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Ray Dalio – Principles for Dealing with the Changing World Order – 4PT

The times ahead will be radically different from those we’ve experienced in our lifetimes, though similar to many times in history. ~ Ray Dalio

Ray Dalio was born on August 8, 1949. He is a self-made billionaire investor, hedge fund manager, and philanthropist. He is the founder, co-chairman, and former chief investment officer of Bridgewater Associates, one of the world’s largest hedge funds.

Dalio was raised in a modest, middle-class family on Long Island, New York in 1949. His father was a jazz musician, and his mother was a homemaker. He began investing at a young age and started his first business, a golf caddy service, when he was just 12-years-old. He attended Long Island University and later transferred to Harvard University, where he studied finance. During his time at Harvard, he traded commodity futures and later founded Bridgewater Associates out of his apartment in 1975. The company initially focused on currency trading, but later expanded its investment strategies to international markets. Under Dalio’s leadership, Bridgewater Associates became known for its unique investment approach based on economic principles and systematic analysis. The firm utilizes a concept called “Principles,” a set of rules and guidelines that govern decision-making within the company. The firm is always refining a computer algorithm that has a good success rate of predicting growth in domestic and foreign markets. The firm generally requires that clients have at least $7.5 billion of investable assets in order to put money into the hedge fund. As of 2024, Bridgewater had posted the second highest gains of any hedge fund since its inception in 1975.

Dalio’s investment strategies and economic insights gained him recognition and made him one of the wealthiest individuals in the finance industry. Unlike so many professional prognosticators, he is not simply a seer of world events as part of a think-tank funded by the US government or a special interest group. On the contrary, his ability to foresee economic cycles based on what has happened in the past is precisely how he built his fortune. From a modest beginning, he was able to rise to be 107th richest person in the world according to the Forbes 500 list as of 2023.⁴¹ For this reason, I value Dalio’s analysis of national economies and where each is on the growth and decline curve.

Ray Dalio’s book, The Changing World Order, provides an insightful analysis of global power dynamics and its impact on economies, markets, and individuals. Dalio delves into history to identify recurring patterns and principles that shape the rise and fall of empires and the current shifting global order. This introduction sets the stage by emphasizing the importance of understanding the forces driving geopolitical and economic changes in order to navigate the turbulent times ahead. Dalio’s goal is to equip readers with a comprehensive framework and timeless principles to navigate the changing world order effectively.

The introduction to The Changing World Order describes how Dalio first noticed that there was a perfect storm brewing that indicated the end of a 100 year big economic cycle. This could end the United States’ dominance as a world economic, political and military power. Dalio also noticed that although these converging trends had not occurred in his lifetime, they have happened many times before in history.

Huge national debt
Zero or near zero interest rates
Massive printing of money in USD, the Euro, and Japanese Yen
Big political and social conflicts within these countries
The largest wealth, political, and values disparities between polarized groups in more than 100 years
The rising of a world power (China) to challenge the existing world power (US)

The last time this occurred was after WWI, from 1921 to 1939, a crisis period in Western Europe that lasted about 18 years. Likewise, the beginning of the current crisis period can be marked at the year 2008 for the US and will probably conclude by 2028. This realization sent Dalio on an in-depth research project seeking patterns of small and big economic cycles in the world’s major empires for the past 600 years.

The 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. (Dalio 3).

According to Dalio, one of the most amazing things about these Big Cycles is that they rise and fall almost like clockwork every 80 to 100 years. No system of government, economy, currency or empire lasts forever. Historians and political philosophers have long been aware of this, but almost everyone is surprised when the end of empire stages begin to occur in their lifetimes. Rarely, is an empire able to survive a big crash, reboot its economy, and reclaim its status as its region’s hegemon.

Great empires typically last about 250 years. There is a first period of slow growth in the shadow of the prior rival power. Then the Big Cycle – the rise and decline of the empire – typically lasts about 100 years with the peak coming at the midpoint of 50 years. That is, the long term debt and capital market cycles last 100 years, but within that period are at least two smaller 50-year “reset” cycles in which the reserve currency is reinvented and the national debt liabilities restructured. Within those cycles are smaller five to seven year cycles, which are determined by short term debt and capital market highs and lows.

Dalio admits that this model is over simplified, but insists that “to see the big picture, you can’t focus on the details”(15). He describes with hard data how a new world order emerges after the previous order crashes. The global paradigm is usually attended by a series of meetings between the leaders of one or more nations who decide what this new order will be.

In “Part 2: Samuel P. Huntington – The Clash of Civilizations,” I discuss the geopolitical changes that are the inevitable consequences of these economic changes. What surprised me as I was first reading Dalio’s book was seeing the following news item about an economic summit between Chinese and Russian leaders in Moscow. At the end of the meeting, President Xi Jinping said the following.

Right now there are changes – the likes of which we haven’t seen for 100 years – and we are the ones driving these changes together.

~ China’s President Xi Jinping, speaking to his Russian counterpart Vladimir Putin following talks in Moscow in March 2023

⁴¹ “Real-Time Billionaires List.” https://www.forbes.com/real-time-billionaires/.

Book

The Fourth Political Theory in Biblical Perspective

Jay Rogers

A Christian civilization is emerging from under the wreckage of Modern culture.

A Christian civilization is emerging from under the chaos that has been strewn throughout the wreckage of Modern culture. As dawn breaks through the darkness, many will be awakened to a new understanding of the fulfillment of the Law through love and grace. Many will comprehend, as if for the first time, what it means to be truly human. We are being prepared to overcome a world system that has denied God, faith, family, and even humanity itself. This book analyzes and critiques several leading experts in the theory of the rising multipolar world including –

• The Changing World Order by Ray Dalio
• The Clash of Civilizations by Samuel Huntington
• The Fourth Political Theory by Aleksandr Dugin