Bridgewater Associates founder Ray Dalio, speaking to Fortune‘s Kamal Ahmed at the World Economic Forum in Davos, Switzerland, issued a stark warning to global leaders and business executives: Stop pretending the old rules still apply. In a candid assessment of the current geopolitical landscape, Dalio argued the fate of the post-World War II global order—much debated amid President Donald Trump’s pursuit of Greenland and unsettling of the NATO alliance—is a moot point.
“Let’s not be naive and say, ‘Oh, we’re breaking the rule-based system,'” Dalio said. “It’s gone.”
The billionaire founder of the largest hedge fund in history added that as a student of financial history, he pays close attention to the economic cycles of the last 500 years and sees cycles repeat themselves over time.
“And what I learned through that exercise is the same thing happens over and over again,” he said. “And it’s like a movie for me. It’s like watching the same movie happen.”
According to Dalio, five specific forces interact to drive the movie plot forward, with the “money-debt cycle” serving as the MacGuffin that kicks things off. The roots of the current instability, Dalio explained, lie in the monetary decisions made during the past several decades. Since 1971, when the U.S. under President Richard Nixon broke the dollar’s link to gold, Dalio notes, governments have consistently chosen to “print money” rather than allow debt crises to naturally play out. This behavior occurs when debt-service payments rise faster than incomes, squeezing spending. After more than half a century of this, he argued, repeating a consistent warning in his public remarks on the subject, the world is now witnessing a “breakdown of the monetary order,” evidenced by central banks altering their reserves and buying gold.
