raydolio

Ray Dalio believes the global system established after World War II has largely broken down and is giving way to a new period defined by power politics and growing rivalry among major nations. Referring to remarks made by leaders at the Munich Security Conference, he argues that the long-standing rules-based international framework is steadily weakening.

Dalio describes the current moment as “Stage 6” in his Big Cycle theory — a turbulent phase characterized by fragile institutions, diminished respect for rules, and conflicts unfolding across multiple fronts. In his view, global affairs are beginning to resemble a “law of the jungle,” where influence, sanctions, and coercion matter more than neutral legal systems.
He identifies five primary arenas of confrontation: trade, technology, geopolitics, capital flows, and the military. According to Dalio, financial and economic battles often precede direct armed conflict. He cautions that wars tend to spiral beyond expectations and typically cause far more harm than leaders anticipate, urging restraint to prevent uncontrolled escalation.

Dalio also emphasizes that financial stability underpins geopolitical strength. He points to rising tensions between the United States and China — particularly over Taiwan — as the most serious potential flashpoint. For investors, he warns that major geopolitical shifts can trigger capital restrictions, frozen assets, market volatility, and heavier taxation. Historically, he notes that gold has served as a protective asset during such periods. Still, Dalio maintains that decline is not unavoidable if leading nations manage their finances prudently and prioritize cooperative, mutually beneficial relationships.

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