How to anticipate the future? Ray Dalio answers it in this video: by studying the past. The story repeats itself. By looking back to find similar situations, we can try to guess what might happen in future years.
Three big changes are happening in the world right now:
- First, countries are more indebted than ever. The biggest nations don’t have enough money to pay off their debts, even after lowering interest rates to zero. So their central banks started printing a lot of money to do it.
- Second, great internal conflicts have arisen due to growing disparities in wealth and values. This manifests itself in political populism and the polarization of opinions.
- Third, there is a growing external conflict between two great world powers: a rising great power (China) and the currently dominant great power (the United States).
Ray Dalio has studied over 500 years of history to find similarities with the current situation and his finding is poignant: the characteristics we are experiencing have happened before and almost always lead to change in the world order. From Dutch domination from 1630 to 1750, then British from 1750 to 1900, to American domination today, we could move towards Chinese domination in a few years.
Source: Principles by Ray Dalio
Here is the documentary made by Ray Dalio’s teams: