Ray Dalio

What's happening now with money, debt, and credit has never happened before in our lifetime. But it has happened many times in history, which is why I believe studying the past is so important. The same cycles repeat over and over again, and there are important lessons we can learn from those experiences. If we apply that understanding to the issues we face today, we can increase the chances of positive geopolitical and economic outcomes. That’s good for all of us. I enjoyed meeting with the IMF to discuss this and answer questions about my new book, which dives deeper into these topics. It’s called How Countries Go Broke: The Big Cycle, and it’s available now. If you’re interested in learning more about our collective debt burden — and what steps we can take to solve these issues — I hope you will read the book (available at all booksellers) and let me know your thoughts. #principles #raydalio #economics #history #howcountriesgobroke

History shows us that having too much debt during an economic downturn leads to a classic, self-reinforcing cycle where: 1) The empire can no longer borrow the money to repay its debts 2) It prints a lot of new money, which devalues the currency and raises inflation 3) Living standards decline, leading to the rise of political extremism 4) Turbulent economic conditions undermine productivity and there is conflict about how to divide the shrinking resources 5) Populist leaders emerge pledging to take control and bring about order #principles #raydalio #history #debt

The basic picture has not changed — if the US doesn’t cut the deficit to 3% of the GDP, and soon, we risk facing an economic heart attack in the next three years. The good news is that these cuts are possible. If we change spending and income (tax returns) by 4% while the economy is still good, the interest rate will go down as a result and we’ll be in a much better situation. And we know this kind of balance is possible because it happened between 1991-1998. My fear is that we will probably not make these needed cuts due to political reasons, and will have even more debt and debt service encroaching on our spending that will ultimately lead to a serious supply-demand problem.

Here’s a peek into the audio recording of my new book, How Countries Go Broke: The Big Cycle. This new book explains what I've learned about the mechanics behind big debt cycles and debt crises, and how they help drive the Overall Big Cycle, which is especially important to understanding what is happening today.   I hope that you find it helpful in navigating the interesting times ahead.   If you're an audiobook listener and are interested in the book, it's now available to order at the link in my bio. 

#howcountriesgobroke #principles @Simon & Schuster Audio

So much of our current political and economic climate can be explained by debt cycles— and how those cycles build on each other over time. I explain why in my new book, How Countries Go Broke. But if you’d like more context on how all of these pieces come together, I recommend you watch my 30-minute explainer “How the Economic Machine Works” on YouTube.

If you study the patterns of history, you find interrelated cycles in which global economic and political orders rise and inevitably break down due to specific cause-effect relationships playing out through time. In my research, I’ve found that when you have the combination of the monetary order breaking down — like a debt crisis — and the internal political order breaking down, you have a very serious situation. I believe we are facing one of these inflection points today. With our current levels of prosperity, it can be difficult to see this happening in real-time. But when you step back and look at the mechanics, the broader picture begins to emerge. I recently had the opportunity to discuss this perspective with the IMF. And for those who are interested, I dive into what these mechanics are and how they work in my new book, How Countries Go Broke: The Big Debt Crisis — specifically Chapter 8. I hope you read it and let me know if you see things the same way. #principles #howcountriesgobroke #economics

What happens when a country mismanages its debt? In 1990, Japanese policymakers decided to deal with its debt obligations by printing a lot of money to buy bonds. They further devalued the currency by giving bondholders significantly lower interest rates than in the US. As a result, Japanese bonds lost 45% relative to US bonds and 60% relative to gold over the next few years. That had a real impact on the average Japanese worker, who lost a significant amount of buying power — and those impacts are still felt today. My new book, How Countries Go Broke: The Big Cycle, breaks it all down for you. #raydalio #principles #politics #economics

Today is the launch day for my new book, How Countries Go Broke: The Big Cycle. I wrote this book because I believe now is a critical time when it comes to the global debt burden. I’ve spent a lot of time over the last 50 years as a global macro investor finding the indicators of debt problems, and I want to pass along what I’ve learned so that policymakers and individuals can try to deal with our current situation well. Through studying history, I’ve come to realize that everything happens due to cause-effect relationships that can be studied and understood. So reality works like a perpetual motion machine that began an eternity ago and will take us into the future. That perspective has driven my approach to life which has led to whatever success I have had. And I hope it will help others better understand how we got where we are, and what we need to do next to avoid bad outcomes for everyone. Our current debt situation has implications for almost all markets and economies. So if you’re interested in learning more, I hope you’ll give it a read — and I’m excited to continue exchanging ideas about this with you on social media. You can find a link to order the book in my bio. And as always, I welcome your thoughts. #principles #raydalio #debt #economics #history

An order is a governing system that helps people deal with each other in a structured way. There are internal orders for governing within countries, and a world order for governing between countries. Orders typically change after wars, when revolutionary new forces defeat weak old ones. When this happens, new agreements and treaties are signed that detail how global governance and monetary systems will work moving forward. And a new world order begins. #principles #raydalio #history #bigcycle