Principles for Dealing with the Changing World Order Quotes

“Think about all the things that we can’t imagine not having that were invented or discovered in just the last 150 years. Before we had them, nobody could have imagined them—e.g., the telephone (1876), the electric light bulb (1879), the internal combustion powered vehicle (1885), the radio (1895), movies (1895), the airplane (1903), television (1926), antibiotics (1928), the computer (1939), nuclear weapons (1945), nuclear power plants (1951), GPS (1973), digital cameras (1975), online shopping (1979), the”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“However, the “one person, one vote” democratic process has the drawback of having leaders selected via popularity contests by people who are largely not doing the sort of thoughtful review of capabilities that most organizations would do when trying to find the right person for an important job. Democracy has also been shown to break down in times of great conflict.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“By the end of the 1970s real GDP growth was around 2 percent, inflation was around 14 percent, short-term interest rates were around 13 percent, and unemployment was around 6 percent. Over the decade, gold surged and commodities kept up with rising inflation, returning around 30 percent and 15 percent on an annualized basis, respectively. But the high rate of inflation wiped out the modest 5 percent annual nominal return for stocks and 4 percent return for treasuries matched to equity volatility.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“How this evolution with big cycles around it happens also continues to evolve. For example, while ages ago agricultural land and agricultural production were worth the most and that evolved into machines and what they produced being worth the most, digital things that have no apparent physical existence (data and information processing) are now evolving to become worth the most.5 This is creating a fight over who obtains the data and how they use it to gain wealth and power.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“By the way, many of the European Renaissance innovations had already been in place in China for centuries because the Chinese discovered the key elements to produce it—e.g., the printing press, the scientific method, and the meritocratic placements of people in jobs—much earlier. One can think of China’s Neo-Confucianism, described earlier, as being like China’s Renaissance because, as in Europe’s Renaissance, it led to more logic- and evidence-based thinking and more inventive rather than religious worldviews.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed or Fail

“To reiterate, in the upwave, debt is increased and financial wealth and obligations rise relative to tangible wealth to the point that these promises to pay in the future (i.e., the values of cash, bonds, and stocks) can’t be met. This causes “run on the bank”-type debt problems to emerge, which leads to the printing of money to try to relieve the problems of debt defaults and falling stock market prices, which leads to the devaluation of money and in turn to financial wealth going down relative to real wealth, until the real (inflation-adjusted) value of financial assets returns to being low relative to tangible wealth. Then the cycle begins again.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed or Fail

“When individual countries have more power than the collectives of countries, the more powerful individual countries rule. For example, if the US, China, or other countries have more power than the United Nations, then the US, China, or other countries will determine how things go rather than the United Nations. That is because power prevails, and wealth and power among equals is rarely given up without a fight.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed or Fail

“As a natural consequence, all of the greatest empires developed the world’s leading financial center for attracting and distributing the capital of their times. Amsterdam was the world’s financial center when the Dutch were preeminent, London was when the British were on top, New York is now, and China is quickly developing its own financial center in Shanghai.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed or Fail

“Some people who struggled through them have even described these very difficult times as bringing about important, good things like drawing people closer together, building strength of character, learning to appreciate the basics, etc. For example, Tom Brokaw called the people who went through the 1930–45 period “the Greatest Generation” because of the strength of character it gave them.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed or Fail

“I also saw how, throughout time and in all countries, the people who have the wealth are the people who own the means of wealth production. In order to maintain or increase their wealth, they work with the people who have the political power, who are in a symbiotic relationship with them, to set and enforce the rules. I saw how this happened similarly across countries and across time.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed or Fail

“The most important and undeniable trend of technological advancement has been toward higher living standards. That trend is likely to accelerate in unimaginable ways. Beyond that, computerization is changing the character of decision making, making it faster and less emotional. As helpful as that is, it also poses certain dangers.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“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 will cause an opponent to capitulate. It also calls for the extensive use of psychology to influence opponents’ behaviors.11 Still, there have been numerous violent dynastic wars inside China. The few wars that were fought outside China were for the purpose of establishing China’s relative power and opening trade.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“300 years seems like a very long time ago to Americans, but for the Chinese, it isn’t long at all. While the prospect of a revolution or a war that will overturn the US system is unimaginable to most Americans, both seem inevitable to the Chinese because they have seen those things happen again and again and have studied the patterns that inevitably precede them. While most Americans focus on particular events, especially those that are happening now, most Chinese leaders view current events in the context of larger, more evolutionary patterns. Americans are impulsive and tactical; they fight for what they want in the present. Most Chinese are strategic; they plan for how they can get what they want in the future. I have also found Chinese leaders to be much more philosophical (literally, readers of philosophy) than American leaders.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Probably the most important thing I gained from studying the history of so many countries is the ability to see the big patterns of causes and effects. Shifting my perspective to the very long term felt like zooming out in Google Maps because it allowed me to see contours that I couldn’t see before and how the same stories play out over and over again for basically the same reasons. I also came to understand how having so much history to study has affected the Chinese way of thinking, which is very different from the American way of thinking, which is much more focused on what is happening now. Most Americans believe their own history is just 300 or 400 years old (since they believe the country began with European settlement), and they aren’t terribly interested in learning from it.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“In the Song, Yuan, and Ming dynasties, the government struggled to maintain a large enough money supply in metal coins and resorted to money printing, especially in times of war and natural or human-caused disaster. The problems with collecting taxes made the incentive to print even stronger. This caused high inflation or hyperinflation, making matters worse.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Based on my readings of history, my readings of existing conditions, and my understanding of how the economic machine works, the promises that are denominated in the world’s reserve currencies, most importantly the dollar, are too large and growing too fast to be paid in hard money. In other words, the debt that is denominated in these currencies is an overhang, so money will probably be printed to service debts and debt growth4 and interest rates will probably be held below inflation and economic/income growth rates. This reflects the fact that the major reserve currency countries are late in their debt/money/capital market/economic cycles and that wealth will probably be increasingly redistributed from those who have a lot of it to those who don’t have enough of it in one way or another. The extent to which these things will be true will vary from country to country, though it will likely be worldwide.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“All the empires and dynasties I studied rose and declined in a classic Big Cycle that has clear markers that allow us to see where we are in it. This Big Cycle produces swings between 1) peaceful and prosperous periods of great creativity and productivity that raise living standards a lot and 2) depression, revolution, and war periods when there is a lot of fighting over wealth and power and a lot of destruction of wealth, life, and other things we cherish. I”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“It struck me as odd that the Chinese, who were earning about a 40th of Americans on average, would be lending money to Americans, since rich people are in a better position to lend than poor ones. To me, it was a shocking reflection of how deeply Americans were willing to get into debt to finance their overconsumption and how much more the Chinese valued saving. It was also a reflection of how emerging countries that want to save in the bonds/debt of the leading reserve currency countries can lead those countries to become overindebted.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Over the decade, gold surged and commodities kept up with rising inflation, returning around 30 percent and 15 percent on an annualized basis, respectively. But the high rate of inflation wiped out the modest 5 percent annual nominal return for stocks and 4 percent return for treasuries matched to equity volatility.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“1935 tax bill, then popularly called the “Soak the Rich Tax,” the top marginal income tax rate for individuals rose to 75 percent (versus as low as 25 percent in 1930). By 1941, the top personal tax rate was 81 percent, and the top corporate tax rate was 31 percent, having started at 12 percent in 1930. Roosevelt also imposed a number of other taxes. Despite all of these taxes and the pickup in the economy that helped raise tax revenue, budget deficits increased from around 1 percent of GDP to about 4 percent of GDP because the spending increases were so large.5 From 1933 until the end of 1936 the stock market returned over 200 percent, and the economy grew at a blistering average real rate of about 9 percent. In 1936, the Federal Reserve tightened money and credit to fight inflation and slow an overheating economy, which caused the fragile US economy to fall back into recession and the other major economies to weaken with it, further raising tensions within and between countries.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“My point is that while these revolution/war periods typically lead to a lot of human suffering, we should never, especially in the worst of times, lose sight of the fact that one can navigate them well—and that humanity’s power to adapt and quickly get to new and higher levels of well-being is much greater than all the bad stuff that can be thrown at us. For that reason, I believe that it is smart to trust and invest in humanity’s adaptability and inventiveness. So, while I am pretty sure that in the coming years both you and I and the world order will experience big challenges and changes, I believe that humanity will become smarter and stronger in very practical ways that will lead us to overcome these challenging times and go on to new and higher levels of prosperity.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“History shows us that reversing a decline is very difficult because it requires undoing so many things that have already been done. For example, if one's spending is greater than one's earnings and one's liabilities are greater than one's assets, those circumstances can only be reversed by working harder or consuming less. The question is whether we can face our challenges honestly and adapt and change to meet them.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Real Wealth ≠ Financial Wealth. Real wealth is what people buy because they want to have and use it, such as a house, car, streaming video service, etc. Real wealth has intrinsic value. Financial wealth consists of financial assets that are held to a) receive an ongoing income in the future and/or b) be sold in the future to get money to buy the real assets people will want. Financial wealth has no intrinsic value.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“The biggest problem that we now collectively face is that for many people, companies, nonprofit organizations, and governments, their incomes are low in relation to their expenses, and their debts and other liabilities (such as those for pensions, healthcare, and insurance) are very large relative to the value of their assets. It may not seem that way—in fact, it often seems the opposite—because there are many people, companies, nonprofit organizations, and governments that look rich even while they are in the process of going broke.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“The degree of inventiveness and innovation in a society is the main driver of its productivity. An innovative and commercial spirit is the lifeblood of a thriving economy. Without innovation, productivity growth would grind to a halt. Innovations that allow a country’s workers to produce more relative to the rest of the world feed into their cost competitiveness, making them more attractive places to do business.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Because thinking about all of these determinants and their interactions is complex, I suggest that you keep the three big cycles in mind as the most important things to watch: 1) the cycle of good and bad finances (e.g., the capital markets cycle), 2) the cycle of internal order and disorder (due to degrees of cooperation and fighting over wealth and power largely caused by wealth and values gaps), and 3) the cycle of external order and disorder (due to the degrees of the competitiveness of existing powers in fighting for wealth and power).”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Everything that has happened and everything that will happen has had and will have determinants that make it happen. If we can understand those determinants, we can understand how the machine works and anticipate what will likely be coming at us next.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“one’s ability to anticipate and deal well with the future depends on one’s understanding of the cause/effect relationships that make things change, and one’s ability to understand these cause/effect relationships comes from studying how they have changed in the past.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“Jesus, Confucius, Mohammed, Buddha, Mahavira, Guru Nanak, Plato, Socrates, Marx, and many others, have conveyed approaches to life that were captured in books such as the Hebrew Bible and the New Testament, the Talmud, the Quran, the I Ching, the Five Books and Four Classics, the Analects, the Upanishads, the Bhagavad Gita, the Brama Sutras, Meditations, Republic, Metaphysics, The Wealth of Nations, and Das Kapital. These, together with the discoveries of scientists, artists, politicians, diplomats, investors, psychologists, etc., all encountering their realities and adapting to them in their own ways, are what determines a people’s culture.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

“As earnings from abroad fell, wealthy Dutch savers moved their cash into British investments, which were more attractive due to their strong growth and higher yields.9 Despite this, the guilder remained widely used as a global reserve currency. As explained earlier, reserve currency status classically lags the decline of other key drivers of the rise and fall of empires. Then, as is typical, a rising great power challenged the existing great power in a war.”
― Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail