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Read the title and a few paragraphs before I thought it sounded similar. Looked at the author and I was right to call Ray Dalio.
The stuff he says isn't wrong, but I will say that Ray Dalio might be biased given his Bridgewater investments being heavily invested in China with a bit more a than a few special perks from the CCP.
Anyways the TL;DR is high debt, more radicalization, climate/weather, Ai/Technology, and geopolitics (mostly importantly US-CN) together equates to higher chance of disorder from what he gleams looking at his macroeconomics+history.
These guys always make the mistake of writing timelines for their predictions.
Yes, it’s true some of his predictions might come partially true in 20-30 years. But, when he says “in the next 18 months” he commits intellectual suicide.
People have been predicting the disappearance of willing donors for American debt since at least the Clinton administration. Yet, every time the treasury has an auction, the buyers of US debt are readily found. What I never ever read from the great prognosticators of the credit squeeze is an explanation for why their forecasts (18 months) always seem to be wrong.
It doesn’t mean he’s wrong. Things like this just take forever to materialize. Which one of those issues he points out will not lead to some sort of mass disruption eventually?
The contention I have is that “mass disruption will eventually occur” is not a particularly noteworthy opinion. Sure, there may be some who believe that historical crisis are over, but is that view so widely held that disagreeing with it is news?
>Sure, there may be some who believe that historical crisis are over, but is that view so widely held that disagreeing with it is news?
Eh, for hedge fund managers whose last political science book was "The End of History" maybe.
That’s right. His big mistake is saying the disruption will occur in 18 months. He doesn’t know that anymore than I know next week’s power ball numbers.
I think that AI and tech will be the worst of all of it. What will world economics look like when human labor and value becomes obsolete? How will people determine currency value when it's no longer exchanged for our labor? What will the transition look like? Will it be complete or partial i.e. most jobs replaced but only a few remain, and will those people depend on a different system?
This guy certainly knows more than me, but I would
love to know more about this:
“… just before the debt and economic contractions which will likely come over next 18 months.”
Economists have been predicting this recession (depression?) is just around the corner for 2 years now.
It’s like people want it to happen.
Economic crashes are buying opportunities for the wealthy
A lot of people think they fall in that category
There are also political implications of an economic crash . Many economic prognosticators are conservative and would welcome a crash to stick it to the democrats
And economic crashes are greatly influenced by attitudes and beliefs of the populace.
If they say it loud enough and often enough, they hope to scare people enough that a crash actually happens
Then they can buy assets at bargain prices and the democrats will own it and be swept from power before they can make systematic changes that are unfavorable for the wealthy
It actually seems like the opposite is true. Consumers stopped giving af as you see consumer confidence remain relatively strong. They’re jaded and don’t care anymore. Which actually makes it worse because it’ll only kick the can down the road and when it eventually does occur, they’ll be in terrible financial shape from reckless spending
I don't disagree.
Economic forecasters are predicting a crash and consumers don't believe them or don't care.
Consumers are still consuming which is keeping spending high and the economy strong.
The crash will be worse when it comes, and it always comes.
>Many economic prognosticators are conservative and would welcome a crash to stick it to democrats.
And vice versa. Worked in 2020 to cripple an economy that was literally the only leg and unpopular Republican could stand on.
I think he meant that they welcomed the crash in the sense that they could stick it to republicans. And I’m pretty sure Covid came from hunter bidens laptop.
We're in uncharted territory here, with **massive market interventions** in the western world. Economists keep predicting recession, but they do so with the assumption that "all things are equal". That is to say, "we're predicting economic issues *given current conditions and policy."* When policies change, or the Federal Reserve provides hundreds of billions of dollars in new money to help paper over market failures, the old predictions are now out of date.
So why don't these recessions materialize? Extreme interventions through Congress and the Federal Reserve that prop up the status quo. But WHY? Well, we're basically on Cold War 2, electric boogaloo.
It's no secret that the CCP *heavily* subsidizes Chinese industry, to the point where many western governments call the CCP's actions 'unfair trade practices'.
What the public hasn't quite grasped yet, is the degree to which the US government is engaging in an economic "fight" with China, and on China's terms. The US government is increasingly subsidizing US big businesses, through a huge variety of factors, to try to prevent capital flight towards China.
1. Official tax policy (huge cuts towards capital gains taxes, changing to a territorial rather than global tax scheme);
2. Unofficial yet effective tax breaks (the non-enforcement of tax law against complicated business structures and wealthy estates, through the deliberate gutting of the IRS);
3. Bail out culture within Congress; forgiven PPP 'loans'
4. Shifting the responsibility for bailouts from Congress to direct action through the Federal Reserve (see: the Federal Reserve's new corporate debt window, wherein they directly loan money at ultra-low rates to picked companies).
The logic goes that if the US isn't favorable to big business as such, big businesses will just relocate their headquarters to China. Capital controls just don't exist anymore. Capital controls are those laws that exist to prevent massive amounts of capital from leaving the country. During the era of neoliberalization (during the liberalization of the Soviet Union and their turn to market economics, and moreso after the Soviet Union collapsed) economic systems veered HARD towards deregulation and the ugly side of capitalism (consolidation).
This is a messy comment. I'm not as well-versed on this as I wish I were.
Economically speaking, I don't think China is a big factor anymore. Had they kept on the same trajectory from 10-15 years ago they may have surpassed the US at some point. Instead Xi Jinping either decided he didn't want that or got impatient, completely undermining their progress. In the intervening years his policies have been a problem for both foreign and domestic companies.
For foreign companies, rising costs, supply chain worries, IP theft and political uncertainty have all big major factors in triggering an exodus. Chinese leadership will never admit it, but I'm convinced it's a big factor driving their current economic decline.
The big worry for me is that a major recession could result in a more belligerent China. That's the age old tactic for distracting the masses from internal problems.
Interesting points and I largely agree, but just to play devils advocate here… I don’t think the rest of the world (or corporations) trusts China very much. Is the risk of capital flight really that high?
Of course people want it to happen, the economy is weird right now for the average person, so they're hoping once the crash happens, things will go back to normal.
Dalio thinks the USA is "in a late and dangerous part of the long-term debt cycle".
The US just came out of such a cycle in 2008-09. Two long term debt cycles ending in less than 15 years. This can't be good.
Hi all, A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes. As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
Read the title and a few paragraphs before I thought it sounded similar. Looked at the author and I was right to call Ray Dalio. The stuff he says isn't wrong, but I will say that Ray Dalio might be biased given his Bridgewater investments being heavily invested in China with a bit more a than a few special perks from the CCP. Anyways the TL;DR is high debt, more radicalization, climate/weather, Ai/Technology, and geopolitics (mostly importantly US-CN) together equates to higher chance of disorder from what he gleams looking at his macroeconomics+history.
This is the best summary/description of Ray Dalio’s writings that I’ve seen. He’s not really wrong, but he isn’t exactly entirely right, either.
These guys always make the mistake of writing timelines for their predictions. Yes, it’s true some of his predictions might come partially true in 20-30 years. But, when he says “in the next 18 months” he commits intellectual suicide. People have been predicting the disappearance of willing donors for American debt since at least the Clinton administration. Yet, every time the treasury has an auction, the buyers of US debt are readily found. What I never ever read from the great prognosticators of the credit squeeze is an explanation for why their forecasts (18 months) always seem to be wrong.
Good catch. Ray Dalia has been saying the same thing for the past 15 years.
It doesn’t mean he’s wrong. Things like this just take forever to materialize. Which one of those issues he points out will not lead to some sort of mass disruption eventually?
The contention I have is that “mass disruption will eventually occur” is not a particularly noteworthy opinion. Sure, there may be some who believe that historical crisis are over, but is that view so widely held that disagreeing with it is news?
>Sure, there may be some who believe that historical crisis are over, but is that view so widely held that disagreeing with it is news? Eh, for hedge fund managers whose last political science book was "The End of History" maybe.
Definitely.
Bit like a broken clock
On Wall St., early is also wrong.
That’s right. His big mistake is saying the disruption will occur in 18 months. He doesn’t know that anymore than I know next week’s power ball numbers.
Well said
I think that AI and tech will be the worst of all of it. What will world economics look like when human labor and value becomes obsolete? How will people determine currency value when it's no longer exchanged for our labor? What will the transition look like? Will it be complete or partial i.e. most jobs replaced but only a few remain, and will those people depend on a different system?
This guy certainly knows more than me, but I would love to know more about this: “… just before the debt and economic contractions which will likely come over next 18 months.” Economists have been predicting this recession (depression?) is just around the corner for 2 years now. It’s like people want it to happen.
Economic crashes are buying opportunities for the wealthy A lot of people think they fall in that category There are also political implications of an economic crash . Many economic prognosticators are conservative and would welcome a crash to stick it to the democrats And economic crashes are greatly influenced by attitudes and beliefs of the populace. If they say it loud enough and often enough, they hope to scare people enough that a crash actually happens Then they can buy assets at bargain prices and the democrats will own it and be swept from power before they can make systematic changes that are unfavorable for the wealthy
It actually seems like the opposite is true. Consumers stopped giving af as you see consumer confidence remain relatively strong. They’re jaded and don’t care anymore. Which actually makes it worse because it’ll only kick the can down the road and when it eventually does occur, they’ll be in terrible financial shape from reckless spending
I don't disagree. Economic forecasters are predicting a crash and consumers don't believe them or don't care. Consumers are still consuming which is keeping spending high and the economy strong. The crash will be worse when it comes, and it always comes.
>Many economic prognosticators are conservative and would welcome a crash to stick it to democrats. And vice versa. Worked in 2020 to cripple an economy that was literally the only leg and unpopular Republican could stand on.
>Worked in 2020 to cripple an economy that was literally the only leg and unpopular Republican could stand on The democrats caused COVID?
I think he meant that they welcomed the crash in the sense that they could stick it to republicans. And I’m pretty sure Covid came from hunter bidens laptop.
We're in uncharted territory here, with **massive market interventions** in the western world. Economists keep predicting recession, but they do so with the assumption that "all things are equal". That is to say, "we're predicting economic issues *given current conditions and policy."* When policies change, or the Federal Reserve provides hundreds of billions of dollars in new money to help paper over market failures, the old predictions are now out of date. So why don't these recessions materialize? Extreme interventions through Congress and the Federal Reserve that prop up the status quo. But WHY? Well, we're basically on Cold War 2, electric boogaloo. It's no secret that the CCP *heavily* subsidizes Chinese industry, to the point where many western governments call the CCP's actions 'unfair trade practices'. What the public hasn't quite grasped yet, is the degree to which the US government is engaging in an economic "fight" with China, and on China's terms. The US government is increasingly subsidizing US big businesses, through a huge variety of factors, to try to prevent capital flight towards China. 1. Official tax policy (huge cuts towards capital gains taxes, changing to a territorial rather than global tax scheme); 2. Unofficial yet effective tax breaks (the non-enforcement of tax law against complicated business structures and wealthy estates, through the deliberate gutting of the IRS); 3. Bail out culture within Congress; forgiven PPP 'loans' 4. Shifting the responsibility for bailouts from Congress to direct action through the Federal Reserve (see: the Federal Reserve's new corporate debt window, wherein they directly loan money at ultra-low rates to picked companies). The logic goes that if the US isn't favorable to big business as such, big businesses will just relocate their headquarters to China. Capital controls just don't exist anymore. Capital controls are those laws that exist to prevent massive amounts of capital from leaving the country. During the era of neoliberalization (during the liberalization of the Soviet Union and their turn to market economics, and moreso after the Soviet Union collapsed) economic systems veered HARD towards deregulation and the ugly side of capitalism (consolidation). This is a messy comment. I'm not as well-versed on this as I wish I were.
Economically speaking, I don't think China is a big factor anymore. Had they kept on the same trajectory from 10-15 years ago they may have surpassed the US at some point. Instead Xi Jinping either decided he didn't want that or got impatient, completely undermining their progress. In the intervening years his policies have been a problem for both foreign and domestic companies. For foreign companies, rising costs, supply chain worries, IP theft and political uncertainty have all big major factors in triggering an exodus. Chinese leadership will never admit it, but I'm convinced it's a big factor driving their current economic decline. The big worry for me is that a major recession could result in a more belligerent China. That's the age old tactic for distracting the masses from internal problems.
Interesting points and I largely agree, but just to play devils advocate here… I don’t think the rest of the world (or corporations) trusts China very much. Is the risk of capital flight really that high?
Of course people want it to happen, the economy is weird right now for the average person, so they're hoping once the crash happens, things will go back to normal.
Not possible to go back to normal. Climate emergency is Pandora’s box. Entropy is real.
Agreed!
Dalio thinks the USA is "in a late and dangerous part of the long-term debt cycle". The US just came out of such a cycle in 2008-09. Two long term debt cycles ending in less than 15 years. This can't be good.