Principles for Dealing with the Changing World Order Quotes

“Why Countries Succeed and Fail, and What Should Be Done So Failing Countries Succeed.” (This study, and every other study mentioned here, is available for free at economicprinciples.org”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Over the next 10 years, the most important dynamics are the short-term debt/money/economy cycle (also called the business cycle), the internal political cycle, and the escalating conflicts/reducing interdependencies between the US and China.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“But first I want to share some big-picture thoughts about the five determinants that have had the biggest impacts in the past and that I believe will have the biggest impacts on what happens in the years ahead: innovation, the debt/money/capital market cycle, the internal order and disorder cycle, the external order and disorder cycle, and acts of nature.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Chinese culture compels its leaders and society to make most decisions from the top down, demanding high standards of civility, putting the collective interest ahead of individual interests, requiring each person to know their role and how to play it well, and having filial respect for those superior in the hierarchy. They also seek “rule by the proletariat,” which in common parlance means that opportunities and rewards are broadly distributed. In contrast, American culture compels its leaders to run the country from the bottom up, demanding high levels of personal freedom, favoring individualism over collectivism, admiring revolutionary thinking and behavior, and not respecting people for their positions as much as for the quality of their thinking. These core cultural values drove the types of economic and political systems each country chose.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Because the dollar is the dominant currency in world trade, capital flows, and reserves, it is the world’s leading reserve currency, which puts the US in the enviable position of being able to print the world’s money and to inflict sanctions on its enemies. The US now has an arsenal of sanctions, which is its most used arsenal of weapons.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Over the next five to 10 years, in addition to there being decoupling in other areas, we will be seeing which countries align themselves with each of these leading powers.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Probably the most dangerous sovereignty issue is Taiwan. Many Chinese people believe that the United States will never follow through with its implied promise to allow Taiwan and China to unite, unless the US is forced to do so. They point out that when the US sells the Taiwanese F-16 fighter jets and other weapons systems it sure doesn’t look like the United States is facilitating the peaceful reunification of China. As a result, they believe that the only way to ensure that China is safe and united is to have the power to oppose the US in the hope that the US will sensibly acquiesce when faced with a greater Chinese power. My understanding is that China is now stronger militarily in that region of the world. Also, the Chinese military is likely to get stronger at a faster pace, though deterrence through mutually assured destruction is most likely the case. So, as I mentioned earlier, I would worry a lot if we were to see an emerging fight over sovereignty, especially if we were to see a “Fourth Taiwan Strait Crisis.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Classically, the most dangerous part of the trade/economic war comes when countries cut others off from essential imports. The case study of the US and Japan leading up to World War II (found in Chapter 6) is a useful analogue to US-China circumstances because the geographies and the issues are analogous.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“China declared to the United Nations that it has “indisputable sovereignty over” an area in the East and South China Seas. The area is marked by a “nine-dash line” on a World War II era map presented by China; it covers offshore waters east of Vietnam, north of Malaysia, and west of the Philippines, which include a bunch of islands, are important for shipping that China needs, and are believed to have undiscovered oil reserves, which I imagine China would love to have given its huge imported oil needs and the risk of oil imports from the Middle East being cut off. If you read the World War II case study in Chapter 6 and saw how the US cut off resources to Japan, you know the issue: China has a great need for oil and other imports that currently come through a choke point at the Strait of Malacca. As a result of all of this and other assertions, the perception of China as a threat/enemy has emerged, globalization has reversed, and “wars” have intensified, starting with the trade and economic wars, expanding to the technology and the geopolitical wars and, most recently, to the capital war. All remain relatively mild in relation to what they could be, but they should be watched closely. Eventually the actual powers of a country that are recognized become consistent with the actual powers that exist. The actual powers that exist are reflected in the gauges and other facts that I’m watching for guidance.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“in 1945 the new world order divided the world into two main ideological camps—the democratic capitalists led by the United States and the autocratic communists led by the Soviet Union—with a third group of countries that were not committed to either side. Many of these nonaligned countries had until recently been colonies, most notably under the declining British Empire. China was clearly in the Soviet-led camp. On February 14, 1950, Mao and Stalin signed the Treaty of Friendship, Alliance, and Mutual Assistance to cooperate and come to each other’s aid militarily”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“According to Marxism,” he said, “communist society is based on material abundance… Only when there is material abundance can the principle of a communist society—‘from each according to his ability, to each according to his needs’—be applied. Socialism is the first stage of communism…” Maybe that’s true and maybe it’s not. Time will tell.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Marx’s most important theory/system is called “dialectical materialism.” “Dialectical” refers to how opposites interact to produce change, and “materialism” means that everything has a material (i.e., physical) existence that interacts with other things in a mechanical way. In a nutshell, dialectical materialism is a system for producing change by observing and influencing the “contradictions” of “opposites” that produce “struggles” that, when resolved, produce progress. Marx meant it to apply to everything. The conflict and struggle between the classes that is manifest in the conflict between capitalism and communism is just one of many such examples.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“All of these Chinese systems are hierarchical and nonegalitarian. Wang Qishan, the vice president of China and a remarkable historian and explorer of different cultures, told me that the core difference between Americans and the Chinese is that Americans hold the individual above all else while the Chinese put the family and the collective above everything. America is run from the bottom up (e.g., democracy) and optimized for the individual; China is run from the top down and optimized for the collective”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Legalism favors the rapid conquest and unification of “everything under heaven” by an autocratic leader.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Confucianism seeks to bring about harmony by ensuring that people know their roles in the hierarchy and how to play them well,”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Then the cycle began again under the Qing Dynasty. China achieved its maximum territorial expansion, governing over a third of the world’s population while reforms under the reigns of three long-ruling emperors led to an extended period of economic prosperity.3 Then the European powers arrived. Earlier in this book we saw how the European powers, in the Age of Exploration, used their military strength to trade with and exploit resource-rich but militarily weaker foreigners. That’s what happened starting in the early 1800s, which began what is called the Century of Humiliation in China. The Europeans came offering to trade but the Chinese didn’t want anything they had to offer. This led to the British bringing opium into China to get the Chinese addicted, so that they would trade for it. A series of military confrontations followed during the 1800s (most notably the Opium Wars), which sped China’s decline. Chinese moves to stem their decline failed and there was great internal conflict and uprisings (most notably the Taiping Rebellion), which continued until the collapse of the Qing Dynasty in 1912.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“The Qing Dynasty (1644–1912) came to power when the neighboring Manchu people capitalized on instability and rebellions in Ming China to challenge it.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“who was born into poverty and rose to be a great general who captured Beijing and threw out the Mongol rulers. He consolidated power in a 14-year purge that led to about 30,000 executions”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“The Ming Dynasty (1368–1644) presided over an empire that was largely prosperous and peaceful. It was founded by the Hongwu Emperor,”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Kublai Khan founded the comparatively short-lived Yuan Dynasty (1279–1368).”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Then came the Northern and Southern Song dynasties (960–1279), during which China was the most innovative and dynamic economy in the world.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“The Tang Dynasty (618–907) is considered by many Chinese to be a high point of Imperial China. The”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“China is now roughly tied with the US in being the leading power in trade, economic output, and innovation and technology, and it is a strong and quickly rising military and educational power. It is an emerging power in the financial sector but is lagging as a reserve currency and financial center. We will explore all of this in more detail later in the chapter, but in order to understand China’s present we first need to wade into its tremendous history.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“eight measures of power: education, competitiveness, innovation/technology, trade, economic output, military, financial center status, and reserve currency status.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“The stats in my model suggest that the US is roughly 70 percent through its Big Cycle, plus or minus 10 percent. The United States has not yet crossed the line into the sixth phase of a civil war/revolution, when the active fighting begins, but internal conflict is high and rising.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“The printing and buying of debt that the Fed undertook in 2020 was much like Roosevelt’s March 1933 move, Nixon’s August 1971 move, Volcker’s August 1982 move, Ben Bernanke’s November 2008 move, and Mario Draghi’s July 2012 move. It has become standard operating procedure for central banks, and it will persist until it no longer works.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“As long as the living standards of most people are still rising, these gaps and resentments don’t boil over into conflict.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“a result of the Bretton Woods Agreement, the dollar became the world’s leading reserve currency. This was natural because the two World Wars had made the US the richest and most powerful country by far. By the end of World War II the US had amassed its greatest gold/money savings ever—about two-thirds of all the government-held gold/money in the world, the equivalent to eight years of import purchases. Even after the war, it continued to earn a lot of money by exporting.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Representatives of 44 countries gathered in Bretton Woods, New Hampshire, in 1944 to make a monetary system that linked the dollar to gold and other country’s currencies to the dollar. The Soviet Union’s system was built around the ruble, which nobody wanted.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“the US has fought a number of conventional wars since World War II, most notably the Korean War in the 1950s, the Vietnam War in the 1960s and 1970s, the two Gulf Wars in 1990 and 2003, and the War in Afghanistan from 2001 to 2021. These were costly in terms of money, lives, and public support for the United States. Were they worth it? That’s for others to decide. For the Soviet Union, which had a much smaller and weaker economy than the US, spending enough to compete with the US militarily and maintain its empire pushed it into bankruptcy.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail