Ray Dalio runs the world’s largest hedge fund. And he thinks that the world order is about to shift.
A prolific investor, Dalio has all the accolades, credentials, and experience you'd expect for a man who is worth $20 billion.
Dalio is a macro trader, which means he focuses on the big picture. He’s correctly predicted large-scale events like the burst of the housing bubble in 2008 and has written extensively about his thought process in his seminal book Principles.
In his new book, Dalio explores the process of what he calls the “world order” — the ranking of the world’s most powerful nations. His new YouTube video about the Changing World Order is a fascinating watch, well worth the 45 minutes. This is a good YouTube video.
Dalio uses the concept of “reserve currency” to determine which nation is at the top of the order. The US dollar has been the world’s main reserve currency since the end of WW II.
Dalio uses currency as a means to rank the world’s most powerful nations. This is what he calls the “world order.”
He likens the span of a nation's order to that of a person. It starts off with a period of growth, then peaks, then experiences an inevitable decline.
This is the “Big Cycle.” Of course, a lot of up and down happens along the way. This is an abstract way to simplify things the bigger picture. Here’s Dalio’s interpretation of the history of the last 500 years of the Great Empires of the world.
The implication here is not-so-subtle. And when it comes from a man who has spent his life making a fortune by predicting large-scale events I am keen to listen.
Dalio has studied the last 500 years — and the different nations that have held the reserve currency at different points during that period — experience a rise and decline much like a person.
By studying the recent events in the world economy, Dalio has observed that the value of the US dollar has declined while the value of the Chinese yuan has skyrocketed.
I highly suggest watching the full video.
Even if you disagree with Dalio’s not-so-subtle conclusion, his perspective here is valuable and worth being aware of. I think this is perhaps the best marketing for a book one can do — the video has over 4 million views as I'm writing this.
Dalio provides an immense amount of value in this video — it’s basically a 45-minute animated documentary. The metaphors and methods for explaining this seemingly complicated concept were simple and direct and easy to understand.