Ray Dalio’s Thoughts on China & Diversification

2025-07-18

What happens when a country mismanages its debt?

In 1990, Japanese policymakers decided to deal with its debt obligations by printing a lot of money to buy bonds. They further devalued the currency by giving bondholders significantly lower interest rates than in the US.

As a result, Japanese bonds lost 45% relative to US bonds and 60% relative to gold over the next few years.

That had a real impact on the average Japanese worker, who lost a significant amount of buying power — and those impacts are still felt today.

My new book, How Countries Go Broke: The Big Cycle, breaks it all down for you.

#raydalio #principles #politics #economics

2025-07-16

The world order is now changing in a way that I described in my book and video Principles for Dealing with the Changing World Order. For a complete picture I encourage you to read the book or you can watch the animated video on my channel.

#raydalio #principles #politics #economics

2025-07-11

History shows us that having too much debt during an economic downturn leads to a classic, self-reinforcing cycle where:

1) The empire can no longer borrow the money to repay its debts
2) It prints a lot of new money, which devalues the currency and raises inflation
3) Living standards decline, leading to the rise of political extremism
4) Turbulent economic conditions undermine productivity and there is conflict about how to divide the shrinking resources
5) Populist leaders emerge pledging to take control and bring about order

#principles #raydalio #history #debt

2025-07-07

An order is a governing system that helps people deal with each other in a structured way.

There are internal orders for governing within countries, and a world order for governing between countries.

Orders typically change after wars, when revolutionary new forces defeat weak old ones.

When this happens, new agreements and treaties are signed that detail how global governance and monetary systems will work moving forward. And a new world order begins.

#principles #raydalio #history #bigcycle

2025-07-03

History tells us the preferred path for government policymakers trying to deal with too much debt is lowering interest rates and devaluing the currency the debt is denominated in.

Doing this is a very hidden way of reducing wealth, because as your currency goes down, it makes it look like other things are going up. But despite the downsides, this wealth shrinkage and reduction in buying power is favored by policy makers precisely because its impacts are less obvious than the alternatives.

At such times, you should expect interest rates and the currency’s value to fall.

#debt #raydalio

2025-07-02

After spending time in Washington, DC discussing the budget deficit with senior people on both sides of the aisle, it’s clear to me that we are unlikely to change the debt trajectory we’re on and avoid the painful consequences.

While virtually everyone agrees on the need to address our debt problem in a balanced way that includes tax increases and cuts to benefits, they also agree that they cannot speak up because politics have become absolutist.

We must find a solution around absolutist pledges like, ”I will not raise taxes,” or “I will not reduce benefits,” when they are desperately needed.

2025-06-17

We’re entering a period of history where countries must be much more self-sufficient.

Not just because of the debt and trade issues — and those imbalances are unsustainable — but also because of security.

With today’s geopolitical instability, a country like the U.S. can’t afford to be be dependent on imports from countries like China.

As a result, restructuring our trade relationships is critical and necessary.

At least, that’s what it looks like through my eyes. I’m curious to hear if you agree.

#raydalio #howcountriesgobroke #geopolitics #trade

2025-06-10

What’s happening now with money, debt, and credit has never happened before in our lifetime.

But it has happened many times in history, which is why I believe studying the past is so important. The same cycles repeat over and over again, and there are important lessons we can learn from those experiences.

If we apply that understanding to the issues we face today, we can increase the chances of positive geopolitical and economic outcomes. That’s good for all of us.

I enjoyed meeting with @imf to discuss this and answer questions about my new book, which dives deeper into these topics. It’s called How Countries Go Broke: The Big Cycle, and it’s available now.

If you’re interested in learning more about our collective debt burden — and what steps we can take to solve these issues —