So first off, please join me in welcoming Ray Dalio to the stage Wow! Fuck yeah! Ray Dalio! Oh my god, real legit! We got Ray Dalio! Don't let your winners ride Rain Man David Sass And it's said we open sourced it to the fans and they've just gone crazy with it Love you guys, I mean queen of quinoa!

Ray, I don't know how we got you to this stage It must have been the fact that I just said your name 400 times last year This guy's read your book Do not be bored Yeah, but I will say you were by far my top choice as a guest to have at the All in Summit 2023 Which I took advantage of because I got to produce it this year You guys have heard me talk about Ray's book, Principles for Dealing with the Changing World Order Why Nations Succeed and Fail on the Pod a lot And I think it really encapsulates so well why we are observing a lot of the social, economic and political shifts that are underway in the US and around the world today Increasing civil unrest, divisive politics, our desire for external conflict, inflation, budget and debt problems, etc They've all played out before as nations have risen and fallen Jason likes to make fun of the term "declinists" But I think it's more broader than that, which is what is the cycle that happens with social systems that we call nation states over time Ray's book was my content pick of the year in 2021 And I first learned about Ray when he published Principles as a PDF in 2011 You put that out for free on the internet, thank you Which was an internal document you used at Bridgewater And I don't know if anyone else downloaded it and read it But I was a young CEO in 2011 And I read that PDF and it made a big impact on me and how I thought about management, prioritization, decision making and myself As a kid growing up in Nassau, New York, Nassau County, New York Ray earned money mowing lawns, shoveling snow, delivering newspapers and caddying for Wall Street tycoons He later got a summer job with a Wall Street trader that he caddied for And ended up starting Bridgewater two years after he got his MBA at Harvard in 1973 Make sure I get that right By 2013, Bridgewater was the largest hedge fund in the world Today managing well over $100 billion in assets Ray spends much of his time sharing his analyses and thoughts today And his viewpoints openly and freely And for that we appreciate him and thank him and excited to welcome him here today So Ray, maybe you could just very briefly kind of summarize the cycle that you highlight in your book that I mentioned And the five great kind of drivers that you've observed And tell us a little bit about the simple kind of macro picture I know you've got something you could share on it as well Yeah, sure First I should explain that experience I had of learning that many of the things that surprised me Surprised me because they didn't happen in my lifetime before But they happened many times in history The first time I was clerking on the floor of the New York Stock Exchange in 1971 And the United States, Nixon defaulted on the promise to deliver gold for money Because they didn't have enough money, real money, gold And it went down, I went on the floor of the New York Stock Exchange expecting a big down It went up a lot That's because I never had a devaluation on behalf of that I found that in March 1933 the exact same thing happened with Roosevelt on the radio Same thing So then I studied the 30s, what happened in 1938 in terms of the depression leading to the wars and so on And the interest rates hitting zero Is the exact same thing that happened in 2008 It was because I studied that that we were able to make a lot of money in the 2008 financial crisis So three things started to happen in my lifetime, our lifetimes, that never happened before And I needed therefore to study them in history The first is the amount of debt and money creation Huge amounts of debt and money creation Does that matter?

What is the rise and decline of a reserve currency? How does that all work? I needed to see the cycles for that The second was the amount of internal political conflict In particular populism of the left and populism of the right And a populist is a person who will not accept losing They fight with their contingency And that dysfunction and that lack of willingness to lose Then had January 6th, came out after the book And there's a dynamic that we're going on for that And the third of course is the great power conflict In other words the rise of a comparable economic and military power In the form of China rising and competing with the United States Which is also changing that world order Those three things never happened in my lifetime But are big things that are affecting things When I went back in history I said I needed to study how these things work Sometimes we overlook the really big things So I went back and I studied that And I saw that there were two others that had enormous impact The two others were acts of nature In particular droughts, floods, and pandemics And they killed more people And they toppled more empires And changed more world orders than anything And certainly big issue now And then number five is technological changes and how they evolve So I needed to study those five forces I saw that there's this cycle that repeats over For good cause-effect relationships I don't believe in a cycle just because it repeats I started to understand the cause-effect relationships I have a clip here if I can show you Just four minutes, just a brief summary of the cycle Can you hit it with the clip?

I studied the ten most powerful empires Over the last 500 years And the last three reserve currencies It took me through the rise and decline Of the Dutch Empire and the Gilder The British Empire and the Pound The rise and early decline In the United States Empire and the Dollar And the decline and rise of the Chinese Empire And its currencies As well as the rise and decline of the Spanish German, French, Indian, Japanese, Russian And Ottoman Empires Along with their significant conflicts As measured in this chart To understand China's patterns better I also studied the rise and fall of Chinese dynasties And their monies back to the year 600 Because looking at all these measures at once Can be confusing I'll focus on the four most important ones The Dutch, British, US and Chinese You'll quickly notice the pattern Now let's simplify the form of it As you can see, they transpired in overlapping cycles That lasted about 250 years With 10 to 20 year transition periods between them Typically these transitions have been periods of great conflict Because leading powers don't decline without a fight So how am I measuring an empire's power?

In this study I used eight metrics Each country's measure of total power Is derived by averaging them together They are education, inventiveness and technology development Competitiveness in global markets Economic output, share of world trade Military strength The power of their financial center for capital markets And the strength of their currency as a reserve currency Because these powers are measurable We can see how strong each country is now Was in the past And whether they're rising or declining By examining the sequences from many countries We can see how a typical cycle transpires And because the wiggles can be confusing We can simplify it a bit To focus on the pattern of cause-effect relationships That drive the rise and decline of a typical empire As you can see, better education Typically leads to increased innovation and technology development And with a lag, the establishment of the currency as a reserve currency You can also see that these forces then declined in a similar order Reinforcing each other's decline Let's now look at the typical sequence of events going on inside a country That produces these rises and declines In a nutshell, the big cycle typically begins after a major conflict Often a war, establishes the new leading power And the new world order Because no one wants to challenge this power A period of peace and prosperity typically follows As people get used to this peace and prosperity They increasingly bet on it continuing They borrow money to do that Which eventually leads to a financial bubble The empire's share of trade grows And when most transactions are conducted in its currency It becomes a reserve currency Which leads to even more money At the same time, this increased prosperity Distributes wealth unevenly So the wealth gap typically grows between the rich haves And the poor have-nots Eventually, the financial bubble bursts Which leads to the printing of money There is an increased internal conflict between the rich and the poor Which leads to some form of revolution to redistribute wealth This can happen peacefully or as a civil war While the empire struggles with this internal conflict Its power diminishes relative to external rival powers on the rise When a new rising power gets strong enough to compete with the dominant power That is having domestic breakdowns External conflicts, most typically wars, take place Out of these internal and external wars Come new winners and losers Then the winners get together to create the new world order And the cycle begins again The book's amazing And the amount of work you put into this is extraordinary And it's just really great intellectually I'm curious, when we look at those four groups Since you wrote the book China, I think we'd all agree, has changed significantly Perhaps, I think, best described as maybe being in decline in many ways And disconnecting from the West And it's also, I believe, when you look at the countries you studied Perhaps one of the only modern authoritarian countries To, you know, perhaps have an ability to take the crown If they were to continue So, two-part question How does everything you've learned and studied Impact your thinking when one person, an authoritarian, Xi Jinping Is running China and disconnecting it from the rest of the world In terms of their ability And then, do you consider this If they did succeed in becoming the dominant power in the world What do you think that does for humanity?

There are a bunch of questions in there I'll try to remember them and take them once at a time I think China is going to be a big power for the foreseeable future I think the basic picture in China The United States, the emergence of India and so on The world order is going to change in a very profound way We can't say who's going to be the winner and the loser of this game But I think we do know that This conflict is going to be with us And it's totally changing the world order When you're asking, like, who's going to be the winner of this game Like, I'll tell you history In the history of democracy As Plato described in the Republic There's a cycle And one of the great vulnerabilities of democracies Is the disorderliness, the anarchy that comes from a conflict And so you're asking me to compare democracy And also what I'll call capitalism With authoritarianism And let's call it communism, that version of it Or quasi-capitalism, maybe But we know what we mean Yeah Okay, so So when The risk of capitalism Is when you have the wealth gap clash And the opportunity gap clash And the risk, and that produces a risk for democracy So in the '30s, four major democracies Because of that dynamic Chose to be, their parliaments chose to be autocracies That happened in Germany, Italy, Spain, and Japan So the risk, both have risks I came from, and I've been, we've all been blessed With this amazing environment That equal opportunity, the ability to be creative Rule of law, civility But if we risk those things, in both of those Then we have a great risk So on this war, I think it depends more on How we are, with our circumstances To be strong and capable And relative to them It certainly is going to be a test of the systems Yeah So in a way, us focusing inward On what we do here in America With our democracy, and making it high function Is as important as managing our relationship with China And if you were to look at China and India And those two countries specifically And you were to handicap them, as you are uniquely qualified to do Maybe you could just broadly handicap India versus China for us Because this is a topic we've been talking about, Chamath and I And the other besties on the show, a whole bunch And it's now the largest population in the world I guess people don't realize that And they're continuing to grow And the birth rate is in decline in China So maybe a little bit on India and how you look at it Yeah, and I should emphasize that every conclusion that I have Is a function of measuring statistics And having them as leading indicators And we have 10 year growth rate estimates for China Excuse me, India, and all the countries, top 22 countries And you can see it online if you want, country by country And the reasons for it India has the highest potential growth rate I think India is where China was when I started to go I started to go in 1984 So if you look at the complexion, the per capita income And I think Modi is a Deng Xiaoping So that you have a massive reform, development, creativity All those elements There are of course issues, risk issues But India is very important Now of course there's a religious internal issue Having to do with the population Has 240 million Muslims And I don't think that any of these issues is going to stop India Also in history, the countries that were the neutral countries Did the best So in other words, better than the winners in wars So as we have this conflict between the United States and China And its allies, Russia and so on As we see that line up Countries that are in the middle, like India Are going to be net beneficiaries of that Middle East is again So there are two big epicenters where things are happening fast And quick and getting better And one of them is, well let's say three There's the ASEAN countries We can say that Singapore is essentially a hub But the ASEAN countries, which is Indonesia, Philippines, Vietnam And all of that, that's going to be a great area The Middle East in terms of particularly the Gulf countries The amount of money and they're making talent magnets They're attracting people You look at how the change in wealth is taking place That's certainly it, and India Ray, can I just ask back on China You know Chinese leadership You've spoken and had relations there for many years Can you share with us your point of view On how they think about their position in the world And how you understand their intentions Yes, I'll give you my thoughts I'm not making judgments, I'm just passing along, okay They think there are two different systems, two different approaches They would think that an autocratic system They used to have a committee that would make it But they would say it would be very much like a company If you had a company, you have a board You have the executive committee and so on and so forth And you make sure you get the leadership And then they would say that the world should have a competition And that throughout history There were these competitions in all the various ways we talk about And there's an emergence of that And that there's an inevitability And I think we say that there's an inevitability For a conflict Because there's a containment And then there's a desire to expand And it's like almost keeping a lid on a boiling pot That's the type of situation I can go on at length about the particulars of their thing They have a very good historical perspective Because their history has been literally 5,000 years Like we think of ours They remember the particulars and all the leaders study that And there is a cycle that they're very conscious about So for example, the big risk that they believe is instability So she says that the big storm on the horizon He keeps referring to the big storm on the horizon And that relates to the conflict in the world that we're talking about But it also relates to the fact that they've got a debt problem They have a debt restructuring problem And their instinct through history, the learning of history Is that during such periods of time Internal conflict is a big threat And therefore autocracy, strong controls are the things to have Okay, now we can explore the relative merits of that internal conflict And so on, but that's basically their perspective One of the things that I'm struck by is if you look in the past A lot of these conflicts were started because it's about commerce Or some form of capital or some critical resource And then it just kind of like escalates And then you have these large re-transformations and reallocations of power But in a world where we are now sort of almost on the precipice Closer than we've ever been to this sort of form of abundance Whether it's quasi-costless energy Whether it's food that's available to be printed or made or what have you What do we fight over in this next great conflict?

What is worth fighting over? Okay, so let me first deal with the productivity thing Throughout history, productivity has been the greatest And so if you take the '20s, we had the productivity Most inventions, most patents and so on in the '20s You also had a debt problem And you also had a wealth gap problem So I believe that in terms of the new technology We're going to really see new technologies Now, they can be used for weapons or they can be used for productivity But we're going to have to have a reorganization Of how are we going to redistribute the wealth and opportunities and so on So if we come back, I think we just have to look at What are we fighting for now?

What's going on? And I think that, of course, there's a fight over money If you have a downturn, if you have a debt problem And I think there's good reason to believe we will We can get into that in a minute But they fight over money And they fight over differences in values In other words, the differences in values Like how do you educate your children?

What is transgender issues and education issues And those types of things And so I think you're seeing those things to fight over You're seeing plenty to fight over And let's say we don't fight Let's pray we don't fight What we need is to come together But if, let's say we don't fight You're still going to have to deal with How do you redistribute not only money But how do you redistribute opportunities?

And that's going to take figuring it out, right? And there's going to be an argument over how they do that No, I think this is really interesting Because I think you're saying If you don't fight over the historic area of battlefields If we're not fighting over resources We are going to fight over social issues Or social constructs or social beliefs But I'm also saying you're going to fight over resources Like, we have debt And we'll operate as though it doesn't matter And we'll continue to have the pile If you look at history And we can get into why it is It is not that that goes on a while And you can't continue to increase your living standards By borrowing more than you're spending You know, you can't keep accumulating your debt Because it has to matter So these types of things, as they build up As the debt builds up As the wealth gaps build up And the values gaps build up And then there's difference in reaction to controls Some people, so you see the movement We will have things to fight over At the same time As we hopefully will have a productivity miracle I think that in the next five years I think year by year We're going to go through a time warp You're going to see radical disorder In the next five years As each one of those things comes to pass First with the elections as we have Then we have the conflict with the geopolitical conflict Then we have the climate issue Which by the way is a very expensive issue We should talk about how costly that issue is And then we're going to have this issue of technology Which can provide the greatest miracle But also is a weapon Just frame for us your thoughts on debt for a second How do you think about debt as an absolute construct Or a relative construct?

Especially sovereign debt There is a US debt But then there are also every other 182 countries Who have a ton of debt And so how do you think about debt Debt to GDP relatively and in absolute terms? For any country And quite often many countries Because they go through the cycle together As they did in the 30s What happens is debt rises relative to incomes And what that means mechanistically Is that debt service payments rise relative to incomes And so it squeezes out consumption As the compound And what happens is there's a realization That they have to print money So I think you're going to see In the next downturn Another move to print money There are certain things that are going on now That means that the big risk comes When they don't want to hold those bonds anymore Because the supply demand Think about that supply demand It has a deficit It has to borrow And so it sells its bonds Who are the buyers of the bonds?

Why do they buy? The buyers of the bonds buy Because there's an attractive return Not only do you have to sell those amounts of bonds But when they start to realize That I'm not getting good returns on those bonds They can sell those bonds There are 31 trillion dollars in bonds What would they own instead?

They always own tangible things And those things can also be It could be equities It could be many other things It could be gold Gold has always been accepted as a money Because nobody else There's a saying that gold is the only asset you can have Not somebody else's liability In other words, dependent on getting paid You can have that intrinsic value And for a long period of time It's been valued and you can move it between countries But also, different countries prosper So you'll see the countries Some of the countries that we mentioned They will prosper through that The United States made most of its money Because it didn't enter the war It was before, on World War II and World War I The United States became the richest country Because of the money it made before it entered the war So those countries will prosper And in those countries Then certain real estate will profit Hard assets But where you have that is very, very important There's something about wealth inequality That I just wanted to get your thoughts on as well Which is, I saw a chart in The Economist recently Where they showed on a purchasing price parity basis Normalized across all the Western countries That US median income So median, so not thinking about means Is now 45, almost 47 thousand dollars Doing much better than Britain, most of continental Europe, etc.

So on a functional purchasing power parity basis A lot of Americans are doing much, much better There was a UPS renegotiation for their labor contracts Drivers can now make 180 grand a year I mean, there's a lot of money to be made But then there's this real but also hyper-perceived imbalance And I just wanted to get your sense of How much of this is the social media phenomenon Of just never having enough And how much of it is true when you look at data like that?

There's a huge wealth gap And the nature of our economy is producing this So I can rattle off a bunch of statistics What happened, as happens in these cycles Is that when you have the type of situation we have The government will take on the debt And it'll send out the money So the mechanics of that were that There was more checks and more money sent Than there was loss of income, by a lot So a lot of money went out And as a result of that The financial conditions of the household sector Improved, generally speaking While the financial conditions of the government sector The government got into a lot more debt That's very classic at the end of the cycle Because there's an imbalance between demand and purchases of bonds There is the central bank buying those bonds That monetization So now, that's what the wealth gap looks like And that also creates more of the inflation Because the household sector, buying large benefits But when you look at the differences I'll tell you a personal case So that I can understand I live in Connecticut And Connecticut's usually one, two, or three Of the richest states in the country 22% of the high school students in Connecticut Either have dropped out of high school Or are failing classes with absentee rates of greater than 25% The $600 million a year goes to incarcerations There is a level below which No human beings should be allowed to Let alone raising kids and families I live in Greenwich, Connecticut A wealthy place My number won't be up to date Maybe five years old Per capita students in high school Costs would be $24,000 a person In Bridgeport, Connecticut, up the road $14,000 a person There were 60,000 kids in Connecticut That didn't have computers How were they going to get education?

The state wasn't going to pay for it We philanthropically bought them So now, we don't create a bottom An acceptable bottom The idea of equal opportunity I was blessed with it I think we probably all were blessed with equal opportunity All you need is Parents will take care of you Go to a public school Come out to a world of equal opportunity Equal stability If you have those things If you take all those measures The gaps in those things are greater than they have ever been Right.

Saxon? Let me ask. Ray, I think I fundamentally agree with your critique That America is looking more and more like a late-stage empire Like a late-stage Roman Empire We have this massive debt And we're debasing our currency Like the Roman Empire We have all these far-flung military wars Which we lose all over the world We're wracked by internal divisions So I think I agree with that part of it At the same time We do seem to be really good still at technological innovation In the last year, we've had this breakthrough with AI With large language models I'm wondering, is that Well, first of all, is that a mirage or do you agree with that?

And then if you do agree that we're still really good at technology Is there anything in the historical pattern that's like that? Where you have an empire that's declining in every visible way Except for the one that really undergirds our power Which is technology Well, the late '20s in the United States was such a classic example We had more innovations, more technology All of these cycles If I was to go back to the Industrial Revolution Late 1800s And then you turn When there's a lot of debt And a big wealth gap In 1907, you have the Panic of 1907 Boom, you have this internal conflict And you had the First World War In the '20s, you had the same kind of late '20s It was an era of great inventiveness The other things matter So just because we're really great at innovation Isn't going to save us if all these other things are broken It's a wonderful thing But ultimately, we as a society In an aggregate Are spending a lot more money than we're earning So, if we're doing such a good job on that technology Whatever it is Why is that happening?

So now when you look at the debt Do you want to own the debt? Do you want to own that? Those who don't want to own it Then you have a financial problem When you have a financial problem At the same time as you have a wealth gap And populism That's a dangerous combination At the same time as you have an external So it's a very risky I'm with you, but - Let me just follow up there So you mentioned populism I mean, I think I have a slightly different definition I don't want to debate semantics with you I think populism is a reaction to the failure of elites So all the people managing our fiscal situation And our foreign policy Who have gotten us into all these industry conflicts Who have debased our currency I see populism as people rising up to reject their leadership Now it's a bad thing That they're not willing to accept the results of the election - I agree with your definition And then also At the same time that that's happening They'll win it all, of course They won't compromise They will win They will fight for that side and win - Fair enough, and that's not good I guess my question is Why don't you have more criticism for our elites Who are running all these institutions Who are making these decisions - I do I wrote a piece about four years ago Which says Why and how capitalism needs to be reformed And I believe That on these issues Of equal opportunity We've got a big structural problem And that Everything needs to be reformed I'm not against capitalism, but it needs to be reformed And part of the big problem Just analytically, mechanically Is that The profit system alone Does not Direct resources adequately Let's say if we take Climate, for example There is costs Terrible costs that come from climate It's not built into the system Education Look at the gaps in education The structural system Means that the central government That state government Controls education Then you get to the town And at the town level, it's the town that controls the education And how much they pay And so then you create wealth gaps With rich people being able to take care of their kids In a way that other people can't take care of their kids And that creates an opportunity gap That's a structural problem It has to be taken on full Looked at, reformed And in order to pull this thing off We have to do it together Okay, we cannot do it With one side fighting the other side With irreconcilable differences -Ray, before we run out of time Amazingly well said And what an amazing conversation If we were to get prescriptive here In the last couple of minutes we have If America wants to Have a more If America wants to Continue to be the leader Or at least in a lead position here In the free world What should we focus on?

What would you say are the top three things? -Let me add one question to that And it connects these two Is there a political solution In the US to avoid the End of empire? Or is it a function of physics? And I think this is a big part of Like Sax's point of view Is there a political solution?

We need to change these people Or are there too many, call it Conflating forces, social forces, economic forces That all kind of rise and fall together And it becomes an inevitability That there's a side point -There are pre-existing conditions That represent challenges So for example The amount of debt that we're in Represents a You can't pretend it It exists It represents a challenge There are a lot of these challenges But it is not inevitable What is needed is First of all, a strong middle To bring the country together In terms of rather than To have this fighting Because if we continue the way we will We're going to have a conflict And then there needs to be a good engineering exercise That's going to produce But has to be bipartisan Has to be bipartisan And that strong middle Taking control of the extremes Because neither side is going to win -A great reformation -And that reformation I think should take the form of If I was president of the United States What I would do is -It's on the table -Bipartisan cabinet I'm not running for president But a bipartisan cabinet Bipartisan cabinet And then have An engineering exercise Much like the Manhattan Project In which those bipartisan people Get together And properly engineer Important changes that need to be made They have to be structural We will not agree with each other Ever We're going to kill each other Fighting over these things So structural changes have to be made And you need to have The country as a whole do those things -Do you guys think that's naive Or is it feasible?

-I think that the way politics works Is that you don't somehow Come together in the middle I think one side has to win In the eyes of voters Voters have to choose a path -And that's I'm with you, that's what's going to happen -We've had moderate stuff -We're going to have an interesting two years Between where we are now And let's say Almost two years And let's say early 2025 Okay?

And not just interesting because We're going to have unbelievable elections And we'll see how power How we can come together We're going to have an interesting On how China-US relations are We're going to have an interesting Financial conflict And we're going to have radical technology changes Plus climate's going to be an issue So -Ray, you've, Mr.

Dalio -Right -You've accomplished more than Anybody could ever expect in life Financially with your company And intellectually Obviously you've given this Tremendous amount of thought And you said you're not running for president I wonder, there's not much time left You should Maybe consider running for president And why not do it?

Why not? What's the argument To be so successful, so rich So intellectually curious And not do what the country Needs you to do Which is get in the arena We need you, Mr. Dalio Get in the arena Who wants him in the arena? Let's go -Thank you -This is the same speech -I'm very confident -That's a very nice And generous compliment, thank you very much -Seriously, on a personal level Take me through it -Well, okay Mario Draghi I would give up my life for the country -Okay -But Mario Draghi In Italy, if you know the story He knows The system and how it works And that if you don't have Unitedness And operating in that way Everybody's going to be Torn apart And so I think Whatever thoughts I have If these are helpful thoughts I think my best role is to pass along Whatever helpful thoughts I have And then the population as a whole Deals with those thoughts So I'm making my best contribution That I can, I feel That's my best capacity And then it's up to the people Please join me in thanking Ray Dalio For his contribution -Amazing, give it up That was incredible Thank you Mr.

Dalio Wow, look at this Standing out, first one First standing ovation Of all the designers -Thank you -Let your winners ride -Rainman David Sack -Thank you -And instead -I'm going to endorse it to the fans And they've just gone crazy with it -I'm the queen of Kinwani -Let your winners ride Let your winners ride Let your winners ride -Besties are gone -That's my dog taking a notice In your driveway -Oh man -My half a dash or we'll meet -We should all just get a room And just have one big huge orgy It's like sexual tension -We need to release that now -Let your beat be Let your beat be -We need to get -Besties are gone -I'm going all in I'm going all in I'm fallin' in.