Kerby Anderson

Ray Dalio is a hedge-fund manager, turned economic historian. He announced, “It’s Official: The World Order Has Broken Down.” As I write this, I am looking at his books on my shelf: Principles for Dealing with the Changing World Order and How Countries Go Broke: The Big Cycle.

He begins by providing quotes from the recent Munich Security Conference that I mentioned yesterday. The German Chancellor warned, “The world order as it has stood for decades no longer exists.” The French president agreed and said that Europe’s old security structures tied to the previous world order don't exist and that Europe must prepare for war. Even Secretary of State Marco Rubio added that we are in a “new geopolitics era” because the “old world” is gone.

Ray Dalio has observed that countries go through a six-stage cycle of going between order and disorder. But that is different when we look at international relations. Much of that is driven by raw power dynamics. There are fewer agreed-upon laws, law enforcement, and adjudication.

He lists five fights between countries: trade/economic wars, technology wars, geopolitical wars, capital wars, and military wars. The link to his post provides a definition of each of these.

His argument is simple. We have experienced the first four of these. We are already in capital wars (sanctions and other financial tools). Most types of wars don’t involve shooting, but the last stage does when military conflict breaks out. “Conflict arises when the dominant power begins to weaken or an emerging power begins to approach it in strength—or both.”

We are living through political and economic change and must pray for wisdom for our leaders.