try to 'hedge' my bets in my personal life, though real life bets are built in relationships, with time and with heart and it is not as easy to divide these things like a hedge fund manager might.
Dalio also gave me a new idea that I'm surprised I haven't run into before. That there are a myriad of different kinds of wars: trade/economic, technological, geopolitical, capital, military, cultural, and internal.
When you look for these kinds of conflicts in the world you can see much clearer the rivalry between nations.
March 17, 2023
A really nice book. Very well structured and written. Superb resources included and very well referenced. I highly recommend it and have learned a lot from it, particularly the study of history and its application to the book thesis of the cycles. There were a couple of points that I disagreed with the author on. Namely, the notion that taxing the rich contributes to the decline of a nation. This seems like a dogmatic idea that the author slipped into his narrative in the book. The other notion the author claimed to also contribute to the decline of a nation is what he referred to condescendingly as the "woke" culture, as opposed to the meritocracy. Meritocracy is a necessarily at all times, and 100% agree with that. However, Strongly ingrained structural and systematic inequalities that sustain themselves over time require an intervention (even if temporary and time-bound) to correct those inequalities. The examples he draws from history are from nations that had slaves, and the so called "meritocracies" he referred to from then only applied to non-slaves. So his point is not very valid. Otherwise, the book was stellar. I've enjoyed reading it.
May 13, 2022
A great review of history in the context of empires in a financial context.
As expected, Dalio presents a thorough analysis of previous empires rise and fall to destill a framework for understanding where in the cycle we are at any point in time. The concept is comparable to his book on Navigating Debt Cycles in format but with a particular focus in the current US-China relation as well as the route to the current situation through Dutch and British dominance.
The focus on underlying principles and consistent patterns makes for an intuitive and entertaining read which I believe to be relevant for finance professionals as well as people with an interest in the subject matter.
I'd high recommend the book.
As expected, Dalio presents a thorough analysis of previous empires rise and fall to destill a framework for understanding where in the cycle we are at any point in time. The concept is comparable to his book on Navigating Debt Cycles in format but with a particular focus in the current US-China relation as well as the route to the current situation through Dutch and British dominance.
The focus on underlying principles and consistent patterns makes for an intuitive and entertaining read which I believe to be relevant for finance professionals as well as people with an interest in the subject matter.
I'd high recommend the book.
February 18, 2023
To create more wealth, you have to be more productive.
Ray Dalio created an interesting model about how the world works and how empires rise and fall. I underline the word "interesting." After reading the book, I am not convinced that the model is bulletproof. And to be fair, the author himself acknowledges that. For example, I'm curious how analyzing the demographics of a country (some countries have pretty aging populations) would influence the model.
The writing itself is... subpar. The text is more verbose and repetitive than it needs to be.
I appreciate this new lens in how to view the world. It made me curious to read different takes on the same broad topics. Other reviewers have recommended Peter Zeihan as someone whose analysis differs from Ray Dalio's.
Ray Dalio created an interesting model about how the world works and how empires rise and fall. I underline the word "interesting." After reading the book, I am not convinced that the model is bulletproof. And to be fair, the author himself acknowledges that. For example, I'm curious how analyzing the demographics of a country (some countries have pretty aging populations) would influence the model.
The writing itself is... subpar. The text is more verbose and repetitive than it needs to be.
I appreciate this new lens in how to view the world. It made me curious to read different takes on the same broad topics. Other reviewers have recommended Peter Zeihan as someone whose analysis differs from Ray Dalio's.
June 5, 2022
Jei iskesit knygos pradzia, kur Ray kalba ta-pati-per-ta-pati, tai gausit gera istorijos ir ekonomikos skaitala
January 28, 2022
For those who don't know of Ray Dalio: He is a American billionaire investor and hedge fund manager, who has served as co-chief investment officer of the world's largest hedge fund, Bridgewater Associates, since 1985, which he founded in 1975 in New York. For someone who doesn't like or read a lot of help books I have enjoyed Principles and have also read Debt Crisis. This is the third book that Mr. Dalio has published and this book takes us through the history and more precisely economic & political history of the rise and fall of various empires.
Dalio’s analysis of previous fallen empires, such as the Dutch and British, suggests that America is at the end of a big cycle and will cede its global dominance to China, which has caught up to the USA on some measures. To Dalio's credit - he reads and analyzes history that goes beyond an economic cycle and rather analyzes a more holistic view of how different forces interact with each other in a long-term cycle. This book provides a smorgasbord of information on various factors that led to the rise and fall of Dutch empire, who were the inventors of Capitalism as we know now and then how the British arrived to fill in the gaps left by the failing Dutch empire. Similarly, how America filled the void of a superpower post WWII. He also discusses various determinants that form the basis for the rise and fall of any empire.
Dalio then delves deep into China and walks us through the fascinating history of various dynasties such as Tang dynasty, Song dynasty to the current regime. He then discusses that China’s rich history has shaped her leaders ideology, whereas Americans views are limited due to much shorter history.
Chinese philosophy revolves around three broad concepts:
1) Confucianism, which seeks to bring harmony by ensuring that people know their roles in hierarchy;
2) Legalism, which favors unification by autocratic ruler;
3) Taoism, which teaches that it is paramount importance to live in harmony with the laws of nature
Interestingly, the traditional chinese military philosophy teaches that the ideal way to win a war is not by fighting but by quietly developing one's power to the point that simply displaying it to capitulate an opponent (Highly recommend reading Art of War)
While the past of western democracies is nothing to tout about, Dalio was oddly quiet on human rights issues (Uighurs), riots in Hong Kong and Covid-19. Dalio's predilections towards a pro-China reached its crescendo when he ended up thanking the Chinese authorities for providing him l masks during the peak of the pandemic but failed to discuss Bridgewater's investments in China. However, we'd be delusional if we ignore China's rise, as no other country other has uplifted more people out of poverty in the last three decades. In addition, one cannot ignore the political polarization America is going through which may create more internal disorder in the coming years. As Abraham Lincoln said “A house divided against itself cannot stand." The conflict with China is more plausible as the ideologies of the two countries couldn’t be more different.
One interesting tidbit I learned on a footnote on page 487: There have been just 50 wars between great powers since 1500, per Steven Pinker’s Better Angels of our Nature. Eighty percent of the years before 1800 had wars; its been 20 percent since.
In the appendices, Dalio discusses various determinants that are responsible for a country's outlook i.e., education, innovation & technology, debt burden etc., but I would have liked another variable % of young population to the mix. Countries such as Japan have an aging population with minimal immigration; which may further exacerbate the slow growth.
I highly recommend this book if you are interested in economic and political history and can't wait to read Principles of Investing when it comes out.
May the force of evolution be with you!
Thanks to my wife for gifting me this book for Christmas.
Dalio’s analysis of previous fallen empires, such as the Dutch and British, suggests that America is at the end of a big cycle and will cede its global dominance to China, which has caught up to the USA on some measures. To Dalio's credit - he reads and analyzes history that goes beyond an economic cycle and rather analyzes a more holistic view of how different forces interact with each other in a long-term cycle. This book provides a smorgasbord of information on various factors that led to the rise and fall of Dutch empire, who were the inventors of Capitalism as we know now and then how the British arrived to fill in the gaps left by the failing Dutch empire. Similarly, how America filled the void of a superpower post WWII. He also discusses various determinants that form the basis for the rise and fall of any empire.
Dalio then delves deep into China and walks us through the fascinating history of various dynasties such as Tang dynasty, Song dynasty to the current regime. He then discusses that China’s rich history has shaped her leaders ideology, whereas Americans views are limited due to much shorter history.
Chinese philosophy revolves around three broad concepts:
1) Confucianism, which seeks to bring harmony by ensuring that people know their roles in hierarchy;
2) Legalism, which favors unification by autocratic ruler;
3) Taoism, which teaches that it is paramount importance to live in harmony with the laws of nature
Interestingly, the traditional chinese military philosophy teaches that the ideal way to win a war is not by fighting but by quietly developing one's power to the point that simply displaying it to capitulate an opponent (Highly recommend reading Art of War)
While the past of western democracies is nothing to tout about, Dalio was oddly quiet on human rights issues (Uighurs), riots in Hong Kong and Covid-19. Dalio's predilections towards a pro-China reached its crescendo when he ended up thanking the Chinese authorities for providing him l masks during the peak of the pandemic but failed to discuss Bridgewater's investments in China. However, we'd be delusional if we ignore China's rise, as no other country other has uplifted more people out of poverty in the last three decades. In addition, one cannot ignore the political polarization America is going through which may create more internal disorder in the coming years. As Abraham Lincoln said “A house divided against itself cannot stand." The conflict with China is more plausible as the ideologies of the two countries couldn’t be more different.
One interesting tidbit I learned on a footnote on page 487: There have been just 50 wars between great powers since 1500, per Steven Pinker’s Better Angels of our Nature. Eighty percent of the years before 1800 had wars; its been 20 percent since.
In the appendices, Dalio discusses various determinants that are responsible for a country's outlook i.e., education, innovation & technology, debt burden etc., but I would have liked another variable % of young population to the mix. Countries such as Japan have an aging population with minimal immigration; which may further exacerbate the slow growth.
I highly recommend this book if you are interested in economic and political history and can't wait to read Principles of Investing when it comes out.
May the force of evolution be with you!
Thanks to my wife for gifting me this book for Christmas.
February 17, 2022
The main messages are: 1) Countries, especially empires, go through cycles. US is declining in this cycle, and China is inclining. 2) This cycle can be judged by various factors: education, innovation, debt, trade, etc. The author summarized these factors and compared them between past empires Dutch and UK, and now US and China to support his arguments.
I found this book from https://www.youtube.com/watch?v=TISMi... (an interesting interview). I notice that in the comment section there were many people trashing him simply because it seems that he did not say what normal American media would say about China. Hence I was interested in reading this book to see what exactly what is so controversial. Basically he does not think that CCPs are evil but just do what they think is the best for China. He touched upon some sensitive topics and gave a less popular view to them (the Tiananmen Square protests, constitution change to abolishing term limit).
While I see some arguments and alternative opinions may be important to know, the book is not well executed. The phrases/sentences are repeated, arguments circulated, and there exist too many justifications like "I don't know for sure but I know the best people in the field and they agree with me." I did not enjoy reading the long book.
I found this book from https://www.youtube.com/watch?v=TISMi... (an interesting interview). I notice that in the comment section there were many people trashing him simply because it seems that he did not say what normal American media would say about China. Hence I was interested in reading this book to see what exactly what is so controversial. Basically he does not think that CCPs are evil but just do what they think is the best for China. He touched upon some sensitive topics and gave a less popular view to them (the Tiananmen Square protests, constitution change to abolishing term limit).
While I see some arguments and alternative opinions may be important to know, the book is not well executed. The phrases/sentences are repeated, arguments circulated, and there exist too many justifications like "I don't know for sure but I know the best people in the field and they agree with me." I did not enjoy reading the long book.
January 31, 2022
Dalio has said that he was never a good student and after reading this I can see why. The performance of his hedge fund shows that he’s clearly a smart man but being a good student usually requires one to be a good writer and well…
Besides being poorly written I also found the book shallow in it’s analysis. Dalio claims to have identified 18 or so “determinants” that allow him to predict a nations futures prospects. However most of these ideas are obvious (ie an inventive population improves a nation’s prosperity) and there’s no sophisticated discussion of the relative importance or interaction of these factors.
The section on debt, inflation and reserve currency is interesting but it is short and Dalio has written a whole other (free) book on that topic so skip this and read that instead.
Besides being poorly written I also found the book shallow in it’s analysis. Dalio claims to have identified 18 or so “determinants” that allow him to predict a nations futures prospects. However most of these ideas are obvious (ie an inventive population improves a nation’s prosperity) and there’s no sophisticated discussion of the relative importance or interaction of these factors.
The section on debt, inflation and reserve currency is interesting but it is short and Dalio has written a whole other (free) book on that topic so skip this and read that instead.
April 23, 2022
Incredible book. You'll never see geopolitics in the same way anymore.
It's my first book by Ray Dalio and now I want to read them all. (I can see the author is too proud but doesn't remove from the quality of his writing.)
If you want a systematized way of analyzing countries behaviors, internally and internationally, this is the book.
I'm a fan of Acemoglu & Robinson "Why Nations Fail?" of which the thesis is basically "democracy succeed". This is totally ignored by Dalio. I'd be interested in seeing an analysis reconciling the two points.
This is the first book where I see the Dutch story in the 17th century so emphasized.
It's my first book by Ray Dalio and now I want to read them all. (I can see the author is too proud but doesn't remove from the quality of his writing.)
If you want a systematized way of analyzing countries behaviors, internally and internationally, this is the book.
I'm a fan of Acemoglu & Robinson "Why Nations Fail?" of which the thesis is basically "democracy succeed". This is totally ignored by Dalio. I'd be interested in seeing an analysis reconciling the two points.
This is the first book where I see the Dutch story in the 17th century so emphasized.
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