Principles for Dealing with the Changing World Order 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 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.
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Excerpt. © Reprinted by permission. All rights reserved.
The times ahead will be radically different from those we’ve experienced
in our lifetimes, though similar to many times in history.
How do I know that? Because they always have been. Over the last 50 or so years, in order to handle my responsibilities well, I have needed to understand the most important factors that go into making countries and their markets succeed and fail. I learned that to anticipate and handle situations that I had never faced before I needed to study as many analogous historical cases as possible to understand the mechanics of how they transpired. That gave me principles for dealing with them well.
A few years ago, I observed the emergence of a number of big
developments that hadn’t happened before in my life but had
occurred numerous times in history.
Most importantly, I was seeing the con uence of 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 con icts within countries, especially the US, due to the largest wealth, political, and values gaps in roughly a century; and the rising of a new world power (China) to challenge the existing world power (the US) and the existing world order. The most recent analogous time was the period from 1930 to This was very concerning to me.
I knew that I couldn’t really understand what was happening and deal with what would be coming at me unless I studied past analogous periods, which led to this study of 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, I needed to study the mechanics behind similar cases in history—e.g., the 1930–45 period, the rise and fall of the Dutch and British empires, the rise and fall of Chinese dynasties, and other SW. as
in the midst of doing those studies when the COVID-19 pandemic struck, which was another one of those big events that never happened in my life but had happened many times before. Past pandemics became a part of the study and showed me that surprising acts of nature—e.g., diseases, famines, and goods—need to be considered as possibilities because those surprising big acts of nature that rarely comes along were by any measure even more impactful than
the biggest depressions and wars.
As I studied history, I saw that it typically transpires via relatively well-de ned life cycles, like those of organisms, that evolve as each generation transitions to the next. In fact, the history and the future of humanity can be seen as just the aggregate of all the individual life stories evolving through time. I saw this store together as one all-encompassing story from the beginning of recorded history up to this moment, with the same things happening over and over again for basically the same reasons, while still evolving.
By seeing many interlinking cases evolve together, I could see
the patterns and cause/effect relationships that govern them and could imagine the future based on what I learned. These events happened many times throughout history and were parts of a cycle of rises and declines of empires and most aspects of empires—e.g., of their education levels, their levels of productivity, their levels of trade with other countries, their militaries, their currencies, and other markets, etc.
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