Our Current Economic Chaos Is Part Of A Repeating Cycle

One of the greatest investors of our time explains how global orders rise, then fall, and what to expect in our future

Burning Through Dollars — Created By Author In Starryai

“To understand what is coming at you, you need to understand what happened before you.”

— Ray Dalio, The Changing World Order

In the financial world, it’s often said that past performance is not an indicator of future returns. Although a historian may say the opposite. They tend to see pieces of the past within the present, which indicates possibilities for the future.

Ray Dalio occupies both worlds: investment and history.

In his recent educational video The Changing World Order, the billionaire attributes part of his investing success to studying the past rises and falls of empires, along with boom-bust cycles. He sees their shadows today. In fact, he claims we’re going through one of these stages right now.

Dalio’s interest in the past first started as a young clerk on Wall Street when the United States “ran out of money and defaulted on its debts” in 1971. But we don’t recognize it this way. We refer to August fifteenth of that year as the day the dollar was removed from the gold standard.

Dalio reminds us the notes used to be convertible into gold, but the country spent more than their supply. He expected a crash on Wall Street the next day. But surprisingly the market shot up about twenty-five percent.

It made no sense. But soon Dalio found this reaction wasn’t unique. Franklin Roosevelt had also halted the exchange of dollars for gold in the 1930s, and the market boomed in response as well.

However, this was only the first of many similarities. As he studied empires throughout history, a recurring cycle started to appear throughout time. He calls it the “Big Cycle,” and it may sound familiar.

The Big Cycle: The Rise And Fall Of A Global Order

The cycle starts with a conflict, usually a war, which establishes a new leading world power, and a global order around them. This is followed by a time of relative peace. This is due to a mixture of war…