Ray Dalio, founder of Bridgewater Associates, has written several books on the world of investing and the economy in general based on his years of experience as manager of the world’s largest hedge fund. In the latest of his ‘Principles’ series, Dalio applies his quantitative approach of macro investing to analyzing countries, seeking to identify the factors that lead to strength such as education and work ethic, as well as lagging indicators such as a reserve currency that allow a country to spend beyond its means but ultimately presage a fall from dominance. Notably, Dalio sees China’s rise to the top of global power as likely, with America, while ahead, slowly declining. Tonight we debate the merits of his analysis, as well as the overall validity of a global macroeconomic approach that overlooks key factors such as demographics in forecasting long term power status.
Myth of the 20th Century – Episode 249 – The Changing World Order – Why Nations Succeed and Fail
— References —
– America’s 60 Families, Lundberg (1937)
– The Fate of Empires and Search for Survival, Glubb (1978)
– Gung Ho, Howard (1986)
– Dynamic Hedging: Managing Vanilla and Exotic Options, Taleb (1997)
– The Fourth Turning, Howe & Strauss (1997)
– The House of Rothschild (series), Ferguson (1999)
– The Ascent of Money: A Financial History of the World, Ferguson (2008)
– A Gift to My Children: A Father’s Lessons For Life And Investing, Rogers (2009)
– The Black Swan: The Impact of the Highly Improbable, Taleb (2010)
– Antifragile: Things That Gain from Disorder, Taleb (2012)
– Cycles in History – The Fourth Turning, Myth of the 20th Century (2017) – https://myth20c.wordpress.com/2017/11/15/cycles-in-history-the-fourth-turning/
– Principles for Navigating Big Debt Crises, Dalio (2018)
– American Factory, Bognar and Reichert (2019)
– China Factory Blast: Death Toll Rises to 64, Hundreds Injured, PTI (2019) – https://www.thequint.com/news/world/chemical-plant-blast-china
– The Changing World Order: Why Nations Succeed and Fail, Dalio (2021)
– The End of the World is Just the Beginning, Zeihan (2022)
– Zeihan – After Dark – the Collapse of Globalization, Myth of the 20th Century (2022) – https://myth20c.wordpress.com/2022/10/31/zeihan-after-dark-the-collapse-of-globalization/
– Train Fatalities, Injuries, and Accidents by Type of Accident – https://www.bts.gov/content/train-fatalities-injuries-and-accidents-type-accidenta
16 Comments Add yours
“I hope he slits his wrists sometime soon”
LoL! All your lipsmacking is forgiven. Fucking based.
Episode topic suggestion: America’s industrial readiness for a global conflict
LikeLiked by 1 person
Probably a dumb question, but whatever happened to Hank Oslo?
One thing you guys hint at but miss the entire import of – Dalio is a MASSIVE China shill. He is making so much money off of the China shift, and all of his investments favor gutting the US and moving the industrial base to China, etc., and the Chinese have cornered him to such an extent, he is not really free to NOT be a China shill. If you think I am being paranoid about the Chinese, look at the university system, look at who funds Elon Musk (you missed the massive China drive with him as well – Notice the lack of freedom of speech on twitter now about anti-CCP content, and you guys did not go in depth about how intimately tied his finances are to the CCP), the fentanyl crisis, moving into Brazil, their nuzzling up to the transhumanists, etc. CCP dont play around. Great show as always. – Possible future show – the position paper Unrestricted Warfare those 2 chinese colonials wrote in the late 90’s?
Please substantiate your claims. Bridgewater has to disclose its positions to the SEC every quarter through the 13F filing, which are publicly available. From what I can tell there is very little China exposure (i.e., < 5%): https://whalewisdom.com/filer/bridgewater-associates-inc#tabholdings_tab_link
Your other points about Musk are fine, but this wasn’t a show about him. His selection of the former head of Tesla China as VP of Tesla Sales caught my attention recently.
Copy – will take time to substantiate given my day job. I first learned about his leanings from Steve Bannon and Peter Navarro, the CCP Hawks of all CCP Hawks, who put him in the camp of multi-national Globalists. I will get you data – only fair. My growing suspicion is that the CCP has their fingers in a lot of things and they are expert at being decptive. Pillsbury writes in his book that Guile is a Chinese Virtue, (e.g., Tale of the Emperor’s Cauldrons). I think we in the US are at the point where you have to pick a side, and many people, Dalio included, have not done so, putting them on the side of the CCP.
Again, great podcast – you guys are impressive, educational, and entertaining. I stop what I am doing to listen to what you guys have to say. God bless and be well –
P.S. – Kyle Bass also was a wake up call for me on CCP –
Here is a starter, though I have not researched the data cited:
From a Kyle Bass interview with Ben Weingarten : “Yeah, this is the hard part, right? What China does so well? Again, they lie, they cheat, they steal, they bribe, they do everything they can do to further their own interests as a nation-state in our world, and they use our weaknesses against us. And one of our weaknesses is a desperate need to pad our own pockets. If you think about what they do, they dangle that carrot, they dangle the carrot of the path to riches and the path to wealth through China and China’s 1.4 billion people and selling things to all of them. And then what they do is they’re brilliant in granting special market access to few. They invest $5 or $6 billion in Ray Dalio’s Bridgewater, and they invite him into the PBOC [People’s Bank of China] meetings, he becomes evangelical about the greatness of China because he’s making billions of dollars off the Chinese…”
I actually really like Kyle Bass, although I think his skepticism on China is a bit hyperbolic. That being said, I generally think he’s right to sound the alarm on the CCP. That government is most definitely oriented towards undermining the US, and their businesses and citizens are not much different, although are more generally just interested in enriching themselves like Americans. The difference is the coordination in my view which makes them such a formidable adversary.
I’m sure he’s careful to be nice to all his investors, China not excluded. Does that make him a globalist? Maybe. But a pragmatist most certainly.
Finally, I am not against Elon, and I appreciated your stance on him in the end of hte year podcast. I only brought him up to illustrate that China is all over virtually every aspect of American business and culture, and like Ray Dalio, they are all over Elon like a cheap suit – hard to fully judge him without understanding that massive lever on his business. That said, I am with you that he is a force and one to admire.
Of course. The Chinese are not going to ignore what Elon and Tesla are doing – they’re trying their best to do it better, cheaper, and kill off the competition. Tesla barely scraped by in getting their factories in China to be solely owned and not joint-ventured like all the other auto makers, and China is one of the few places that Tesla actually makes money. Getting that money out of there is always the problem, though. Lastly, speaking of investors, I’ve never been one to laud Charlie Munger, Warren Buffet’s business partner, but I do respect his investing success. However, if you want to look into what’s been wrong with American business, I don’t think we need to look further. His investment in the Chinese automaker BYD is a direct competitor in Tesla in the EV space, and Munger never stops saying how BYD is a superior business. He might be right, but they (Warren and he) funded BYD over 10 years ago, and since has been nothing but a critic of Musk and his business practices. It’s all very muted in the terms of what public figures can realistically say to the press, but it just demonstrates how little vision these bean counters have when it comes to actually inventing anything. They basically saw the cost advantages of Chinese manufacturing, and instead of investing in America, they funded a company in an increasingly dangerous geopolitical rival country. We’ll see how their investments do over there if China invades Taiwan. Charlie’s something like 96 anyway so I’m not sure he really cares anymore if he ever really did.
Looking forward to Hans’ deep dive into the falseness of Chinese antiquity. I get the Ship of Theseus view of the current Han population not being the same as the ancient Qin Dynasty but does that really discount China as an ancient civilization?