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Ray Dalio's "The Changing World Order" [pdf]

39 points by tithe 2y ago

jonahx 2y ago
Would love to hear from experts how much validity / evidence there is behind Dalio's economic writings and videos.
- roenxi 2y ago
  You can see in the pdf, N=3. For a lot of conclusions, there is nearly no evidence here. That being said; money printing is an interesting economic tool in that it is an extreme stretch to say it has any positive impact in the real world. That the US is now resorting to it as a strategy for what seems to be every crisis is a very bad sign. Not because it is, in itself, a problem but because it suggests the leadership in several systemically important decision making offices are being challenged and are not capable of answering the challenge.
  - Satam 2y ago
    Nothing survives over a long enough time scale. So the US will fall from grace and fail too. The question really is, is that going to happen within our lifetimes and what effects will we see in the meantime?
    - roenxi 2y ago
      Depending on how honest China's economic data is, in theory the interesting part has probably already happened. The Chinese economy is a behemoth. The era where the US was the unquestioned global leader is over and probably the era where they were the most industrially competent nation too. China's policies are probably more material to the global economy right now than the US's, although it won't be easy to tell without a few decades hindsight. As far as I can tell, if the Russia-China-India axis agree on something there isn't going to be much the US can do about it. That suggests Asian issues are about to become globally significant in a way that they weren't back in the 2000s.
ksec 2y ago
This is Change World Order Charts. Not the book itself.
huijzer 2y ago
I’ve read the book and found it convincing upon first read. Upon some more research however, it’s not so much. The book looks like an artifact that was created to convince the reader than China will be the new superpower and soon. So conclusion first and data second. It looked like Dalio has cherrypicked data for his arguments. Also, if I remember correctly, there is no mention of geography (US has enemies behind an ocean, China not) and China’s poor demographics. What is also in China’s way, I think, is that they are busy with getting rid of alternatives. Like any autocratic regime, it’s not about being a good government, it’s about there not being any alternatives. That’s why Jack Ma had to go. And that’s why great businesses get more and more locked-in. Golden tickets for CCP board members. CCP restricting growth like Tencent games. It leads to a very restrictive environment. So I don’t have the strongest counterarguments anymore, but I do remember that I questioned Dalio’s incentives. Curious whether other people here have better insights.
- keiferski 2y ago
  Well, the book came out in 2021, prior to recent AI developments - the cutting edge of which are almost entirely in the US. The location where chips are produced is a relevant discussion point to have here though. In general these “trends indicate the future will be X” analyses aren’t a new thing (see for example Cliodynamics [1.]) and they often underestimate how history can hinge on a few specific decisions. A few different decisions throughout the 90s would have brought Russia into the EU and Western world and not in the direction it’s headed nowadays. With Dalio specifically, I think it’s a mistake to focus on the nation state as the end-all in political organization. IMO it is better to look at global systems in terms of capital interconnectivity. Various attempts have been made to combat this throughout history by creating closed systems (Napoleon’s continental system or the USSR as prime examples) and they don't work. The states that are open and fluid seem to outcompete ones that aren’t. Were China attempting to be a USA of Asia, I think they would absolutely become the economic center of the world. But they seem to be headed in the exact opposite direction - they aren’t culturally and economically absorbing nearby states like the USA is, they’re becoming increasingly hostile. 1. https://en.wikipedia.org/wiki/Cliodynamics https://en.wikipedia.org/wiki/Cliodynamics
  - 2y ago
iamacyborg 2y ago
I suggest reading The Fund by Rob Copeland which will likely make you want to stay well clear of anything Dalio touches or says.
Satam 2y ago
I think one should look at this as a nudge to think and re-examine our intuitions. The world and its 'order' has changed many times in the past. The leading empires rise and fall every couple of centuries, pandemics and wars devastate the world periodically. That's the pattern. Can we safely assume this time's the exception? As a fun example, my understanding was that gold has always been the preferred standard for currency. Turns out silver was the far more prevalent standard for almost 5000 years. The switch to gold seems to largely have been caused by Isaac Newton's (yes, that one's) mistake in setting the exchange rate when he was the head of Britain's treasury. How many people don't know this yet exclaim how gold has always been the greatest form of currency?
- keiferski 2y ago
  For this pattern to continue uninterrupted, it seems to me that you’d need to discount the entire technological revolution that’s happened since the early 19th century. That means the internet, nuclear weapons, automobiles, airplanes, international travel, etc. have had no significant effect on the underlying political structure of human society. That seems like a hugely unlikely thing to me, and it’s probably more likely that we’ll see something very different and unexpected, not a continuation of the pattern. For one, I would bet more on regions merging into a single loosely connected political entity than on continued divided states battling it out.
  - Satam 2y ago
    Great point. I think that might be in line with the idea if we take it to its full conclusion. Any way it goes, expect change. The meta mistake is assuming the patterns we've seen in the last 10/50/100/1000 years/etc. will continue. If one looks at the last 10 years, they assume the market only goes up. If one looks only at the last 50 years, one assumes the US will continue to dominate. I guess then, what is the mistake if we look only at the last 1000 or 10000 years? Maybe assuming the continued dominance of humans?
vasco 2y ago
HN getting afraid the downtrend will continue after two big red days. If you're wondering about it, just quit, those vesting stock options are probably going to be underwater.
deleted 2y ago
[deleted]
nabla9 2y ago
This is from 2021. China was his big move. Ray Dalio is a case study of how authoritarianism lures capital and you get billionaire Chinese propagandists. Around 2020 Dalio was all about China. China is now on par with the U.S. in advanced technologies and will take the lead in the next five years. He downplayed and denied Chinese human rights violations. He called the Chinese government a "strict parent". Dalio was invested heavily in China. Then Xi starts to violate property rights and becomes a "strict parent" to billionaires who disappear. Dalio is trapped. He talks Chinese propaganda, because his assets can be taken away if he angers Chinese leaders. Dalio says he still invests in China, but in reality, that's not the case. A significant chunk of his assets is trapped there and he can't move away as he pleases without massive losses. If you read his LinkedIn essays and know this, it's easy to see how he is just rationalizing his situation.
- kjrfghslkdjfl 2y ago
  [dead]
amai 2y ago
Dalio praised Merkel, Putin an Xi Jinping as great leaders in his book "Principles". Since then I cannot take this guy serious anymore.
incomingpain 2y ago
https://www.scmp.com/business/markets/article/3241457/ray-dalios-bridgewater-offloaded-xpeng-li-auto-and-hutchmed-it-exited-1o-chinese-stocks-amid-third https://www.scmp.com/business/markets/article/3241457/ray-da... Ray Dalio convinced everyone to rush into china with investment at the same time as he was exiting rapidly. The idea that china would be the new world order is ridiculous. China is knees deep in a collapse that will be rather bloody.

39 points by tithe 2y ago

jonahx 2y ago

Would love to hear from experts how much validity / evidence there is behind Dalio's economic writings and videos.

roenxi 2y ago
You can see in the pdf, N=3. For a lot of conclusions, there is nearly no evidence here. That being said; money printing is an interesting economic tool in that it is an extreme stretch to say it has any positive impact in the real world. That the US is now resorting to it as a strategy for what seems to be every crisis is a very bad sign. Not because it is, in itself, a problem but because it suggests the leadership in several systemically important decision making offices are being challenged and are not capable of answering the challenge.
- Satam 2y ago
  Nothing survives over a long enough time scale. So the US will fall from grace and fail too. The question really is, is that going to happen within our lifetimes and what effects will we see in the meantime?
  - roenxi 2y ago
    Depending on how honest China's economic data is, in theory the interesting part has probably already happened. The Chinese economy is a behemoth. The era where the US was the unquestioned global leader is over and probably the era where they were the most industrially competent nation too. China's policies are probably more material to the global economy right now than the US's, although it won't be easy to tell without a few decades hindsight. As far as I can tell, if the Russia-China-India axis agree on something there isn't going to be much the US can do about it. That suggests Asian issues are about to become globally significant in a way that they weren't back in the 2000s.

ksec 2y ago

This is Change World Order Charts. Not the book itself.

huijzer 2y ago

I’ve read the book and found it convincing upon first read. Upon some more research however, it’s not so much. The book looks like an artifact that was created to convince the reader than China will be the new superpower and soon. So conclusion first and data second. It looked like Dalio has cherrypicked data for his arguments. Also, if I remember correctly, there is no mention of geography (US has enemies behind an ocean, China not) and China’s poor demographics. What is also in China’s way, I think, is that they are busy with getting rid of alternatives. Like any autocratic regime, it’s not about being a good government, it’s about there not being any alternatives. That’s why Jack Ma had to go. And that’s why great businesses get more and more locked-in. Golden tickets for CCP board members. CCP restricting growth like Tencent games. It leads to a very restrictive environment. So I don’t have the strongest counterarguments anymore, but I do remember that I questioned Dalio’s incentives. Curious whether other people here have better insights.

keiferski 2y ago
Well, the book came out in 2021, prior to recent AI developments - the cutting edge of which are almost entirely in the US. The location where chips are produced is a relevant discussion point to have here though. In general these “trends indicate the future will be X” analyses aren’t a new thing (see for example Cliodynamics [1.]) and they often underestimate how history can hinge on a few specific decisions. A few different decisions throughout the 90s would have brought Russia into the EU and Western world and not in the direction it’s headed nowadays. With Dalio specifically, I think it’s a mistake to focus on the nation state as the end-all in political organization. IMO it is better to look at global systems in terms of capital interconnectivity. Various attempts have been made to combat this throughout history by creating closed systems (Napoleon’s continental system or the USSR as prime examples) and they don't work. The states that are open and fluid seem to outcompete ones that aren’t. Were China attempting to be a USA of Asia, I think they would absolutely become the economic center of the world. But they seem to be headed in the exact opposite direction - they aren’t culturally and economically absorbing nearby states like the USA is, they’re becoming increasingly hostile. 1. https://en.wikipedia.org/wiki/Cliodynamics https://en.wikipedia.org/wiki/Cliodynamics
- 2y ago

iamacyborg 2y ago

I suggest reading The Fund by Rob Copeland which will likely make you want to stay well clear of anything Dalio touches or says.

Satam 2y ago

I think one should look at this as a nudge to think and re-examine our intuitions. The world and its 'order' has changed many times in the past. The leading empires rise and fall every couple of centuries, pandemics and wars devastate the world periodically. That's the pattern. Can we safely assume this time's the exception? As a fun example, my understanding was that gold has always been the preferred standard for currency. Turns out silver was the far more prevalent standard for almost 5000 years. The switch to gold seems to largely have been caused by Isaac Newton's (yes, that one's) mistake in setting the exchange rate when he was the head of Britain's treasury. How many people don't know this yet exclaim how gold has always been the greatest form of currency?

keiferski 2y ago
For this pattern to continue uninterrupted, it seems to me that you’d need to discount the entire technological revolution that’s happened since the early 19th century. That means the internet, nuclear weapons, automobiles, airplanes, international travel, etc. have had no significant effect on the underlying political structure of human society. That seems like a hugely unlikely thing to me, and it’s probably more likely that we’ll see something very different and unexpected, not a continuation of the pattern. For one, I would bet more on regions merging into a single loosely connected political entity than on continued divided states battling it out.
- Satam 2y ago
  Great point. I think that might be in line with the idea if we take it to its full conclusion. Any way it goes, expect change. The meta mistake is assuming the patterns we've seen in the last 10/50/100/1000 years/etc. will continue. If one looks at the last 10 years, they assume the market only goes up. If one looks only at the last 50 years, one assumes the US will continue to dominate. I guess then, what is the mistake if we look only at the last 1000 or 10000 years? Maybe assuming the continued dominance of humans?

vasco 2y ago

HN getting afraid the downtrend will continue after two big red days. If you're wondering about it, just quit, those vesting stock options are probably going to be underwater.

deleted 2y ago

[deleted]

nabla9 2y ago

This is from 2021. China was his big move. Ray Dalio is a case study of how authoritarianism lures capital and you get billionaire Chinese propagandists. Around 2020 Dalio was all about China. China is now on par with the U.S. in advanced technologies and will take the lead in the next five years. He downplayed and denied Chinese human rights violations. He called the Chinese government a "strict parent". Dalio was invested heavily in China. Then Xi starts to violate property rights and becomes a "strict parent" to billionaires who disappear. Dalio is trapped. He talks Chinese propaganda, because his assets can be taken away if he angers Chinese leaders. Dalio says he still invests in China, but in reality, that's not the case. A significant chunk of his assets is trapped there and he can't move away as he pleases without massive losses. If you read his LinkedIn essays and know this, it's easy to see how he is just rationalizing his situation.

kjrfghslkdjfl 2y ago
[dead]

amai 2y ago

Dalio praised Merkel, Putin an Xi Jinping as great leaders in his book "Principles". Since then I cannot take this guy serious anymore.

incomingpain 2y ago

https://www.scmp.com/business/markets/article/3241457/ray-dalios-bridgewater-offloaded-xpeng-li-auto-and-hutchmed-it-exited-1o-chinese-stocks-amid-third https://www.scmp.com/business/markets/article/3241457/ray-da... Ray Dalio convinced everyone to rush into china with investment at the same time as he was exiting rapidly. The idea that china would be the new world order is ridiculous. China is knees deep in a collapse that will be rather bloody.