The Changing World Order
A book by Ray Dalio, CEO Bridgewater Associates
I just watched a five minute clip from a brilliant summation called The Changing World Order. It’s based on a book by American Billionaire Ray Dalio, who is CEO of Bridgewater Associates.
It very neatly summarizes how the ‘world order’ financially is created, maintained, and then falls. Looking at the last 10 great empires he found definitive patterns that help us predict what comes next.
The pattern was startling in its regularity — about 250 years with an overlap of 10-20 years as a transition. Those transition periods were typically a period of conflict.
He looked at eight metrics to measure the power of an empire. These metrics indicate a country’s total power and at its height, the US empire was the most powerful by these metrics. They were:
Education
Inventiveness + Technology development
Competitiveness in global markets
Economic output
Share of world trade
Military strength
Power of their financial center
Strength of their currency as a reserve currency
Each of those metrics was chartable and showed a common curve declining at the same time to contribute to the downfall of the empire. Because they can be empirically measured, you get a picture of where each country is at the moment — a snapshot if you will — if they rising or declining.
His data clearly shows that America is in the decline of it’s empire, and China is again on an upswing. The transition from one empire to another always is accompanied by conflict. Why? Because as Ray Dalio puts it “Leading powers don’t decline without a fight.”
One of those metrics preceded the others; education drove the other metrics, without it, I doubt they would happen. Each metric spurred the next, with their currency becoming a reserve as more countries used it as a means of measuring everything else.
Today, the world does business in US dollars. But that is changing - or will change as the US crashes its own markets and destroys its own businesses. Being the reserve currency means the world has confidence in that country for being stable.
And right now, the US is anything but stable. The stock markets show this quite clearly. But the Chinese financial situation isn’t much better. They are experiencing some major problems themselves, you just don’t hear about it because they try to keep it under wraps. But if you know who to listen to, there are signs that they are themselves in a bit of a crash.
So who will step up and become the leader of the next world order? Could it be Canada? Australia? Dalio is showing that it’s probably China, but I’m not as sure as him.
Typically, the conflicts during the transitions are wars between competing countries. We’re in a war right now — albeit not a military one, yet. I don’t think the ‘next’ war will be nuclear, because as a species we understand that would destroy all of us. So my bet is on a financial war, a war of wits, with possible military skirmishes. Let’s hope so.
Anyway, I’m speculating. So you can choose to ignore me — or do your own research, which I completely encourage. Add your thoughts to this and let’s start a conversation.
Ray Dalio’s book is available at Amazon and the full title is Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail.
There is also a YT video, of the same name at this link: