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Dalio emphasizes the reality that debt is an integral part of modern economies. The relationship between money and debt is depicted as a circulatory system: credit enables spending, which, in turn, leads to the accumulation of debt. However, this debt can begin to suffocate economic growth as it creates a supply-demand mismatch. Currently, a significant portion of government budgets—about $1 trillion in the United States—is dedicated solely to servicing interest on debts. Inadequate demand for debt leads to escalating interest rates, further complicating an already precarious situation.
The Five Forces Shaping Our Future
To better understand the current landscape, Dalio identifies five fundamental forces driving economic and geopolitical conditions: