Principles for Dealing with the Changing World Order by Ray Dalio - YouTube

Ray Dalio emphasizes that the times ahead will be significantly different from those we've known, yet similar to historical patterns. His study of the last 500 years reveals recurring cycles of empire rise and fall, particularly examining the Dutch, British, and US empires. Dalio shares insights in his book, Principles for Dealing with the Changing World Order.

The journey begins in 1971, when the US defaulted on its debts by severing the dollar's convertibility to gold. This event was a turning point that led Dalio to realize the importance of historical patterns. He learned that when governments print money to alleviate crises, assets like stocks, gold, and commodities typically rise in value.

Dalio identifies three big things that have not occurred in his lifetime but are now shaping the future: countries printing money to pay debts, internal conflicts due to wealth and value gaps, and rising external conflicts between great powers, notably China and the US. These elements have historically led to significant shifts in domestic and world orders.

An 'order' refers to a system of governance within or between countries, usually established after major conflicts. Dalio explains that internal orders change at different times than world orders, often after wars. For instance, the current American world order was established post-World War II, with the US as the dominant power.

Empires rise by excelling in education, innovation, competitiveness, economic output, military strength, and establishing a reserve currency. However, the seeds of decline are embedded in success, as prosperity leads to less competitiveness, increased borrowing, and growing wealth gaps. Eventually, financial bubbles burst, leading to money printing, inflation, and increased internal conflict.

As empires decline, they face internal economic weakness, political strife, and costly external conflicts. The loss of faith in the empire's currency and debt marks the end of its cycle. New winners then emerge, restructuring the old systems and establishing a new world order.

Dalio concludes that while most empires inevitably decline, it's possible to reverse this by improving vital signs and making hard decisions. The key to navigating these times well is to earn more than we spend and treat each other well, focusing on strong education and competitiveness. He invites readers to explore more in his book and join the conversation about these principles.

The original article: https://m.youtube.com/watch?v=xguam0TKMw8