Principles for Dealing with the Changing World Order: Why Nations Succeed or Fail

The book is exceptionally well researched and documented. Its author has a fifty- year experience in global asset management and is the founder and leader of the largest hedge fund in the world. He believes in studying the past in order to understand where we are and to have practical principles with what is coming. His research comprised his personal experiences both qualitative and quantitative, his interactions with pre-eminent experts, reading authoritative books, and immersing in statistics and archives with his competent research team. The crux of the book is to provide an archetype of the forces that affect the big cyclical swings in wealth and power to which I shall come later. At this point, I shall touch on elements which I found important in reading the book. The people who have wealth are the people who own the means of wealth production. In order to maintain or increase their wealth, they work with the people who have the political power in a symbiotic relationship with them, to set and enforce the rules. This dynamic leads to a very small percentage of the population gaining and controlling an exceptionally large percentage of the total wealth and power, and then encountering bad times, which hurt those least wealthy and least powerful the hardest, which lead to conflicts that produce revolutions and/or civil wars. When these conflicts are over, a new world order is erected, and the cycle begins again. Evolution, which is due to human ingenuity, is the upward movement toward improvement and is intimately related to human productivity that is the output per person which is the most important force in generating the world's total wealth, power, and living standards to rise over time. Together evolution and cycles make the upward corkscrew-type movement that we see in everything - wealth, power, technology etc. The archetypical Big Cycle in which strengths and weaknesses are mutually reinforcing comprise: the new order, the rise, the top, the decline which leads again to a new order. The Rise is the prosperous period of building that comes after a new order. It is when the country is fundamentally strong because there are a) relatively low levels of indebtedness, b) relatively small wealth, values, and political gaps between people, c) people working effectively togetherto produce prosperity, d) good education and infrastructure, e) strong and capable leadership, and f) a peaceful world order guided by a dominant world power which leads to the top. The Top is a period characterized by excesses in the form of a) high level of indebtedness, b) large wealth, values, and political gaps, c) declining education and ifrastructure, d) conflicts between different classes of people within countries, and e) struggles between countries as overextended empires are challenged by emerging rivals, which leads to the decline. The Decline is the painful period of fighting and restructuring that leads to great conflicts and great changes of new internal and external orders. It sets the stage for the next new order and a new period of prosperity building. I shall conclude the review by citing the three empires that rose and declined successively during the last 500 years namely the Dutch, the UK, and the US all of which possessed a reserve currency. I shall touch a litle more on the Dutch because they invented capitalism as we know it. The Dutch Empire and the Guilder: The Dutch invented ships that could go around the world to collect riches, capitalism that could finance these and other productive endeavors. The Dutch created the world's first mega-corporation, the Dutch East-India Company. They also created the world's first reserve currency other than gold and silver, the Dutch guilder, supported by innovative banking and currency system put into place via the establishment of the Bank of Amsterdam. The UK and the Pound: The Uk followed a very similar path peaking in the 1800s. The US and the Dollar: Finally the US rose to become the world's superpower over the last 150 years, though particularly so during and after World Wat II when with the Bretton Woods agreement, the dollar was established as a reserve currency. The US is now in relative decline while China is ascending.

Extremely interesting book, gives insights into threats to us all

This book is written by one of the greatest macro investors ever. Using his knowledge and the expertise built up at Bridgewater Capital he’s decided to share it with the world. It certainly is interesting when you zoom out over about 600 years and see the cycles unfolding with rises and falls of empires. It’s also a masterpiece of economic and geo-political history which probably has no equal. As Ray has compiled the data for specific countries he can show, over time, how their influence rose and fell, e.g. the British empire. He believes that these principles can be applied in the future and will therefore determine his macro trading. The book showed me that seemingly invincible empires get stretched and eventually crumble and he correctly identifies the shifting tectonic plates between the US, China and others. It’s a meaty ready but valuable all the same. PS: If there was a reissue, I’d like clearer charts as some contain too many variables with subtle colour changes. I did like the bold type however, as that points to summaries rather than reading the whole text. I also liked the references to economicprinciples.org which is something that can be updated as things evolve.

Excellent insight. Very thought provoking and realisational book.

Great

Have read a few books on the rise of China and none lay it out as clearly as Ray. He is also incredibly transparent on the future of USA in the way that you wouldn’t expect to hear from an American. Great book on the rise and fall of empires - perhaps the best of Ray’s books so far. Also shows how quickly world moves as Ray talks a lot about Taiwan, which is still a major risk, but so much has happened since with Ukraine, Trump, and China.

I found it a fascinating (and at times scary) read. I think very pertinent in today’s times. Bought it to get a better insight into Ray Dalio’s thinking about investment markets but the book has a much wider reach. Not always the easiest read and fair bit of repetition but all in all a great piece of research and writing.

Loved the broad perspectives (zoomed out views) towards understanding the evolution of nations. He seems to be a keen student of History and have done a fair bit of scholarship. Was interested by his frameworks for analysing trends/countries, as well as his computer generated analyses. Seems that to be a good macro investor, you need to be very worldly, know what is going in the world, be kind of a jack of all trades/polymath/dabbler, and to turn over all the rocks. And to seek out as many expert opinions as possible while keeping an open mind for triangulation as most see the world from within their unique (and inadvertently narrow) fields of expertise.