Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

by Ray Dalio

At the time of my writing, it is now 75 years later, and the major old empires, which are also the major reserve currency empires, are classically approaching the end of a long-term debt cycle when there are large debts and typical monetary policies don’t work well. Politically fragmented central governments have recently tried to fill in their financial holes by giving out a lot of money that they are borrowing, while central banks have tried to help by printing a lot of money (i.e., monetizing government debt). All this is happening when there are big wealth and values gaps and a rising world power that is competing with the leading world power in trade, technology development, capital markets, and geopolitics. And on top of all this, as of this writing we have a pandemic to contend with. Simultaneously, great human thinking, working with computer intelligence, is creating great ways of addressing these challenges. If we can all deal with each other well, we will certainly get past this difficult time and move on to a new prosperous period that will be quite different. At the same time, I am equally confident that there will be radical changes that will be traumatic for many people.