📘Detailed introduction to "Principles for Dealing with the Changing World Order: Dealing with the Changing World Order"

By Ray Dalio

🌟 Editor's Preface

Hello everyone~ Today, I'm sharing another major work by Ray Dalio 📖. Following "Principles," he released another book in 2021, "Principles for Dealing with the Changing World Order ." This book goes beyond simply discussing life or business and directly zooms in on the "world order" 🌍.

Honestly, Hong Kongers are likely to resonate most deeply with the "Great Changes of Our Times," as we daily feel the impact of major shifts in international politics, financial markets, geopolitical conflicts, and societal transformations. Dalio aims to use his approach to macroeconomics and historical cycles to help us understand: Why has the world changed so much? And what lies ahead?

After reading it, I really feel that this book is not an ordinary economics book, but a "history + politics + economics collection" 📚. It also contains many charts and data, which can really help people open up a "God's perspective" 👀.

📖 Book Introduction

Full title of the book: "Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail" (Chinese translation: "Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail") .

Year of publication: 2021 .

Core Concept: Dalio wants to answer a big question: Why do some countries decline from prosperity, while others become stronger?

📌 The book incorporates:

• 📊Historical research : The rise and fall of major empires (Netherlands, Spain, Britain, the United States, China) over the past 500 years
• 💰Economic factors : currency, debt, inflation, fiscal policy
• ⚔️Political power : internal conflict, wealth gap, extremism
• 🌍Geopolitical landscape : international competition, military power
• 🧩Cycle Theory : Nations and empires all have the law of "rise, prosperity, and decline"

🧑🏫 What is the "world order cycle"?

Dalio proposed a concept: "Big Cycle" .

👉 Meaning:

• Every empire goes through similar stages: rise → golden age → debt expansion → internal division → decline .
• The United States is currently in the latter stages of its decline, facing intensified domestic conflicts and challenges to the dollar's hegemony.
• China is another "emerging and rising" power.

Hong Kong people generally understand it as follows: It’s like a big company 📈, which starts small and grows big, making all the money, then becomes greedy and borrows too much money, causing financial collapse, and is eventually replaced by a new company.

📚 Summary of key points in the book

1️⃣ Six major factors that determine the rise and fall of a nation

Dalio lists the key factors that influence the success or failure of a country:

• Education level 📚
• Innovation ability 💡
• Competitiveness ⚔️
• Military Strength
• Financial center status💰
• Currency Internationalization💵

2️⃣ The superposition of three major cycles

He said the world order is mainly influenced by three cycles:

1. Long-term debt cycle : Debt accumulates and eventually bursts.
2. Internal order cycle : class contradictions, gap between rich and poor, and social division.
3. External order cycle : competition among great powers and transfer of hegemony.

Hong Kong people will think: Wow, we see these three things in the news every day.

3️⃣ The Twilight of American Hegemony

• The US dollar is the world's reserve currency, but due to excessive debt and excessive money printing, its trust is slowly declining.
• American society is torn apart and politics is becoming increasingly extreme.
• The US military remains strong, but its economic advantage is gradually shrinking.

4️⃣ The rise of China

• Dalio has a positive attitude towards China and believes that China has the advantage of "historical cycles".
• Emphasize China's investment in education, infrastructure, and technological innovation.
• But it also pointed out that China faces challenges from an aging population and international friction.

5️⃣ Investment and personal coping

Dalio is not asking everyone to panic, but to diversify their assets and not go all-in on a single market.

• It is recommended to diversify investments: stocks, bonds, gold, and overseas markets.
• On a personal level, we should have an "anti-volatility" mindset and not just focus on the short term.

🧑🔬 Author Background: Ray Dalio

• 🎓 King of Hedge Funds, Founder of Bridgewater Associates
• Over $160 billion in assets under management
• Famous for his theory of "macroeconomic cycles"
• Writing style: Combining theory + data + charts to give readers a "God's perspective"

He wrote this book not only to provide investment advice, but also to give everyone a "framework for understanding the changes in the world."

🎯 Editor's Review (Hong Kong Edition)

The editor feels that this book is particularly valuable to Hong Kong people because we are on the front lines of the "China-US wrestling" and feel the shock of the changes in the world order every day🌪️.

A few take away:

• Don't be superstitious about the US dollar and US hegemony anymore . The world is really changing.
• China is a major trend, but it also has risks , so we need to look at it from an objective perspective.
• You have to manage your own risks and not rely solely on one job, one market, or one asset class.
• The best teacher in the history department said that the chaos we see today has actually been repeated many times in history.

Hong Kong people's version: It's like playing Monopoly 🎲. The US used to have Monopoly, but now it's possible for another player to slowly catch up. The situation is never set in stone, and knowing how to read the cards before losing can prevent you from losing everything.

🌈 Summary

"Principles for Dealing with the Changing World Order" is a masterpiece that combines history, economics, politics, and investment. Its most important reminder is:

• The world order will change, and no one can occupy a position for long.
• We must deal with it based on principles, rather than relying on emotions and fantasies.
• Historical cycles can help us predict the future. Although it is not 100% accurate, it is the best reference.

👉 If you're wondering, "Will the United States decline? Will China rise to prominence? How should we respond?" this book is a must-read! 📘🔥

🌍 World Order Cycle Diagram