According to Wikipedia, Ray Dalio is an American billionaire investor and hedge fund manager, who has served as a co-chief investment officer of the world's largest hedge fund, Bridgewater Associates, since 1985. He founded Bridgewater in 1975 in New York.
I have heard about Ray Dalio before. I have known him as someone who has a good understanding of economy, finance and markets. From time to time I would see his name talking about current market conditions, economy and finance. There was a time when he spoke against bitcoin. And there was a time when he spoke in favor of bitcoin. The main thing I remember about him is watching his video titled How The Economic Machine Works. I don't remember all the details of the video, but I remember that I really liked it. It was interesting 30 minute video, explaining how economy works in simple terms.
Today, when I saw another video of his show up in my feed, I had to watch. It has a very interesting title, Principles For Dealing With The CHANGING WORLD ORDER. The video was published two weeks ago and already has 7.3 million views. If you would like to watch it yourself, feel free to follow the title link above.
The topic of the video is very interesting, especially these days with all the chaos in the world, economic uncertainties, and possibilities of financial crises. Knowing that Ray Dalio is a successful investors with many years of experience in markets, and having a good educational experience with his previous educational material in the past, it seemed a good idea to watch what he has to say these days. After watching the video, I was not impressed with it at all.
While I didn't find this particular video as useful as I did with his video about the economic machine, it still has an educational and entertainment value. It does go a little bit into history to make a point, explains how global reserve currencies work and why they failed in the past. It is a well made video and can be entertaining to watch as well. But I would like to tell you why I didn't like it.
It seems to be a promotional video for his new book with the same title. It looks like it was made to sell his book. He tells the viewer in the beginning that he will recommend them to read the book to learn more. I wouldn't mind to learn more and buy the book. But the video failed in the first place delivering in what it promised. For this reason, I am assuming the book would be a disappointment as well.
The story starts out really good, and make the viewer wonder what will be revealed in the end. Nothing is revealed in the end. It pretty much goes into more details of the summary presented in the beginning. The idea presented is not a unique one either. The core idea throughout the video is, history has shown that empires established the world order and their currencies became global reserve currencies. This gave them more economic power. Because they could print as much as they like, and nobody could do anything about it. At the decline of each empire the next one took over and continued the same cycle. First was the Dutch Empire, then the British Empire, then the US Empire. And now US Empire might be in decline too.
Of course know the history can be somewhat of an indicator what future may present. But not always. Certain things and patterns do tend to repeat. But not always. Even in this example of global financial systems, there were always other players involved as well. It doesn't always have to be one dominant empire. Recognizing patterns is a good skill to have and may present edge over other in the markets. But patterns demonstrated through the life cycles of empires may also be misread, especially when there are biases involved.
Now the problem is, even Ray Dalio himself in the end of the video doesn't make the conclusion he has been trying to suggest throughout the video. He dedicates the entire video to suggest that US Empire is in decline, so is US Dollar as a global reserve currency. He goes to suggest the next contender for becoming the empire and whose currency may become a global reserve currency is China. He is spending all this time to make this case. But at the end, he doesn't say it. He doesn't make that clear conclusion. But rather says, everybody should make their own conclusion.
The growth of Chinese economy and its global role has never been a secret to anybody. This is a not a unique idea. Economists, academics, politicians have been talking about growth of Chinese economy for years now. So, what? Growth of any countries economies are good thing. It lifts up many from poverty, provides better lifestyle. There are more countries whose economies have been growing in recent years and decades.
Of course not all countries have ambitions in becoming empires and having major role or say in global political and economic affairs. Usually such ambitions can be identified with the growth and focus on military capabilities of one country. If US global influence were to decline, I can see China contending for the global leader position. The question is, would it really want to? Maybe, maybe not. But more important question is, or the possibility Ray Dalio fails to address is, there are many other options.
We live in a different world compared to the entire human history. The technological advancement put us in a very different position then we were in at any point in our history. Technological changes are just too fast to keep up with. No history can foretell how the technological future will look like in a decade or a century. For the most part of the history we didn't have these computer technologies and they weren't part of this equation.
So, I would suggest, there will not be one global leader. There will be no need for a leader. It will be a cooperation and collaboration of many countries. No one country will have ultimate power. Even their military wouldn't mean much.
The video makes a huge emphasis on global reserve currency and how it is connected to the leading empires. He doesn't mention bitcoin and blockchain technologies at all. There is very good chance that bitcoin will become a global reserve currency. Just like people are tired of their central banks manipulating native currencies and continuously devaluing them, countries are are also tired of seeing manipulations by global reserve currency issuers.
If US Dollar were to decline and be removed as global reserve currency, I doubt it will be due to another empire rising to power, bur rather the failure of the fiat monetary system. The world need a fair system where all countries can participate in a permissionless manner. Bitcoin offers this solution.
Even if you don't agree this will be the case, ignoring bitcoin I think would be a mistake. Even if bitcoin doesn't become a global reserve currency or asset, it will continue to play a big role in shaping the future of the global monetary system. The video doesn't address these innovative technologies at all. Yet the purpose of this technology is to improve the monetary systems and policies.
After watching the video, despite my criticisms, I found value in it because the points it makes about traditional monetary system actually prove how continuing with the same system is not a good idea, especially when there are better alternative today.
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I literally just watched this the other night, good lesson on history and empire. Very interesting information on the world reserve currency and what we can learn from the past. Makes me wonder if usd is devalued then so would usd backed stablecoins. Gold backed stablecoins are interesting and if BTC becomes less volatile then perhaps even BTC backed stablecoins.
It does have some good information to think about. Good point about stable-coins. At least with stable-coins like HBD it is possible to earn 12% APR to offset devaluation due to inflation.
Maybe sovereign currencies don't have to be backed with BTC, 1 for 1. For example, they don't have to have one MadeUpCurrency backed by one satoshi. Instead, they can have reserves in BTC and prove what they have through public ledger and the value of the currency they create/print will be determined by the market. This way there can be a fair competition among sovereign currencies.
BTC will never be less volatile.
It's quite clear to me that DEFI will create a superior coin.
One that actually has elasticity and exponentially larger liquidity pools.
One with much better tools than central banks.
Directly owned by the community itself.
This model will be copied a thousand times over.
Bitcoin will stand in the background as a beacon of security.
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I was thinking over a longer time span when BTC might be more stable. You're right about DEFI creating a superior coin as specific features can be engineered. I agree that algorithmic-based stablecoins are much more efficient.
I was more wondering about the stability of USD backed stablecoins (collateralized off-chain). In terms of these stablecoins being backed by another currency, what sort of hard currency would you suggest? A precious metal? A basket of tokens/currencies?
stable prices are a lie by design.
Central banks 2 goals = max employment, stable prices.
What does it mean? By nature, it isn't.
Honestly I am not sure if bitcoin will be there forever as a global value exchange media despite my optimistic view. However, one thing I am very confident about is that bitcoin and blockchains have enlightened the creative minds of the new generation.
Now they know that value cycles can exist without coercive power and that notion itself is enough for creating a brand new order of future economy. With or without bitcoin.
That is the most powerful thing in the world and nobody can take it away.
100%. Bitcoin has played a big role in educating the public about money, fiat, and financial systems and their flaws.
I watched this video too... and while the video is extremely well done, and I thought it was pretty clear that Ray thinks China could very well hold the new global reserve currency and become the new world leader, I think that China has a bunch of its own problems that might hold it back. The real estate crisis, the aging population and the water issues to name a few.
I disagree with you about there not needing to be a global leader.. I think there will always be a single country that stands out and others look towards for leadership. I think it's just natural for one country to be doing better than all the others.. and I liked Ray's point that it's not a single decision, but essentially the market deciding over time.
I can't imagine Bitcoin becoming the global reserve currency... it's way too slow, way too scarce, too power intensive and not adopted enough. I'd honestly put money on the Euro being the new global reserve currency if the USD slips.
Too many wars and two much corruption with any competition for global leadership. I think world would be a better place if every country had say and United Nations actually worked. One country or union of countries controlling the global financial system wouldn't be fair for the rest of the world. That's why a decentralized solution where no single country or group of them is in control, may serve everybody better. Bitcoin can be that solution. It doesn't have to be fast. Being scarce is a good thing. Also, every bitcoin has 100 million Satoshis.
I agree if USD were to lose its status as global reserve currency, Euro will have a better chance in replacing it. The problem is, it is just the same thing and doesn't offer anything new.
I agree that decentralization of power is desirable, but I think it's important to be aware of all the dangers it's fraught with, and the safe guards that would be needed for smaller self-governed entities (that mostly doesn't tear each others guts out) to be the norm. With a more divided power balance, the chances of voilent conflict drastically increases – which is pretty dangerous with stuff like nukes being a thing.
That being said, I don't see scarcity as a problem for BTC being a world reserve currency either – nation states not being able to indiscriminately print it is actually one of it's best selling points, and a way to break the wheel in regards to debt cycles.
Neither do I see the speed of it being a problem – buying coffee isn't exactly what a state is looking for in a reserve currency (that said, buying coffee works just fine with a 2nd layer solution like the lightning network).
When it comes to power intensivity, the USD actually requires immensely larger power consumption to operate, and BTC also scales really well in that regard (doesn't really require increased power input, even if the market cap grows drastically).
I would be more worried about stuff like massive solar winds knocking out (parts of) the grid, and quantum computers breaking sha-256 (as far as I understand, that would mostly affect mining – but that sounds like a huge danger for the security of the network as well). However, those are probably because I don't know enough about it, and as such are fears based more on my ignorance, than actually being well founded.
I also think there always will be one entity that is more powerful than others, but I would say that it's actually rather rare, and maybe even unique – historically speaking – that you have a unipolar world, where one nation can dictate the world order at will (meaning there isn't really a counter balance to their reign).
During the bronze age, it swang between different civilizations being dominant in the Mesopotamian and Mediterranean area – such as Sumer, Egypt, Babylon and Assyria. However the weaker civilizations always ganged up on the stronger one, when they had to, and as such you always had a multipolar power balance. Not to mention all the horse tibes that rode in and wrecked havoc whenever they felt like it. I guess the Egyptians were sort of a sole power during the dark ages between the bronze age and iron age/early antiquity, but they were also super wrecked after the bronze age collapse, and didn't really have much surplus to spend on dominating others.
Even regionally, the Greek, Macedons and Romans had to deal with stuff like Carthage and the Persian Empire, and ofc the Indian and Chinese Empires were a thing back then as well (although no or very limited interaction occured between Rome and the Chinese). During the middle ages, you had the Byzantine Empire and Persians, but Charlemagne and the Franks challanged those, and later the Muslim Caliphates balanced out the fractioned European power base (for the best example of multipolarity, take a look at a map of the Holy Roman Empire 😁 ). That's until the Mongols briefly conquered most of the known world.
The Italian city states and later the Portuguese, Spaniards, Austrians (Habsburgers), Dutch, and briefly the French again, all had their time in the spot light – but they hardly dominated the world. The British Empire came close, but leading up to the first world war, the dominance far from ensured that the British would come out ahead against the up and coming Germans. Even with allies such as France and Russia they had to sacrifice their status as a global world leader to win, after the fine tuned treaties and complex alliances in Europe created by Bismarck broke down with his death.
Dalio consider the debt cycle to be the most important indicator in regards to where we are in these cycles of changing world orders. When you control the world reserve currency (Dutch guilder and British pound before the USD), the temptation to indiscimenatly print always wins – and with the enormous debt that the US has been able to accumulate, we're seeing typical symptoms like the 2008 crash, dramatically increasing wealth disparity, and living standards stagnating or even devolving for normal citizens etc.
One of Dalio's points is that during these transitions, when one entity is attempting to dethrone another, you enter a period with more uncertain and multipolar power dynamics – with highly increased risk of economic collapses, and both for internal and external conflicts.
It always seems counterintuitive to those living through it though, as we got a status quo bias towards thinking the future will always look like the presence, or like our past – and we have all just experienced a unipolar world with the US as the only dominant world power. I guess most of us aren't even old enough to remember much from the cold war, when the USSR made the world more bipolar. So to us, it's as hard to imagine a world without the US as a single world leader, as it was for people to imagine a world without the British Empire during the Victorian era. In reality though, a unipolar world has only occured for about 30 of the last 4000 years or so – we just happens to have been living through this historical abnormality.
The issue with China is a lot of their companies that are being heavily funded by their government and are still defaulting on loans. They can’t even pay basic employee salaries and have not for months.
US imports from China dropped like a rock during the pandemic. China has always struggled with overproducing and being left holding the bag taking decades sometimes to offload everything. If the dollar dies so will many of the biggest importers of Chinese goods around the world.
I find it rather odd how many companies in the US have been advertising that people need to have exposure to the Chinese markets. This seems like people trying to offload their positions to get out of china leaving their retail investors holding the bag. China has been on a massive spree of trying to broker new and bigger trading partners for a while now I don’t think it will be enough.
The game is so rigged against retail investors it’s disgusting. Between dark pools and market makers they never stood a real chance no matter what markets they are in. With the way companies like Robinhood make their money it’s not that shocking.
This is a great point. All of the economies being interconnected, any serious problems with US dollar and its economy would create problems to other countries as well. Fall of USD could even mean fall of all fiat systems around the world. China's economic success was partly to their ability to produce anything and everything and sell them everywhere. There are many more countries using the same strategy now and China has many competitors. Without these global marketplace Chinese economy would have difficulties too. I guess that can be said about any economy.
The video sounds like one of those circular promotional things like the ones created by all sorts of financial and self-help gurus. They have books that give you an incomplete story but continuously talk about their seminars that they hold around the world that they push on the reader throughout the entire book. Then the seminars are more of the same thing, an incomplete story that does nothing but push their book on you. It ends up being just a big circle jerk, and the only information they provide in the end is basically just about having a certain mindset. Like having the right mindset will change your life lol. (There is some truth to that of course but often it's not why you originally bought the book).
Anyway, your synopsis of the video actually sounds interesting regarding reserve currencies and the rise and falls of empires. China as a rising empire has been talked about a lot and you can see it's workings all over the place. It has taken over the majority of global manufacturing obviously and I even suspect that it is the reason for the insane housing market in Canada at the moment, which is mostly due to foreign investors driving up the prices. They are playing a strong game right now that's for sure.
I recently read Principles for Dealing with the Changing World Order, and really liked the book. If you contemplate getting it as an audio book, make sure to check out the included pdf with tons of stats and graphs as well!
Regarding being a super power, he (correctly, I think) separates it into different key determinants, where military power is one – other determinants being education, innovation and technology, competitiveness, trade, economic output, financial center and reserve FX status.
BTC could potentially remove the reserve FX status from the eqution, and longer term de-fi could remove the need for financial centers. However, there would still be several other axies to compete along for different groups (it being nation states, coorporations or internet communities).
As I perceive it, Dalio's material is far from a money grab. He got more than enough of it already, and also he's providing a ton of additional free content, that is kept updated. Check out these papers for instance. To me it seems that he really care about these subjects, and is driven by a sincere urge to educate and share the knowledge he has accumulated over the years.
If you're a bit of a history buff, I'm currently reading "The Storm Before the Storm: The Beginning of the End of the Roman Republic", which certainly reminds me of today's situation in the US. Note that it's not the fall of the Roman Empire, but of the Republic – so the period leading up Caesar seizing power. Maybe I'll write a post on it after having read the whole book... 🙂
You and others who commented positively about the video have changed my mind. Perhaps I was just disappointed not to see bitcoin mentioned at all. I won't give up on Dalio, not yet. You are right, he does offer a lot of interesting educational material. Thanks for the link to the papers.
Happy to hear! Understand your disappointment, but always impressive when someone are able to change their mind – Guess Dalio and you makes it at least two. 😉
For being a baby boomer that has made his fortune in the old financial system, Dalio has become surprisingly positive to BTC and crypto over the years – say compared to Warren Buffet and Charlie Munger, or Jamie Dimon. Even though their companies got some funds invested in "crypto firendly companies", their rethoric is outright hostile.
Dalio confirmed back in May last year that while being concerned about regulation, he still own some BTC himself. Also pretty fresh news that Dalio's hedgefund Bridgewater – while not investing directly in BTC or crypto – is reportedly dipping in and backing a crypto fund.
Yes, I have heard in the past that he had positive attitude towards bitcoin.
I watched this one recently and it opened some more areas to think about. His YT channel has shared his interview about BTC and expressed an open mind about the tech. The YT video on the book was an effective promotion and it made me want to search for a hard copy available as soon as I finished.
by Ray Dalio I have read a part of the book “the principles of success” and I admit that Ray Dalio gives excellent advice.
Hey @geekgirl !
I started reading this book recently (see the #Leofinance cameo, hehe):
https://leofinance.io/@alex-rourke/the-times-ahead-will-be-radically-different-from-those-we-ve-experienced-in-our-lifetimes
I've quickly found it to be very interesting with lots of valuable information. I'd love to discuss them with you in future posts :)
@scaredycatguide is an avid Ray Dalio reader.
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Principles for Dealing with the Changing World Order examines history’s most turbulent economic and political periods thereby revealing why the times ahead will likely be radically different from those we’ve experienced in our lifetime but similar to those that have happened many times before. Dejavu , Lol .
It's an interesting video. By looking at history, you can see definite patterns and learn from them. I don't really believe him with everything but it makes me wonder if there is going to be another war before things reset.
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I think that the more technology advances and people rely heavily on it, but people's awareness begins to decline and the intelligence of the individual decreases, as the abundance of information and the ease of finding it makes it worthless. like the book, this is the first successful step fo having Principles success
Do you think that China companies must end relation with government and became leader by itself to find solution of salaries?
I admit, watched his video only to half. It was educative to learn again that we need to fight the printer with some assets. And like you say, the world forces are changing through intervals. Will China take the lead? As our western society starts to mimic their "democratic" approaches, I tend to believe they are already forefront. You know how good they use their social score? They are masters, we will just become the learners. I hope not:)
It's good to try and learn for all different people and differing points of view. Even is it's just for understanding, then its something that you don't agree with or feel is right. Good to just try see and understand.
This is great. It makes you appreciate things more, not take things for granted. I think to be a world leader you should be able to solve the world's problem. Be more resilient and to listen and flexible. Give and take is important. !
Someone should tell him that the next contender is not China's currency, but could be Bitcon or a cryptocurrency.
This is a very informative post.
I agree with you...
Talking about the changing world order without talking about a disruptive technology such as Bitcoin is to omit the most critical aspect of the changing world order.
I personally do not see Bitcoin becoming a global reserve currency for the sole reason that it is unstable...
Bitcoin has experienced extreme fluctuations in value and that puts a lot of merchandise tied to it at risk...
World reserve Currencies being tied to the supremacy of a state is the past... And while it would certainly be the case that a lot of history is repeated, disruptive technologies make it impossible to completely repeat history.
With the amount of uncertainity going on. Many will give advice confidently and yet they are merely speculating and hoping something they say play out..Ray gives great advice i just hope he doesn' t end up loosing credibility as he seeks to be relevent
To me , china can't become world leader now , because they have some challenges that they are facing currently now. I think that ,there will be a time one country will be announce as a leader. I don't believe that bitcoin becoming global reserve currency.
I stopped at 18:28. Very interesting and very educational video. It reminds me of that "temporary" suspension announced by Nixon that lasted 51 years already. This tells us that it is not really easy to read the civil government's intention behind public announcements.
I will take dinner for a while and will continue watching later.
Thanks for sharing!
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