The Changing World Order: How Countries Go Broke - Ray Dalio - #976

**Chris Williamson** (0:00)
60 years of global macro investing. Congratulations.

**Ray Dalio** (0:06)
Thank you. Yeah, Bridgewater just celebrated its 50th year, and I just celebrated passing it along. So yeah, thank you.

**Chris Williamson** (0:14)
Yeah. After all that time, why did you get interested in a changing world order and how countries go broke? Like, why does a global macro investor do that?

**Ray Dalio** (0:26)
Well, I'll tell you a story.
When I was between college and Harvard Business School in 1971, I was clerking on the floor of the New York Stock Exchange, and on August 15th, 1971, President Nixon gets on the television and he says, you know our promises to allow you to turn in those dollars for gold, well, we're not going to stick to them. I wasn't as wording exactly, but money as we knew it, which was gold and the money was we now know it, which is fiat money was like checks. He didn't, we weren't going to get our money. And so I walked on the floor of the New York Stock Exchange the next morning, clerking, and I figured the market would be down a lot, and it turned out it was up a lot. And I hadn't been through a devaluation before, so I studied history. And I found out that on March 15th, or I think it was March 3rd, 1933, Roosevelt did the exact same thing on the radio, and I studied it. And as a result of studying that, I understood the mechanics of that, why the devaluation had that kind of effect. And I studied the Great Depression because of what I learned was that it may not have happened in my lifetime before, these important things, but I need to understand them. So I studied the Great Depression, and that allowed me to make a lot of money and do very well in anticipating the 2008 financial crisis, and then to also the European debt crisis from 2010 to 2015 So I knew that things may have happened before, so I then needed to study. So there are things that are going on now that happened in our lifetime before, and I figured that I needed to study that. What causes the rise and decline of a reserve currency, or what causes the rise and decline of a great power? And so I needed to study the last 500 years, because a rise and decline of a reserve currency, or a great power takes arcs. There's the British power. Before that, there was the Dutch and so on, and I needed to study that. I studied that 500 years, and then I saw that the same things happen over and over again for the same reasons. Now I'm at a stage in my life where what I want to do is pass along whatever I know to make it available to other people. I'm no longer focused in and keeping it quiet. That's why I studied that 500 years, and that's why I wrote the book before the last one. The book before the last one is called Principles for Dealing with the Changing World Order. If you read it, you see the pattern. By the way, I also put out a free video for anybody. It's called on YouTube, Changing World Order. It's free.
You can listen to it. Anyway, that's how I came about all this. I need to study. You need to study the mechanics of things that have happened before, because a lot of what's happening now is most similar to what has happened before our lifetimes.

**Chris Williamson** (4:01)
I think there's an assumption that the modern world is so different. Technology, sophistication, interconnectedness, globalization. There is this sense that, well, how applicable are lessons of the past? Really? Are we going to go back to medieval Europe, Ray? Is that where we're going to take our lessons from? Yet, based on your investing track record, it seems like you can predict at least a bit of the future with what's happened in the past.

**Ray Dalio** (4:34)
It's like a life cycle, okay? It's like a disease or a process. And the only thing I could tell you is you're wrong if you believe that there weren't times in the past that were more similar to what you're used to. I mean, I think you've got to know that now, right? I mean, as we are seeing a different domestic order, okay? You've never seen what's going on before. But it's very similar to the past. And like a cycle, like a life cycle, you're born at a middle age, maybe then you get married, you have kids, you get older, you have a profession, you then retire and you get sick, you die or something. There's this cycle that it goes over and over again and these things. But anyway, you could take it or leave it. It's up to you.