Principles for Dealing with the Changing World Order (5-minute Version) by Ray Dalio

I studied the 10 most powerful Empires over the last 500 years and the last three Reserve currencies it took me through the rise and decline of the

Dutch Empire and the Gilder the British Empire and the pound the rise and early decline in the United States Empire in the dollar and The

Decline and Rise of the Chinese Empire and its currencies as well as the rise and decline of the Spanish German French

Indian Japanese Russian and ottoman Empires along with their significant conflicts as measured in this chart

to understand China's patterns better I also studied the rise and fall of Chinese dynasties and their monies back to the year 600. because looking at all

these measures at once can be confusing all focus on the four most important ones the Dutch British U.S and Chinese

you'll quickly notice the pattern now let's simplify the form of it as you can see they transpired an overlapping

cycles that lasted about 250 years with 10 to 20-year transition periods between them typically these transitions have been periods of great conflict because

leading Powers don't decline without a fight so how am I measuring an Empire's power in this study I used eight metrics each

country's measure of total power is derived by averaging them together they are education inventiveness and

Technology development competitiveness in global markets economic output share of World Trade military strength the

power of their financial center for Capital markets and the strength of their currency as a reserve currency because these powers are measurable we

can see how strong each country is now was in the past and whether they're rising or declining by examining the sequences from many countries

we can see how a typical cycle transpires and because the Wiggles can be confusing we can simplify it a bit to focus on the

pattern of cause effect relationships that drive the rise and decline of a typical Empire as you can see better education

typically leads to increased Innovation and Technology development and with a lag the establishment of the currency as a reserve currency

you can also see that these forces then declined in a similar order reinforcing each other's decline let's now look at the typical sequence

of events going on inside a country that produces these Rises and declines in a nutshell the big cycle typically begins

after a major conflict often a war establishes the new leading power and the New World Order because no one wants to challenge this power a period of

peace and prosperity typically follows as people get used to this peace and prosperity they increasingly Bet On It continuing they borrow money to do that

which eventually leads to a financial bubble the Empire share of trade grows and when most transactions are conducted in its currency it becomes a reserve

currency which leads to even more at the same time this increased Prosperity distributes wealth unevenly so the wealth Gap typically grows

between the rich Haves and the poor have-nots eventually the financial bubble bursts which leads to the printing of money

and increased internal conflict between the rich and the poor which leads to some form of Revolution to redistribute wealth this can happen peacefully or as

a civil war while the Empire struggles with this internal conflict its power diminishes relative to external rival

powers on the rise when a new Rising power gets strong enough to compete with the dominant power that is having domestic breakdowns external conflicts

most typically Wars take place out of these internal and external Wars come new winners and losers that then the

winners get together to create the New World Order and the cycle begins again