The Economic Collapse You’ve Been Told Won’t Happen - Ray Dalio

1. 0:00 – 8:00

   Moving from Macro Investing to Predicting Currency Fluctuations

   1. CWChris Williamson0:00

      60 years of global macro investing. Congratulations.

   2. RDRay Dalio0:06

      Thank you. Yeah. Bi- Bridgewater just cele- celebrated its 50th year, and I just, uh, celebrated passing it along. So yeah, thank you.

   3. CWChris Williamson0:14

      Yeah. Why, after all that time, why did you get interested in a changing world order and how countries go broke? Like, why does-

   4. RDRay Dalio0:24

      Oh, okay.

   5. CWChris Williamson0:24

      ... a global macro investor do that?

   6. RDRay Dalio0:26

      Well, I'll, uh, I, I'll tell you a s- a story. Um, when I was (clears throat) between, uh, 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 gonna s- stick to them," and that wasn't his wording exactly (laughs) , uh, but, um, money as we knew it, which was gold, and the money, uh, as we now know it, which is fiat money, was like checks, uh, he di- he didn't, uh, we weren't gonna 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 then I found out that on, um, March 15th, or on S- 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 I, what I learned was that, uh, 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, uh, make a lot of money and do very well in anticipating the 2008 financial crisis and then, um, to also, uh, the European debt crisis from 2010 to 2015. So, I knew that, uh, things may have happened before, so I then needed to study. So, there are things that are going on now that happened to happen in our lifetime before, and I figured, uh, that I needed to study that. Um, 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, you know, 'cause a rise and decline of a reserve currency or a great power c- takes arcs. You know, 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, um, and now I'm at a stage in my life where what I wanna do is pass along whatever I know to make it available to other people. I'm no longer, you know, um, focused in and keeping it quiet, um, and so that's why I studied that 500 year and that's why I, uh, wrote the, uh, book before the last one, the book before the last one is called Principles for Dealing With the Changing World Order, and if you read it you see the pattern. And by the way, I also put out a free video for anybody, it's called the, on YouTube, Changing World Order. It's free. You can, um, you, you can listen to it. So anyway, that's how I came about all this. And, and 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.

   7. CWChris Williamson4:02

      I think there's an assumption that the modern world is so different; technology, sophistication, interconnectedness, globalization. There is this sense that, well, (clears throat) how applicable are lessons of the past? Really? Like, are we gonna go back to Medieval Europe, Ray? Is that where we're gonna take our lessons from? And yet, based on your investing, uh, track record, it seems like you can predict at least a bit of the future with what's happened in the past.

   8. RDRay Dalio4:34

      Um, it's like a lifecycle, okay? (laughs) It's like a disease or a process, um, and the only thing I could tell you is you're wrong if you believe that, um, there weren't times in the past that were more similar to the one, one you're used to. I mean, I think you, y- you've gotta know that now, right? I mean, um, o- uh, as we are seeing a different domestic order, o- okay? You've never seen what's gone on before but it's very similar to the past and, um, like a cycle, like a lifecycle. You're born, uh, middle age, maybe then you get married, you have kids, uh, you get older, you have a profession, you then r- retire a- and y- 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, uh, it's up to you. Um, uh, and so I can tell you I never would've understood what happened in 2008. For example, um, 2008 was the first time that we had a debt crisis and interest rates hit zero since 1933. Okay? So, what happens when you hit zero?The only way you would have seen what happens or what the sensible thing wh- what to do was, quantitative easing. It's the first time it happened, uh, in res- in response to that. The last time it happened was 1933, okay, 'cause what do you do when they get interest rates and they hit zero and you can't lower that, okay? Well, you could take what I'm leaving or s- uh, uh, saying. There are five major forces and that repeat over and over again and interact and, if you like, I'll describe them. Um, and but also you have to realize that all orders, all monetary orders, all political orders, and all geopolitical orders, in other words, systems, have broken down throughout history, okay?

   9. CWChris Williamson6:54

      So they're breaking, they're breaking down in predictable ways, especially if you know what you're looking for?

   10. RDRay Dalio7:01

       Right, okay? But least don't be ignorant, okay, uh, uh, about how do they break down, what happened. What happ- let today, okay, uh, d- debt, okay? Wh- wh- I can take you through the debt numbers, I'm sure we'll discuss the government debt numbers, but, I mean, just in- in- in a nutshell, we're spending... The US government is spending seven trillion dollars a year. We're taking in $5 trillion a year. We're piling on the debt. That means you have to sell the debt, somebody's got to buy the debt. There's a dynamic here and a mechanics. I described that in my recent books. I just want to pass along the mechanics. You could read it, you can take it or leave it as you like, but the- but there's a mechanics here and if- an- y- I think you got to understand the mechanics and the last time it happened. I'll- we'll describe that me- mechanics in a bit, but yeah. So anyway, it's up to you, I'm passing it along. You do what you want with it.

   11. CWChris Williamson7:58

       (laughs) Yeah, okay.

2. 8:00 – 15:35

   The Five Big Forces

   1. CWChris Williamson8:00

      Um, let's go through these, these big forces that are at play.

   2. RDRay Dalio8:05

      Okay so five big forces just I'm, I'm giving a summary. There's a debt cycle... In, in the, uh, in certain times, you wipe out the debts. So for example, the new monetary order with World War II began 1945, you pretty much wipe out the debts, you start again, and then debt rises relative to incomes. So there's a debt cycle that, that we'll get into I'm sure in a minute that I won't digress into because I want to get all five out before we digress into any one of them. But when debt rises relative to your income, debt service payments rise relative to your income, it squeezes out your spending and, a- and because you have more and more that go to debt service and you have a particular dynamic we'll get into in a minute. But there's a debt cycle. There is a, with that debt cycle, along the way, there's usually a political, geo-polit- uh, uh, uh, political, uh, between the left and the right and as that cycle progresses there are greater wealth gaps, there are greater values gaps, and we start to see populism of the left and the right become almost a warlike situation that threatens order and threatens domestic order and, and, and so on. So what we're seeing politically now has not happened in our lifetime. It's surprising to people because they haven't seen it before, okay? But it has happened th- if you look at the '30s and you look around the world, it's happened repeatedly for basically the same reason. So the first is the debt money economy cycle, the second is this political cycle, um, uh, left/right cycle and conflict cycle, the third is a, uh, the geopolitical world order, okay? So for example, 1945, we have a war and then you have to have a new system, how do com- co- countries deal with each other? So there's a geopolitical cycle. They begin a new geopolitical cycle, the dominant power leads how that operates. The US was the dominant power so they had the world's reserve currency, they are, uh, uh, dominant and we create the multilateral world order as we know it, the system by which countries d- interact with each other and that's a cycle. And we could see that that system is now breaking down. It's certainly changing, okay, in ways that haven't happened in our lifetime but happened repeatedly through history, okay? So those three cycles, those three orders which are intertwined with each other are going through those cy- those cycles. In addition, if you look at history, droughts, floods, and pandemics or acts of nature were more disruptive. They're not so- necessarily cyclical or maybe they are and I don't see it, but anyway there what happens is as droughts, wa- war, uh, uh, droughts, floods, and pandemics have killed more people than wars and have toppled more orders than the other factors combined. That's just a, a fact. It's measured in the book. And then number five as a force, big force, throughout history is, um, man's inventiveness of better ways of doing things, particularly new technologies and certainly that's a great force now oth- with AI and many technologies that we're developing. And that's why, you know, on the cover of the book and, and whatever I, uh, you know, I have a, a, a chart that of how it looks to me and, um, and, and that chart sort of looks like I'm drawing it now...... um, it looks something like this.

   3. CWChris Williamson12:10

      Mm.

   4. RDRay Dalio12:11

      Um, that there are these cycles of, um, that go up and down that are of economy and, um, uh, and with that, politics. The- the economy, um, we're, we'll talk about them as being expansions and con- recessions, and, and with those have been bull markets and bear markets, and there've been 12 and a half of those since 1945, okay? Then you have these periods like the great conflict periods, the war years, the breakdowns of the system, and so on, and then you begin a new one in those cycles. Through that all, there is the advances of technology. It's not primarily cyclical because knowledge accumulates. It's not like you f- a- but it doesn't go through these big cycles. There are faster rates sometimes. Usually in the booms, there are faster rates of discovery, um, and so on, and that is literally kind of how it works, right? So now when we're gonna talk about whatever you wanna talk about, whether it's debt or politics or geopolitics or anything, technology, it falls under one of those categories, and they're interrelated. So for, for example, now when we think about the debt situation, we also think about, um, the, um, AI and will that have an effect on productivity. So anything we're gonna talk about is gonna fall under one of those five, and they're interrelated, and if we understand the patterns of history and then also what makes logical sense, um, you know, th- th- then that's a good conversation. We'll... Anyway, we'll, we'll see how it goes. We'll- we'll-

   5. CWChris Williamson14:02

      (laughs)

   6. RDRay Dalio14:03

      ... you- you- we'll go wherever you wanna go, but we will find that it'll be one of those and that they're interdependent, and each one of those is progressing almost like a machine that has this logical pattern. That doesn't mean identically. That doesn't mean you should be ignorant of what's happening new and now and think about is that different. You shouldn't be stuck into a rigid notion. But you should have that frame of reference along with whatever new information you want, and it's dead wrong to believe that, um, oh, that's all, doesn't matter. Because what happens when countries run out of money, okay? We can run out of money. I'll, I'll... I can... I'll describe how we can run out of money or lose the reserve currency status. I- I... Right now, for example, money as we know it is threatened. Mo- money has to be a storehold of wealth. In other words, it's a medium of exchange and a storehold of wealth. Okay, so today, w- there's very good reason to say is money an effective storehold of wealth? (laughs) Okay? So what does that mean? So w- you go to history, that, A, that's happened many times. What do you do if you're a government and you face that situation? Well, let's look at what governments did when they faced that situation. So learn. How can you be against learning?

3. 15:35 – 22:39

   How Does the Debt Cycle Work?

   1. RDRay Dalio15:35

   2. CWChris Williamson15:36

      I really wanna learn about this debt cycle thing. I, I keep on hearing about debt money, debt money economy, how it works. Can you... This is gonna be very difficult for you to do, I'm sure. Can you imagine that I'm an idiot just for a moment, uh, and try and explain to me how the debt money cycle works?

   3. RDRay Dalio15:55

      Gladly, and it really is simple.

   4. CWChris Williamson15:58

      We'll see. We'll see if you can, uh, stress test just how simple I am, but yeah.

   5. RDRay Dalio16:02

      Okay.

   6. CWChris Williamson16:02

      Let's give it a crack.

   7. RDRay Dalio16:04

      Okay. The system works like the circulatory system of your body that brings nutrients in the form of buying power by credit, it brings credit, and that credit produces debt. However, um, when it produces that debt, if you earn enough money because of that credit, it will pay back that credit, and you will have a healthy system. If it, if it doesn't, it will build up debt and debt service payments like plaque in the arteries of your system that will squeeze out other spending. That is true for you. That, uh, that's true for governments, okay? The only difference between your finances or a company's finances or the government's finances is the government has the ability to print money, uh, to pay off those debts, and it has the ability to take money from others by taxes. But the economics work the same, so a healthy system. And you can watch it. Uh, almost like a doctor watching an MRI, you can see that happening, and I'll take you through it for the US government. I'll explain it. But that is now happening, and you see the debt service squeezing out other spending, and I'll take you through in a minute. The second thing to know about that is when you run a, a deficit or have a lot of debt, you have to sell that debt to a buyer. So there's a supply and a demand for debt. One man's debts are another man's assets, and if they believe that that's a good storehold of wealth and they get an adequate real return, they will hold that debt and so on. If they believe that it's not, not only will they not buy the new debt, but they may sell the old debt.And when they sell the old debt, their selling inc- is greater relative to the buying. And like anything, when the selling is greater relative to the buying, the, the price goes down and the interest rate goes up, and that's to ration debt, okay? So, what do central banks do, okay? They print money and, uh, uh, to, uh, and buy the debt, like our central banks did, okay? And they always do that and so that's part of the mechanics. So, um, so that, that, uh, that is the dynamic. So, now let's look at the United States government. The United States government, uh, this year will sell, um, will spend about $7 trillion and it will take in about $5 trillion, okay? So it's spending 40% more than it is taking in, and because it's spent a lot more than it has taken in for a long time, it has a lot of debt. Its debt is about six times what it takes in every year and it can't really cut back on expenses because some of those expenses are, are the things you... are commitments, like you have to pay off the debt with the interest rate. Um, and the debt rollover, the debt service, is huge. So there's a deficit, seven minus five equals $2 trillion, okay? $1 trillion of that is interest. That keeps building up because you build up the debt. In addition, you have to roll over $9 trillion worth of debt that's expiring. So that's $10 trillion. And now-

   8. CWChris Williamson20:23

      What do, what does ex- what does expiring mean?

   9. RDRay Dalio20:26

      It's rolling off. It's maturing. End of that... So I gotta sell, I gotta (laughs) I gotta sell to g- to replace that, and then in addition to that... Uh, so we have the one int- interest, $1 trillion interest, um, $9 trillion expiring, plus the new two makes $12 trillion that I have to sell, okay? The buyers have a lot of these debt assets and are not, for various reasons, not eager to buy that debt. International buyers don't wanna buy that debt because, l- look, who are the int- biggest international buyers? Chinese and Japanese, (laughs) for example, okay? We're at, at the brink of war of the geopolitical situation. And anyway, they've got too much and everybody's worried about it. Okay, so now, um, okay, I'm gonna pause here. I could go on at length but you asked me to describe the situation clearly in a way that could be understood.

   10. CWChris Williamson21:41

       I think you-

   11. RDRay Dalio21:41

       Does that help you? I don't know.

   12. CWChris Williamson21:43

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4. 22:39 – 29:24

   What Does It Mean for a Country to Not Pay Its Debts?

   1. CWChris Williamson22:39

      I mean, the obvious question is, if you are spending more than you are taking in and you already have these existing obligations that are growing and everybody understands how interest works, that it piles on top, this just seems to be an intractable problem. It's a one-way journey towards slamming straight into a wall, and I just don't know what that looks like for a country. What does that mean? I understand what it means for an individual or a company to go bankrupt, but I don't know what it means for a country to not be able to pay its debts.

   2. RDRay Dalio23:16

      What it means by a coun- a country is... For a country, as I say, it's the same as it is for an individual, which means you either don't pay the debt or you exert pressure on others to take the debt even though they don't want it, history has shown this, or you print money and you devalue money. So, you know, um, um, you know, um, the, '70s was a good example. I said August 15th, 1971, I'm clerking on the floor of the New York Stock Exchange and they then didn't have enou- they issued too many claims on the real money, which was gold then, so too much claims on that. They couldn't meet those claims so they said, "I'm not gonna do that and I will print the money," and you had the '70s. Or a good example would be 2020 and 2021, we have COVID, and they, um, they wanted to s- send out a lot of money.They sent out about twice as much money a- as there was loss of income the first go around, and then they sent down a lot more money, and then what, how did they get that? The Central Bank printed money and bought the debt. They monetized the debt. Okay, so that's, that's what, that's what you do, okay? Um, that's what Japan did. For example, Japan, uh, um, has its big debt, and what they did is they forced interest rates down to 3% below US interest rates. The currency depreciated by 4% a year, and so the holder of the bonds lost 7% a year relative to, uh, let's say US bonds, and they lost like 65% in relation to gold. And that's why we are now in a position where, okay, what is money? What is a store hold of wealth? Okay. So that's the dynamic, okay, that's the mechanics.

   3. CWChris Williamson25:16

      I have to assume that's a very dangerous position to be in, when people start questioning-

   4. RDRay Dalio25:19

      Very dangerous.

   5. CWChris Williamson25:19

      ... the value of money.

   6. RDRay Dalio25:21

      Very dangerous because also the dollar is the world's reserve currency and the treasury market is the basis of all markets. It's the foundation. All markets trade off the treasury market. Credit markets, credit spreads are off the treasury market, equities are off the treasury market, and so on. And the reserve currency is the basis of savings, it's the basis of everything, and also it's- it's- it's critical for American power to have the world's reserve currency because when you have the world's reserve currency, it's easier to sell your debt. But what... That's one of the problems because it's easier to serve your ser- serve your debt, uh, s- um, sell your debt, uh, then you get more in debt because you get-

   7. CWChris Williamson26:12

      You're incentivized to keep going, yeah, exactly.

   8. RDRay Dalio26:15

      So anyway, that's it. That's where we are on the debt money thing. And then on, on the, um... We can go beyond that, but if we're taking the, uh, internal conflict thing, um, it's always been the case that, um, uh, capitalism is fantastic for, um, creating those opportunities and, um, productivity and so on, um, and at the same time it produces large gaps in productivity, uh, income and wealth and values. So you can see that the cycle related to that is that there becomes greater conflicts, and then in that democracy and whatever, um, it's no longer the belief in the rules and compromise. It's more like, uh, "Who's gonna fight for me?"

   9. CWChris Williamson27:21

      Mm-hmm.

   10. RDRay Dalio27:21

       "Look, just fight for me and win because those other people are problems. Whether they're Left or Right, they're the problems." And then there's a question, you know, um, "Oh, I can't trust the judgment of the Supreme Court because the Supreme Court is political because it's been stacked by that. Am I gonna let that stand in the way of losing?" And so you then come into a- an era that is different from the era that I was used to b- uh, operating in and believe it was essential. In other words, rule of law. The system is fair. I- I come in. We have a- a- a system, it makes a judgment, we abide by the system. Okay. Now, it's not like that as much, okay? There is Left and Right, and it's not like a compromise, it's kind of a win at all costs kind of thing.

   11. CWChris Williamson28:23

       Mm-hmm.

   12. RDRay Dalio28:23

       But now you have the politics. By the way, if I go back in history, I can recount how this happened. I- uh, in the 1860s, we started the second industrial revolution. There was great prosperity. There was accumulation of debt. As we turn the century 1900, and we go into 190- uh, '07, 1900, uh, we have what was called the Gilded Age and the robber barons they were called, those rich, equivalent of billionaires now, and there was resentment built up. And then you had the panic... You had a debt problem in 1907, the panic of 1907. And then you have the great conflict that also led to the First World War as there's a rising power challenging it. So anyway, I'm rambling too much, but I just wanted to paint that picture.

5. 29:24 – 38:32

   To What Extent Do Economic Cycles Affect Politics?

   1. RDRay Dalio29:24

   2. CWChris Williamson29:24

      I'm interested in how much politics are affected by the economic cycle because I think people like me just lay at the feet of culture and human nature and, um, individual personalities, uh, rhetoric, media, um... We lay the political outcomes and the political landscape at the feet of those things, but it seems like you're suggesting that that can be better explained almost directly by just where we're at economically.

   3. RDRay Dalio29:57

      Well, uh, uh, like, economics is a big deal for a lot of people, (laughs) okay? And- and- and when- when you have bad times they want, uh, you know, they wanna... And then there are values, you know, what is, what is, uh, the Left value and what is the Right f- value? And then you have that, um, uh, uh, that- that- that conflict. Um, um...... there are reasons. It's always shown. I mean, in the simplest sense, you know that if you have a bad economy, there's a high risk that the existing administration will be thrown out of power. I mean, we've seen that in, by comparison to big problems, we see that all the time. We know that the political cycle and the economic cycle are tied. Always, right? It's a good indicator if the economy stinks and you're going into election, it's a good indicator that they'll be thrown out of power. I mean, not perfect, but it is. Okay? Now get bad, now get bad. Get real bad. (laughs) Okay? And think about the differences. Now, um, if you look at the boom that is taking place, uh, particularly, let's say, uh, very much the, related to the unicorns and the inventiveness of new technologies and so on, um, roughly three million people, which is 1% of the population, are working at those places and, and, and they're having a boom. Unicorns, there's a boom going on. It's fantastic. If th- if that, if you're in that neighborhood, it's, it's fantastic. At the same time, 60% of the population has below a sixth grade reading level and hasn't had income growth and so on. And increasingly, productivity's passing them by. Technology is gonna pass them by. You look at the deterioration of homelessness in cities and, um, I mean, you see it. I- you know, a- almost any major city, you see the $50 or $100 million apartment and you see homelessness and, and that and then ... B- but you take that bottom 60%, uh, you know, I can give you examples of where I live and I drive 15 minutes away, and I'm, I live in Greenwich, Connecticut. My wife works to help that population, uh, what you call, what are called disengaged and disconnected young people. That means, um, that they, um, dropped out of high school or are failing high school or something like that and are having a problem getting a job. And, and so I live in Greenwich, Connecticut. 15 minutes up the road is Bridgeport, Connecticut. Um, uh, um, Connecticut, which is the second highest per capita income, uh, state in the country, 22% of the high school students have either dropped out of high school or are failing with cla- grades, failing with absentee rates of greater than 25%. So 22% are, have either dropped outta high school or are failing high school with absentee rates of greater than 25%. They live in neighborhoods where there are drugs, guns, shootings, um, uh, young women having births at 15 years old and so on. There's not a bottom in terms of that. It's created in, in, in Connecticut, $700,000, $700 million a year is spent on incarcerations because of that. Okay, there are these different worlds going on. Anyway, I'm rambling too much, but I'm just saying that's what's going on, right?

   4. CWChris Williamson34:16

      Mm. And this disparity, this tension between those two groups leads to a desire for populism? Is that the mechanism that happens?

   5. RDRay Dalio34:25

      Uh, of course. And I mean, there's first of all is that there's a tragedy. Productivity, like everything works on productivity. If you want income, you're not gonna get anywhere by just giving away money. You have to make people productive. So being productive and having income and having, um, a decent life is very important to the wellbeing of the society. I know if I was to grow up in that area, if I had to raise my kids and send them to that schools, I'd be a revolutionary.

   6. CWChris Williamson35:10

      With the systems

   7. NANarrator35:11

      that we have.

   8. RDRay Dalio35:11

      I could not re- ... I, I doubt that you or anyone on this call practically would say, "I would put my kids in th- that environment in those school systems."

   9. CWChris Williamson35:23

      It feels like the system is unsettling you.

   10. RDRay Dalio35:24

       Okay? Now how do, how do you solve the ... I'm not saying there's an easy way to solve this problem.

   11. CWChris Williamson35:28

       (laughs)

   12. RDRay Dalio35:28

       But you'd never ... It, there's two worlds, and I'm, and that's, you know, that's, that's, but, that's the bottom of the population. But there's a, it's like a disease that when you walk through our cities, you see.

   13. CWChris Williamson35:47

       And that reliably results in the same kind of desires, uh, culturally, especially politically, that then influences the sort of people that are elected, the sort of policies that are seductive and attractive to people?

   14. RDRay Dalio36:01

       Of course. I mean, I mean, you look around you and see what you see. What is going on with the mayor race in New York City?

   15. CWChris Williamson36:11

       Yeah. Yeah, makes complete sense. What's interesting about that one is the, the people that are in support, it's very much sort of a luxury beliefs situation where a lot of ... It's very, um ...... aspirational for somebody in, uh, a position of high privilege to support someone that largely their policies aren't impacting them. They're- they're sort of campaigning for somebody that is trying to uplift, uh, the underclass and the lower class that is struggling, um, but it seems to be a very cool sort of charitable philan- philanthropic, uh, position to take, um, if you're somebody that is of means, even if this isn't someone that's necessarily fighting for you.

   16. RDRay Dalio36:57

       Well, I'm sure each person has their explanation, and I think they should explain for themselves. I'm just saying, yeah, no k- you know, no shit, it happens, right?

   17. CWChris Williamson37:09

       Mm-hmm.

   18. RDRay Dalio37:09

       I mean, you asked me the question, does it happen, does it connected to economics, does it connected to conditions? Okay, look around you.

   19. CWChris Williamson37:17

       Yeah.

   20. RDRay Dalio37:17

       Does it happen? Yes, they're connected!

   21. CWChris Williamson37:20

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6. 38:32 – 43:29

   Why are Our Policies So Push and Pull?

   1. CWChris Williamson38:32

      (laughs) The internal political force w- why are our policies this way where it is so to do with polarity, it's so to do with this sort of push and pull that seems to go in either direction?

   2. RDRay Dalio38:49

      Well, it's, uh, it's the s- it's the same as in the 1930s, and p- particularly in Europe, but to some extent in the United States. Um, you know? It's, uh, uh, Plato in his book The Republic, you know, a couple of thousand years ago, more than that, um, wrote about it. Um, in democracies, people vote for their interest. And, um, and so what happens is the majority of people want to, um, say, "Give me more." Politicians wanna give them more. They're willing to get in debt to do these things. Discipline is not (laughs) you know, the thing, "Okay, I'm gonna be disciplined," and that's why Plato said in The Cycle of Democracy, or you saw it in the 1930s, or you're seeing it now, is you want somebody to get control of this thing and make it work well. And then there's two visions as to who that somebody is, okay? And so, you know, i- uh, um, make the trains run on time was the, you know, i- in- in Italy, which was fascist, and so, uh, make the trains run on time. Make things work. And then each has a different vision of what that is. And that's why you had fascism and communism in the '30s, okay? One is, okay, um, I need a strong leader to d- and make a command economy to get everybody to have discipline and do it in a sort of pro-business, pro-capitalist way. Or I needed to redistribute the opportunities and so on and do it in a communist way. And therefore, you had the fights.

   3. CWChris Williamson40:45

      Yeah. It's, uh-

   4. RDRay Dalio40:46

      I'm- I'm- I'm surprised, like, shouldn't all this be obvious? I mean, uh, am I saying anything... You know, I- I don't know why, like, I don't know why you're having me on the interview and why everybody doesn't... Uh, y- you know, am I saying something we can't see?

   5. CWChris Williamson41:04

      (laughs)

   6. RDRay Dalio41:04

      You know what, w- why we d- we don't see it? 'Cause we're only looking at this much. You turn on the news, and there's today's news. And there's not a- a seeing the cycle, okay? It's like the frog in the boiling water idea, you know? You- i- i- you know, take a frog, you ju- dr- throw him in boiling water, he jumps out. Put him into a pot and have it slowly increasing, he'll sit there and boil to death. It's just one increment at a time that is taking place, and here we are, okay? But draw the lines. In that book, The Changing World Order, that I did, I go have 500 years of history, you can see the lines. Education levels, production, you could... Uh, all these things, you can see them. They're in lines. Look at them. Am I saying anything that should be controversial? It's-

   7. CWChris Williamson42:01

      No.

   8. RDRay Dalio42:01

      It's there.

   9. CWChris Williamson42:02

      You're right. With- without the benefit of perspective, it's very difficult to work out what's going on in a broader context. And if you're only ever looking at the narrow window, you don't get to, uh, detect patterns. Because patterns are, by design, they need big windows for you to be able to get through.

   10. RDRay Dalio42:18

       That's right. Tha- that is the main reason, that what happens is these cycles take about a lifetime. So, these things only come across once-... in a lifetime, so it's, like, new. That's a lesson I learned when I was clerking on the floor of the Exchange, that I, in order to understand what was happening, I h- needed to understand what happened in 1933. Okay? So, a-anyway, for those who are interested, the changing world order is explained in my book, Principles for Dealing With the Changing World, World Order. Or you don't even have to buy the book, you can go online for a free video, 'cause I'm not trying to sell books, I'm trying to pass along some knowledge, and you can see that video. In fact, I give a four-minute clip from it where there's about a 30, 35 minute more complete automatic video free. You go on, take a look at it, see what you see, and then measure up what's happening against what that pattern is. 'Cause it's like a disease, it goes through stages, and you, and if you understand what the stages are, you can look at that and say, "Is it tracking that?"

7. 43:29 – 48:08

   We're On the Brink of an Economic Downturn

   1. CWChris Williamson43:29

      Do you think we're post-democracy yet? Can anyone really trust the system? I- is there breakdowns in belief in politics overall? Is that part of the cycle?

   2. RDRay Dalio43:39

      I think, um, I think, uh, I should say, uh, I believe strongly that we are on the brink of that, okay? That it could go either way. That, that, but that there's more risk. Imagine the next economic downturn. And I me- are we not gonna have any more economic downturns? I mean, y- on average, they've lasted six and a half years, they vary maybe by four years, um, so I can't tell you, but you're probably gonna have a downturn. When you have a downturn, you're gonna have people more at each other's throats. I mean, I think. There're gonna be more conflict and people are gonna get heated up about it. And there's certainly, we're losing the middle. Okay? We're losing the middle in media, we're losing the middle in, you know, everybody's on a campaign. And, and compromise, how does compromise go? And I'm in Washington, I'm, and by the way, um, my more recent book, which explains how the debt cycle works, which I gave you in a nutshell before, um, but anyway, my most recent book, uh, um, I've been drawn down to Washington and I meet with top levels of both sides of the parties, and they both agree, o- on both sides, all agrees on the, on the, um, uh, uh, on the mechanics. "Okay, is this the mechanics? Does it work? Is that picture there?" Ev- everybody agrees. I mean, literally almost everybody agrees with that, both sides. And I s- I say, "Well, if I was in your shoes, here's what I would do," and I could explain what I would do. Um, um, um, and it, it doesn't get rid of the debt, but what you have to do is you have to take a little bit from everything. You have to take a little bit from taxes, you have to take a little bit from, um, spending. And it isn't easy, but you can reduce the budget deficit from 7% of GDP to about 3% of GDP. And if you do that, um, with everybody c- giving something, a little bit, you can, you can achieve that, and if you do that, then the slide up- supply demand for bonds improves and interest rates come down and that helps. But if you don't do it now, you're gonna have the next big increase in debt and y- y- you know, when you get d- debt compounding on itself, um, y- you know, you're beyond hope. And, uh, and, and that's where we are. And then ev- and I say, um, so I call that process the 3% three-part solution, and I would just say take the three-part, t- take that pledge. But it's, and it's like being on a boat, um, headed to rocks, and the pe- politicians on the boat headed to rocks know that they're going to go to the rocks, but they're arguing about how to turn. And I say, "I don't care even how, how you turn, just everybody, uh, take it equally from everything. I don't care. But you gotta turn." But they argue, "Am I gonna go left or am I gonna go right and I don't turn?" And I ask them, "Well, why don't you take the th- well, you agree we're gonna go head to the rocks. We got this problem." And, and the answer is very interesting. The answer is, "Well, um, I can't do that because, um, you have to understand, I have to take one of two pledges, if not both. Um, politically and for my party. And that p- that is I promise you that I will not raise your taxes and/or I promise you that I will not cut your benefits." Okay. (laughs) If you promise that you're not gonna raise your taxes and you promise you're not gonna raise your bene- uh, anything on the benefits, okay, that means, uh, a debt of, you know, tw- seven minus five is two plus the other beat, you gotta sell it, okay? We know where we're going. So politics.

8. 48:08 – 53:26

   How Can We Understand the External Geo-Political Order?

   1. CWChris Williamson48:08

      Okay. Th- I have at, at least a good understanding of how the current economic situation can impact internal politics. We've got polarity, people feel like they can't give an inch. That's seen as a, a lack of conviction by their own side, it's seen as a lack of fealty by the other side, they're an unreliable ally, you have this sort of us and them situation that often comes out with capitalism. Good system, lots of problems.... that kinda makes sense. When it comes to the external geopolitical order, I don't even, I, I do not understand what the sort of fundamentals of how that system works are.

   2. RDRay Dalio48:46

      Okay.

   3. CWChris Williamson48:46

      That, that to me, is it the same? Or is it, is, are they different-

   4. RDRay Dalio48:52

      Uh, uh, an order means what is a system of decision-making. So a global, geopolitical world order is how do countries deal with each other. And so the way it works is, um, when you have a war, the winners determine, um, how the system's gonna work. So in 1945, we had a war. The US came out of it as the dominant power. I can explain all the reasons why, but it, um, it had, uh, half of the world's gold, it ha-, uh, excuse me, 80% of the world's gold, it has had the world's GDP, it had the, uh, dominant military power and so on, and it created the order, the post-World War II order or system, in which it replicated, to some extent, an attempt to have what the American system is of, uh, um, let's, let's call it they have the United Nations, they get everybody together, it's like a congress or a house, and then they have these multinational or multilateral organizations like the IMF, like the World Bank, like the World Health Organization, like, uh, the World Trade Organization and so on, that was, um, uh, envisioned that those countries would work it out in a way li- like that. And, um, that, that doesn't work. Power, um, matters. So nobody's going to the World Trade Organization and saying, "Um, these trade deals, and now you make a judgment and I'm gonna abide by that judgment." Or nobody's going to the UN to say that and so on, and now you have shifts in relative power. It was not many years ago that the United States could say almost, to almost any country, um, "I would like you to do this," and everybody got the message because they were afraid not to. But then you have China rising as a comparable power, okay? You have other countries, um, uh, uh, India, um, other countries rising. You know, uh, uh, it happened in my lifetime so I, I know the difference. Uh, um, I, I remember when going to Asia, I mean there was no place... It was backward. I remember when Europe was backward by comparison. I remember when, uh, uh, when, uh, everybo- place was backward. Now you go to places and they're monitored and they're shiny and they're productive and they're competitive. And y- uh, and so you see the charts in my book, you see these, these, you know, what is your per capita income? What is your living standards? Lots of measure. What's your educational level? The educational level. United States, in common education measures, uh, pieces, scores and such, is, uh, 34th out of the major developed countries, okay? And it used to be as a share of world GDP or whatever. There's com- now there's a competition, okay? And power matters. It's not like you go to the judge or the c- world court and you solve it in the world court, okay? So that's how these cycles work and that's where we are in the cycle.

   5. CWChris Williamson52:28

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9. 53:26 – 57:16

   How China’s Ascension Relates to the First Two World Orders

   1. CWChris Williamson53:26

      Mm. Okay. So I'm interested in how China's ascendancy, what we're seeing at the moment, how that relates to sort of the first two orders at the moment. How much that is borne out of that, how much that is influenced by the first two that we've seen, because you mentioned it earlier on, it seems to be the primary, uh, geopolitical tension that we have at the moment globally between the US and China. Um, are there any comparable situations from history like this?

   2. RDRay Dalio54:03

      Yes, yes. And, and let me, let me just explain it. Um, we now have China as a roughly comparable power, and we had a dynamic, so I'll connect it to the first, the economic, and I'll connect it to the second which is the political and... Okay. We, um, so on the, connected to the first, China, um, takes off and-It becomes very competitive in the world, 'cause it w- was for various reasons, they had communist, uh... Uh, Mao dies in 1976, and they change policies in 1978, and as a result, they go to policies that made them much more competitive in the world. And so, they produce things inexpensively. Americans buy that with borrowed money. The Chinese, um, think, "Oh, that's great. I'm selling stuff, and I'm accumulating my saving in the form of these bonds." And the Americans think, "Okay, that's great. I'm buying this good, expensive th- stuff, and I feel that that's good, but I'm also getting deeper in debt," and they don't pay too much attention to that. And then also, you lose the middle class because we used to be manufacturing. Um, uh, in other words, the manufacturer pr- people worked on an assembly line. They had a- a- a house, two cars, and a boat, and there was manufacturing in there and a combination of international competitiveness, particularly China, but also technology has wiped that out. We don't, we are not manufacturing, so we get deeper into debt, and then, um, and- and we lose the manufacturing. We produce our polarity, and we're coming closer to a war, a conflict, and therefore we cannot have dependencies. Okay? We can't have this dynamic, uh, of which we keep buying their stuff on- on borrowed money because the others don't wanna lend to us, and- and, uh, and- and you can't n- keep not producing because you're losing the middle class, who's angry at you and wants to make changes, and also if you keep borrow- bu- needing to buy the stuff from the Chinese or others out there and you get into a conflict, you may not get stuff that you need. So, all of that has to come to an end, has to c- at least be significantly reduced or ju- uh, okay, and that's where we are. So they're interdependent, right?

10. 57:16 – 1:02:03

    What Role Does Active Nature Have in the Modern World?

    1. CWChris Williamson57:16

       What about the role of acts of nature? You know, I- I- I can't work out whether given how finely tuned our world is, acts of nature matter more or less now, because you'd think that we might be more robust because we've got air conditioning in buildings and- and technology to protect us. But on the flip side, we're so finely tuned that a single stuck ship in the Suez Canal can cause a global supply chain issue that reverberates for months and months and, uh, time after. So I'm trying to work out, yeah, how much do acts of nature matter now in the modern world?

    2. RDRay Dalio57:52

       Um... Uh, um, I don't claim to be an expert on that, but I will tell you what I think, um, objective studies, um, do mean. Um... The estimated costs of, um, either the damage and that future damage of, uh, climate... And I'm not sure that how, how much this is cyclical and how much of this is manmade. I'm just, read the studies, but anyway, uh, uh, you know, ev- people argue about that. But anyway, whatever it is, um, it is going like this in terms of, let's, the, let's say the temperature level and the consequences in terms of damage is est- estimated cost is about $8 trillion a year, either in one of three ways or it's usually a mix of those, either in the d- uh, um, in the cost of trying to prevent climate change, so you have to invest in it and do those things, and that's expensive. Or, um, preventing climate change, meaning maybe you build the sea walls or you have to adapt, it's called adaptation. Maybe you have to move because it becomes too tolerable. I don't know. Or the damage itself, Los Angeles burning or whatever, is estimated something like $8 trillion a year. In a world economy, that's about $100 trillion. So it's a, one way or another, it appears to be a very expensive thing that's certainly going to require adaptations, um, and but I can't tell you, um... It's gonna get worse. The- the four, the first four of these are gonna get worse, probably. Okay? The debt situation, as we get deeper into debt and- and these things happen, um, is probably gonna get worse. I mean, I, you just did the projections. The internal order and disorder, particularly if there's more disruption, but anyway, it's not like we're going to a, probably quickly go back to harmony. I- I've- I think, I think if there was something we need, we need a strong middle. I can get into that in a middle th- minute. But I think you need a strong middle, uh, to, uh, bring, to stop the fighting between it and to do the difficult things that need to be done in order to...... deal with our challenges. But anyway, the, the political is probably not good. The geopolitical is, is certainly risky and it is the case that the acts of nature are probably gonna get worse, and they're related to each other. Um, uh, by the way, I, I, I, um, because I'm a practical guy, I don't approach it either as an optimist or a pessimist. I have to just be as accurate as I possibly can to bet well. And then, uh, and then there's technology, and technology, um, is a two-edged sword. Um, um, it'll probably raise productivity a huge amount, but it could be used for wars as well as improvements, and it certainly is gonna be disruptive to employment. And, and how are we going to deal with, um, that? I mean, in other words, okay, you still have the question of how you divide the pie and, um, uh, you know, there's probably gonna be a lot of fighting over that question.

11. 1:02:03 – 1:08:25

    The Predicted Impact of AI

    1. CWChris Williamson1:02:03

       What's your perspective on the impact that AI is going to have over the next few years?

    2. RDRay Dalio1:02:09

       Um, I think there's the creation of AI and it's going to be amazing and it provides enormous, enormous benefits. It's, it's really unique. I think it's the best technology ever, different technologies, because it's thinking that applies to everything. So if you find better thinking applying to medicine and everything, um, building buildings, doing anything, it has that broad application and it's gonna be a major, um, um... Now, um, I don't think the actual applications to create the differences are going to happen as fast as they are... as, as the potential for them to happen is. In other words, I think the developments will happen, but the issue of using it well, incorporating it into our lives, incorporating it into the companies and so on so that it is producing its benefits I think is gonna be a lot slower than ideally it could be, and as I say, it could be used for wars, um, and also it certainly will create great disruptions. I don't know that we'll be able to handle those disruptions how we, how we do it, and I think it's very difficult to even know the applications, uh, the, the impli- implications and applications of, of the new technology. It's like, um, when the digital age came and we have internet and computerization, um, uh, you know, now people will say you have a higher suicide rate and mental illness for kids who are on phones.

    3. CWChris Williamson1:04:18

       Mm-hmm.

    4. RDRay Dalio1:04:19

       Now I would've thought that, um, that would've been a fantastic equalizer of education, you know? All around the world you can be educated on this and I can't tell you one way or another, uh, other than I'm not smart enough to tell the implications of these things. It's a great productivity tool. This is a great productivity tool. Okay, what ha- what has been its implications? Okay. It's many ways beneficial, many ways people would say detrimental.

    5. CWChris Williamson1:04:55

       Mm-hmm.

    6. RDRay Dalio1:04:55

       I think the most important thing over time is how people deal with each other. In other words, can we solve our problems together? It, it's, it's, it's, uh, uh, you know, it's karma or, you know, h- if you don't do it together, you're gonna be at each other's throats and, and you won't solve the problems.

    7. CWChris Williamson1:05:29

       You said-

    8. RDRay Dalio1:05:30

       So figure, okay, how do we get to the common good of whatever it is? How do we commonly deal with the debt problem or any of these things? Uh, you know, how do we not fight? How do we solve problems well together? Um, I, I think that's... So it's a human nature question, it's not a technology question.

    9. CWChris Williamson1:05:51

       You said w- you're not sure how well we'll be able to, uh, handle the disruption of AI-

    10. RDRay Dalio1:06:00

        No.

    11. CWChris Williamson1:06:00

        ... coming in. What, what does that mean? What does, what does not handling the disruption of AI, uh, what does doing that badly or not handling it well, what does that mean?

    12. RDRay Dalio1:06:10

        Um, it will have implications for employment. Um, um, it'll radically enable and, and just as it's doing now, radically enable and enrich many people, and it will replace many people, and it will be used for productivity and discovering of medical treatments and the like, and it will be used for wars. Um, so it's, uh, uh, uh, it's certainly gonna be very disruptive in, in beneficial and detrimental ways.And, and just like all technologies over a period of time, um, but this one more so, you know, how it's used am- and how the implications of it are dealt with will be of paramount importance.

    13. CWChris Williamson1:07:21

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12. 1:08:25 – 1:13:15

    Is Anyone Safe From AI?

    1. CWChris Williamson1:08:25

       I'm interested in the sort of haves and have-nots dynamic that you identified earlier on, um, how that is played into... Economically, it influences what happens in terms of internal politics, increases polarization, increases tension, inc- increases the desire for sort of populism. I have to assume that if AI comes in, that is... You already mentioned this, whatever, 1% of the population are working at, uh, a, a bunch of companies and of that 1%, some will be in companies that are in AI that are maybe gonna have an even more vertical hockey stick over the next decade or so. Surely, that's just going to sh- allow gains to accrue to an even smaller group of people. It's going to displace more people from work. Uh, I think, uh, maybe Microsoft just released a, a huge 40-page white paper looking at the jobs that are most likely to be displaced and the ones that are least likely to be displaced. And, um, it's like a (laughs) , it's actually quite an interesting cohort when you look at it. A lot of very working class, like, um, uh, lumbering, lumberjacks, uh, logging, um, boat captains, none of those... Well, that they were the lowest down on the list. Middle management, sports broadcasters, historians, analysts, middle-level, um, uh, legal, uh, sort of bods, ma- all that sort of stuff, logistics, drivers. Um, so it really does sort of cross the spectrum. It doesn't seem like anybody's particularly safe. It doesn't look like anyone at any, uh, any area is going to be protected from this. So yeah, I'm just interested in what you, what you see in terms of this increasing polarity, haves/have-nots, and, um, yeah, what that, what that's gonna mean for human nature and human psychology and, and levels of wellbeing.

    2. RDRay Dalio1:10:21

       Um, by studying history, and, um, studying human nature, I, I really do... I'll, I'll, I'll touch on that in a minute. Um, I think that, um, it's what I've been saying in terms of this conflict and how you work it out, and then there's also, I think people have some need to be productive, and I think the society needs te- for people to be productive. Maybe it's theoretically possible that you can just receive your check, but you still have to have somebody determining do you get a check and what do you do with it (laughs) and all-

    3. CWChris Williamson1:11:11

       You mean like a u- a UBI type scenario.

    4. RDRay Dalio1:11:13

       ... all I know, all I know is that it's going to be very disruptive. And the question is how are we going to deal with it? Will we deal with it wisely in a way that most people agree and don't get angry over? And, you know, um... Uh, so that's kind of all I know, you know? (laughs) We don't, we've got-

    5. CWChris Williamson1:11:44

       What's your prediction? How wise, how wisely do you think we're gonna navigate this?

    6. RDRay Dalio1:11:48

       Sorry?

    7. CWChris Williamson1:11:49

       How wisely do you think we're going to navigate this? What's your prediction?

    8. RDRay Dalio1:11:52

       I don't think we're gonna navigate it wisely. I think we have a human nature problem. Uh, that's why I say, uh, I believe, I believe in, uh, whether we call it karma or spirituality or the nature of can we make the collective good, or does the individual fighting for self-interest get such that the collective is bad because everybody's fighting for self-interest and they don't smartly work things out? You know, what goes around comes around, um, do unto others as you would have them do unto yourself. Throughout history, peace, work it out, um, has ebbed and flowed. Mostly, you get it during, you get peace in that during prosperous times. But when you get, um...... a lack of prosperity, whatever, you have the sort of horrendous brutality and wars, you know, that we see in varying places now.

13. 1:13:15 – 1:21:03

    Are Financial Cycles Worse Than Kinetic Wars?

    1. CWChris Williamson1:13:16

       What's more dangerous, these cycles or kinetic wars themselves?

    2. RDRay Dalio1:13:23

       Um, um, um, um, I'm not sure. I think the cycles, the cycles are just a description of cause-effect relationships. And the actions in their worst part, which is, you know, that part of the cycle where you-

    3. CWChris Williamson1:13:48

       Mm-hmm.

    4. RDRay Dalio1:13:48

       ... where you're getting rid of the debts and you're fighting for who has power, and all of that, but, and then you've, you get here, 1945, you are, you've had the war, you've gotten rid of the debts, now you have a new power, and then you begin it again. That, um, is the way it works, and then those periods are very dangerous, of course.

    5. CWChris Williamson1:14:20

       Does our current-

    6. RDRay Dalio1:14:21

       So yes, is it, which is worse, one is the, is a description of the process, the other is a description of the bad part of the cycle.

    7. CWChris Williamson1:14:29

       Understood. Do, do you think that our current stage in the cycle explains many, most, all of the conflicts that we're seeing at the moment?

    8. RDRay Dalio1:14:40

       Um, by and large, it is what's going on. Does it explain everything in all ways exactly? Uh, no. Um, and, um, I think this is one of the big things. It's almost people trying to pay a lot of attention to the, uh, what's happening over the short term and paying too much attention to exactly, that they miss the bigger picture. So nothing happens exactly, and do pay attention to the bigger cycle, 'cause the bigger cycle matters and you might overlook the bigger cycle because you're looking at that small thing and you're asking, "Does it happen exactly?"

    9. CWChris Williamson1:15:31

       Mm-hmm. Mm-hmm. Do you th- what do you think most people miss about the mechanics of how countries fall apart? D- is it slow decay? Is it sudden shock?

    10. RDRay Dalio1:15:41

        I think they just aren't, um, they just are not reading the story. They don't... they haven't experienced it, they don't study it, they don't see the patterns. It's like, uh, it's, it's like a person growing from a kid to get older, get married, and they go through their life cycle, get older and die, and they don't pay any attention to the life cycle, and they don't pay any attention to the fact that, hey, this has happened over and over (laughs) and over again. How does that go? Like, you know, okay, do you know where you are in your life cycle? Do you know, do you know what's coming, okay? Do you know where you are in your life cycle? Are you putting it, or are you just paying attention? You get up, you deal with your sit- your job, your kids, your, your th- circumstances, and so on, but you haven't stepped back and say, "Okay, I'm here in my life cycle and I'm, uh, uh, okay, that life cycle's happened over and over. Uh, okay, I, I'm 76 years old. I know where I am in my life cycle." Okay? And, uh, do you know? You almost can, um, know to almost to the detail. Okay, your hair isn't gray yet. Okay? Okay, you maybe haven't gotten reading glasses yet. Okay? There are markers. Uh, do you pay attention to that, okay? Uh, uh, uh, and your life cycle, um, d- and the next generation, and so on? Uh, most people don't pay too much attention. Do you know how the life cycle goes? Do you know that, you know, it's a fact in terms of the life cycle, um, happiness tracks the life cycle. When you, uh, uh, you're in school, th- one of, uh, one of the happiest periods is you get out of school, you're immediately out of school, and you have your friends and you're having a great time and you have great aspirations and everything's great. So, it's plotted, um, uh... People are asked, "What is your happiness level?" And they find that that's a high point. Uh, the worst part of the life cycle is kinda like 45 to 55, okay? Um, uh, because there's work/life balance, um, uh, uh, uh, you're trying to juggle things, maybe the relationship that you thought was gonna be wonderful with your spouse isn't as wonderful, the seven-year itch or something. Then you get into, uh, also, uh, there's lot- it's not as easy as you expected, to be on top of the world, and, and so on, and then you, uh... That, uh, that's proven. I mean, that's, that, that survey, its result. Then you go up and then you, you get past that. And the happiest point of the life, interestingly, is like 55 to 70, 70-ish, in that vicinity, 'cause you're free of these kinds of things. Interesting. I never would've thought that, because I would've figured, okay, you're gonna be old, how could that be as great, and then you're coming to your end. But anyway, it is for various reasons, 'cause you don't have to take care of kids anymore, you don't have to do that, you're free, you're not trying to prove yourself anymore. Anyway, uh, I'm jo- I'm getting off the subject, but I'm just trying to convey the notion-... that does anybody stand back a- and, and saying how do these patterns go for good reasons? They go and they repeat that way. And not exactly. So if somebody was to say, um, "Well, wait a second. You know, you're living longer today 'cause of the new technologies." That's true, but it's still the lifecycle by and large. Okay? So anyway, (pauses) that's how it looks to me.

    11. CWChris Williamson1:19:35

        It's a nice, uh, or a surprising realization that most people n- don't have an understanding. I guess it's, it's funny that these things, the cycles seem to happen at round about the same length of time that people are alive for. So unless you have a particularly unusually long lifecycle, uh, you don't get to see them twice.

    12. RDRay Dalio1:19:55

        Right.

    13. CWChris Williamson1:19:55

        So you have to do the studying of history because if you just go on personal experience, you have only got to see it once. And what is the, the sense that every generation has that we are special from the one that came before? I don't need to listen to granddad. I don't need to listen to that story he was telling me about what happened in 1945. It's like, no, no, no, this time's different.

    14. RDRay Dalio1:20:15

        But, but yet through history all monetary orders have broken down. I'm stating a fact. Money has broken down. All political systems have broken down. United States is, is long and we've just had one civil war. We can have another civil war, but anyway. (laughs) But watch them, they break down and then they come to a new system. And all geopolitical systems, world order have broken down. Last one broke down, and we began a new one in 1945. Okay? It's like lifecycles. Uh, uh... okay? (laughs) I mean... you could ignore all that.

14. 1:21:03 – 1:23:56

    Is Ray Onto Something?

    1. CWChris Williamson1:21:03

       What do you think that you're right about but might be early on? Have you gotten, uh, intuition about something that as yet you can't necessarily prove but you think, "I, I... reliably-"

    2. RDRay Dalio1:21:16

       Or, or

    3. CWChris Williamson1:21:16

       "... this is the direction I think I'm going in."

    4. RDRay Dalio1:21:22

       Um, the timing. The exact, um... certain actions will be taken. You know, where exactly, when. You know, when you step back. Like I think, um, when are, when is the US going to have its debt problem? I think, um, three years from now, give or take. And I also don't know that I'm absolutely right. And I... but it... but, but maybe it's five years from now. I do... um, I, I am pretty confident that what we're seeing in terms of that squeezing out, debt and debt service squeezing out, like... what are you gonna do? Five minus seven. Okay? But you can't... that, that seven in spending you can't pretty much cut because if you look at the particulars of it, well, what are you gonna do? You're gonna cut your... what are you gonna do? How, how are you gonna cut those things? E- everybody's fighting over it and they look pretty fixed, and okay. And th- and that, that, that's gonna add up, so it's, it looks like it's gonna go like this. Anyway, I don't wanna over embellish on that. But it looks like... so I'm l- like a doctor and, and y- you know, looking at the economy and like a patient. And I could say, "I can't tell you exactly when you're gonna have a heart attack. I can tell you this plaque is building up and it's squeezing out spending. Um, and unless you do this, this, and this and change your ways, that's gonna continue, and at some point it's very dangerous." Now, can't tell you exactly when you're gonna have a heart attack or whatever, but... and the only thing I'm suggesting is, I don't know, read my book or t- do it and decide does that make sense, uh, or not, and it's up to you to take care of yourself. I, you know, I'm just doing my part and trying to pass it along. And maybe I'm right, maybe I'm wrong but you can consider it, and there we are.

15. 1:23:56 – 1:26:05

    Find Out More About Ray

    1. RDRay Dalio1:23:56

    2. CWChris Williamson1:23:56

       Well, I appreciate the time that you've put in to do it. Ray Dalio, ladies and gentlemen. Where should people go? They want to dig into more of the stuff that you've spoken about, where's the best place to head?

    3. RDRay Dalio1:24:05

       Well, like I say, I, I think to really understand it, either of my books, Changing World Order or How Countries Go Broke: The Big Cycle. Either of those would be good. Or you can... there are the free videos, um, there's a 40-minute Changing the World Order, I think, or a 35, I'm not sure. Uh, the, uh, YouTube video you can watch, it's free. And then there's a four-minute clip of it, um, and that'll probably g- give you the cycle. But anyway, you've heard quite a bit of it here. And, um, and, um, and then, uh, it deals more now with what to do about it. The books begin principles for dealing with, so not only does it explain it but more importantly what do you do with it. And a lot of this is, um, not even to bet on it, but to diversify or protect yourself against it. In other words, how do I just be like an insurance policy? If I have bad times and good times, how do I take a certain amount of my money or a- and whatever and protect myself against it? These are things we didn't get into in our talk about what you should do, what you could think about doing. They're in the books. If you want that, you know, I suggest you read it. Uh, uh, I'm, I'm passing it along to help. I assure you I'm not doing it for the money of selling my books.

    4. CWChris Williamson1:25:47

       (laughs) Ray, I appreciate you. Until next time.

    5. RDRay Dalio1:25:51

       Thank you for helping me to pass all this along.

    6. NANarrator1:25:53

       (instrumental music)

    7. CWChris Williamson1:25:54

       Congratulations. You made it to the end of the episode. And if you want more, well, why don't you press right here? Come on.

Episode duration: 1:26:05