Principles: Investment and Economic

by Ray Dalio

Do big government debts and fast rates of adding to them threaten our collective well-being? In this groundbreaking analysis, Ray Dalio, one of the greatest investors of our time and the #1 New York Times bestselling author of Principles, shares the reasons behind his fears for the US debt markets, answering some of the most important market and economic questions we now Are there limits to debt growth? Can a big, important reserve currency country like the US really go broke? Is there such a thing as a “Big Debt Cycle” that can tell us when to worry about debt and what to do about it?

For decades, politicians, policymakers, and investors have debated these questions, but the Big Debt Cycle that helps answer them is not talked about or well understood. With the US debt issue coming to a head, Dalio’s How Countries Go Broke provides the first-ever detailed analysis of the Big Debt Cycle, explaining its implications and offering a surprisingly straightforward solution to getting debt problems like the ones the US faces under control.

Dalio has built his career as a leading global macro investor by studying the patterns of history to develop unconventional perspectives on what’s happening in markets and economies today. It was this approach that led him, in the years leading up to the 2008 Great Financial Crisis, to study the Great Depression and other past big debt crises and use what he learned to navigate the turbulent markets successfully. By looking closely at thirty-five cases over the past 100 years when governments have gone broke and studying the mechanics behind them, Dalio has developed a first-of-its-kind template for what to watch for and what to do when the threat is significant as his measures show that it now is. He has discussed this template with treasury secretaries and central bankers from around the world and is now sharing it with the public to help bring urgent attention to the big risks the US and a number of other countries face—and to explain how to avoid the worst-case scenario.

Genres: Economics, Finance, Business, Nonfiction, History, Politics, Money

Audio CD

First published June 3, 2025

About the author

Raymond Dalio (born August 8, 1949) is an American investor, hedge fund manager, and philanthropist. Dalio is the founder of investment firm Bridgewater Associates, one of the world's largest hedge funds.

Reviews

[Sebastian Gebski · Rating 5 out of 5]

It's kinda incredible (if you ask me), but Ray Dalio has managed to wite yet another book on the very same topic (big & small cycles in local/global economies) and it's ... a-must-read again. Bah.

No, but seriously, get it - it's a no-brainer buy. Many good points, many good observations - quite hard to follow as an audiobook (without graphs and illustrations), and even in the Kindle form I occasionally had to stop and process some shortcuts he made. TBH not all chapters are for every audience, but the ones that are supposed to be generally understandable for everyone already bring a powerful message - hope is not a strategy, we should learn from the past, the post-WW2 period is over, multilateral liberalism is over and we're (unfortunately) back to the rules of direct, brutal strength. For the latest 2 generations (at least) - it's a shock. The faster the wake-up comes, the better.

OK, but back to the book:
- it covers the general theory of cycles (already introduced earlier by Dalio)
- its detailed justification/clarification
- examples from the past (for various countries)
- a summary and even a brief hints on solutions

I've started listening to audiobook (in my Everand subscription), but the book is so good that Ive bought e-book as well & I already know I'll be coming back to it regularly. Good stuff.

[Nigel · Rating 5 out of 5]

Demagogues and sophistry are going to ruin the world
You added a status update

Usually demagogues from the left share support on the people who are in poverty, and on the lower spectrum, where they demagogues on the right will share support on people who are middle class to hold their power
All through out history
You added a status update

Who controls the autocracy and if they do radical enough policies to control the oligarchs in there country and how far and how serious
will such governments
take and how much dictatorial they will be, power controls but absolute control
Autocracy from democracy is
How nationalist they'll be.


Dark sky’s in southern Alberta and over Canada prairies😞

Top it off we have climate deniers who completely ignore the last decade Canada 🇨🇦 has been in a state of emergency 🚨 fire 🔥 status…. And that this year we got 25% of our ground water 💦 this year…. I don’t know how it could get any worst, expanding to the global over population areas that only have 25% of there ground water 💦 with looking at the crisis that is going and transpiring on hard money and on Fiat money.

Might just be the dark haze of smoke developing over the prairies but I think we’re in hell…. Crops are going to be stunted either from lack of ground water 💧 or the smoke haze and the cattle can’t be on the farm cause they rely on the small water sheds on the farm that are well fed that are near empty….

Call me a nihilistic person 🧍‍♂️ but this year is looking forward to winter…. And it’s not even summer yet…

https://www.nowdix.ca/2025/06/off-fac...

Although I go back on after a fawn is born on my lawn…
It’s complicated facebook and me that’s for sure. 👍

https://www.nowdix.ca/2025/06/a-fawn-...

[Sanford Chee]

All-in interview w/ Ray Dalio Jan 2025
https://podcasts.apple.com/sg/podcast...
https://youtu.be/1_rvVTuGRNE?si=r4WTt...

Bloomberg 9 Feb 2025
https://youtu.be/s5kQkpnwtCE?si=KJeuk...

Ray Dalio with David Rubenstein: How Countries Go Broke Jul 2025
https://youtu.be/eGtGKk0E_qk?si=5pRrz...

Defending the Value of Money -Ray Dalio 23 Jul 2025
https://www.linkedin.com/pulse/defend...

'US sliding towards 1930s-style autocracy, warns Ray Dalio' -FT 2 Sep 2025
https://www.ft.com/content/b86bd33b-b...
FT Interview: Ray Dalio 2 Sep 2025
https://www.ft.com/content/d130beb3-b...

'It All Has Happened Before for the Same Reasons' -Ray Dalio 17 Sep 2025
https://www.linkedin.com/pulse/all-ha...

Ray Dalio Principles
https://www.principles.com/
https://economicprinciples.org/

How Countries Go Broke: Introduction & Chapter One
https://www.linkedin.com/pulse/how-co...
5 big forces affecting cycles of peace & prosperity vs conflict & depression: (1) Big debt cycle; (2) internal politics & social harmony; (3) geopolitics; (4) big acts of nature eg droughts, floods, earthquakes, pandemics etc; (5) technology

1 Mar 2024 bubble indicator
https://www.linkedin.com/pulse/we-sto...

Popping of the bubble occurs due to a combination of (1) a tightening of money and (2) the prior rate of debt growth being unsustainable.

Chapt 2: The Mechanics in Words and Concepts
https://www.linkedin.com/pulse/how-co...
When bond yields are low relative to inflation, bonds will be sold and inflation assets will be bought, and vice versa.
"From what I can see, we are likely entering the very turbulent stage in the overall Big Cycle driven by the interactions of these five big forces, and the resulting changes in the world order will be big...By “long-term (big) debt cycle,” I mean the cycle of building up debt assets and debt liabilities over long periods of time (i.e., successive short-term debt cycles) to amounts that eventually become unmanageable. This leads to a combination of big debt restructurings and big debt monetizations that produce a period of big market and economic turbulence." -Ray Dalio
Big debt crises come about when the amounts of debt assets and debt liabilities become too large relative to the amount of money in existence and/or the amounts of goods and services in existence.
The greater the size of the debt assets and debt liabilities relative to the real incomes being produced, the more difficult the balancing act is, so the greater the likelihood of a debt-caused downturn in the markets and economy.
A sure sign of moving toward a debt crisis is when there is a large and rising amount of borrowing that is being used to pay for the debt service.

Chpt 3: The Mechanics in Numbers and Equations
1/ Debts relative to income (Debt/GDP)
https://tradingeconomics.com/united-s...
[(Future exp ex-int - future income) + current debt*(1+i/r)] / [current income*(1+g)]
2/ Debt service relative to income (interest expense/government revenue >useful vs Debt/GDP)
https://www.cbo.gov/publication/61172
3/ Nominal interest rates relative to a) inflation rates and b) nominal income growth rates (i.e., inflation plus real growth)
4/ Debts and debt service relative to savings (e.g., reserves)
=>countries with very high debt levels, very large deficits, low savings, and very high and very fast rising interest rates have a very high risk of a debt default or debt devaluation crisis.

Chapter Four & Chapter Five - Part 2: The Archetypical Sequence Leading to Central Governments and Central Banks Going Broke
https://www.linkedin.com/pulse/how-co...

Chapter 8 to Chapter 11 - Part 3
https://www.linkedin.com/pulse/how-co...

'My Trip to Washington to Get in Sync with Republican and Democratic Leaders on the Budget and Debt Situation' -Ray Dalio 27 Jun 2025
https://www.linkedin.com/pulse/my-tri...

Ray Dalio: When countries have too much debt, lowering interest rates and devaluing the currency that the debt is denominated in is the preferred path government policy makers are most likely to take, so it pays to bet on it happening.
https://www.linkedin.com/pulse/most-i...

[Blake · Rating 1 out of 5]

This books pretty full of shit.

Dahlio makes big claims about the “big debt cycle” but has no evidence to back it up throughout the book.

His fundamentals on economics are mostly good, but also through an investors lens.

Towards the end of the book, his core premise reveals part of the issue, which is he has a presupposition that with the ability to capture all knowledge the future can be predicted. It’s a pretty obviously faulty premise.

The graphs in the book are mainly ascientific and serve mainly to try to illustrate his points.

The history overview are a bit odd and tangential though not necessarily wrong.

His political section is already dated (idk why you would write current events) and overly naive.

Anyone interested in this book would be better off reading other economists, historians, and political writers.

[Russell Chee · Rating 2 out of 5]

There is little here that is original from the perspective of an investor, macroeconomist, or politician. Dalio writes about pretty basic things with the kind of verbal flourishes that imply he is the only person who understands these dynamics. This is by no means a bad introduction to fiscal and monetary dynamics, and investing through these macro cycles, but it is a far cry from the intellectual tome it strives to be.

[T. Van · Rating 3 out of 5]

always interesting to read dalio’s perspective on things. his previous book, changing world order, has greatly shaped how i view the world and so far its been a solid compass to make sense of and navigate what’s going on in the world. to me, this book felt like a mix between an update on the core points of changing world order a few years down the line, as well as a deep dive on the mechanics and current state of sovereign debt, particularly that of the US.

i feel like this book is structured less cohesively and the ideas are expressed less lucidly than in changing world order. it doesn’t explain every term or concept and often leaves reasoning steps in arguments implicit, which, combined with the fact that this book often quite technical, makes this book less accessible to lay people (read: macroeconomics enthusiasts who are by no means professionals) like myself.

still, for anyone interested in macroeconomics and broadly subscribes to dalio’s views on the cyclicality of economies, countries, and geopolitics, i do recommend this as a follow up to changing world order.

[David K. Glidden · Rating 3 out of 5]

Nearly a century ago by now, my father taught graduate students business cycle theory, while he was finishing his degree in agricultural economics. As he became invested in agricultural statistics over his long career, he learned that all generalities are false, no matter how well they appear backed up by statistics.

Dalio’s monetarist theory of economic cycles consequently reminds me of medieval geocentrics who could calculate the motions of stars and planets with considerable accuracy, even though their planet was certainly not the center of the universe.

Dalio is a Platonist, not an Aristotelian. A Hedgehog who sees one big thing, and not a Fox who sees many things. His writing is pretentious, arrogant, supercilious, because he has made a lot of money as a hedge fund monetarist, and in his success he wrongly sees monetarism as the Key to Understanding Economics.

Dalio‘s Top Down, almost autocratic approach to economics naturally takes the perspective of the Lords and Masters of the Universe —the Robber Barons who have taken most of the global wealth, often by trickery and legal chicanery, the movers of global markets. Theirs is indeed a Platonic Universe where only the aristoi ( the best people) really matter.

Aristotelian Economics, by contrast, works from the bottom up, focusing not on gaining the most money, but on distributing the greatest economic good for the most people, starting with the poorest of the poor. And so these economists focus on microcosms, on the moral imperative of fairness, rather than the greedy lust of covetedness. A human potentialities model of economics, as Sen & Nussbaum describe it.

Yes, we the people today are at the mercy of politically influential monetarists. But what if economists took as their Original Position the standards of living of those most in need?

Dalio ends his book with a love letter to Trump and his ilk, those artful dodgers who brought about the Crash of 2008, escaping unscathed while poorer folks lost homes and livelihoods.

[Subramanya Shindagikar · Rating 3 out of 5]

Picked up this one as I belong to the group of Ray which believes current economic world order centered around US is unsustainable. However, editors of the book sadly have done an awful job. Content of the book is worth 100 pages which has been dragged to 400. He often mentions he won’t go into certain topics because it will be a digression - such digressions would have been a lot better than repeating exactly the same statements over and over.

Having said that, his concept of economic cycles resonates very well and perspective of looking at multiple events with a common lens and theme of cycles is refreshing. The book keeps you waiting till the end to see if economic indicators which he says he uses to predict the stage of cycle are explained - it never comes, just the final conclusions with graphs plotted with probability are shown without any method. Disappointing to see that from Ray Dalio who sets out on this book declaring that he wants to teach the world all the knowledge he gained over decades. None of the concepts in the book are complicated, unnecessarily readers told to skip to next if they are non professionals all throughout the book. Better thing would have been to explain the basics if author thinks whatever he is saying is complex, instead of repetitive statements all over.

Easy to notice is the presumption book carries - the Fed or in general, Central Banks are all powerful entity. In reality, Central Banks have very narrow tools which they can exercise even when they are operating independently. They can get the things wrong, but to get it very right and overturning the bad economy it takes wonders if they do. Ray Dalio has projected the Fed as God-like.
Interest rates in the book have been shown as some kind of knob which central banks can easily rotate and “set”, that’s not how the reasonably free markets operate!

4* for the giving the perspective on macro cycles and big picture, 2* for the book structure and presumptions.

[Book Dragon · Rating 5 out of 5]

Ray Dalio, the founder of Bridgewater Associates, has extensively studied and written about the cyclical nature of economies, particularly focusing on how debt cycles drive the rise and fall of nations. His recent book, "How Countries Go Broke: The Big Cycle," distills decades of research into a comprehensive framework for understanding national bankruptcy. This technical review will delve into Dalio's core concepts, emphasizing the mechanisms by which countries accumulate unsustainable debt and the inevitable consequences.

Dalio's Core Framework: The Big Debt Cycle and the Overall Big Cycle

Dalio posits that the economic machine operates through identifiable cause-effect relationships that repeat in cycles. The most critical of these is the Big Debt Cycle, which typically spans 75-100 years. This cycle is not isolated; it interacts with other major cycles, including the political cycle within countries and the geopolitical cycle between countries, all contributing to what Dalio calls the Overall Big Cycle that dictates the rise and decline of empires.
Stages of the Big Debt Cycle and How Countries Go Broke:
Dalio outlines a predictable progression for the Big Debt Cycle, which, if mishandled, leads to a country's financial demise:

1) Early Stage: Low Debt, High Productivity, and Sound Money:
*Characteristics: After a major restructuring (often following a war or depression), debt levels are low, and there's a strong focus on productivity, sound money, and wealth accumulation. The leading power's currency often gains reserve status due to its stability and economic strength.
* Mechanism: People are cautious and prioritize saving and productive investment. Borrowing is for productive purposes, leading to real economic growth.

2)Growth Stage: Credit Expansion and Leveraging:
* Characteristics: As confidence grows, people increasingly borrow, believing in continued prosperity. Credit expands faster than incomes, leading to asset price appreciation and a sense of wealth. New financial instruments and intermediaries emerge.
* Mechanism: Central banks typically keep interest rates low to stimulate growth, encouraging more borrowing. This "leveraging up" fuels economic activity but also creates a growing debt burden.

3)Bubble Phase: Unsustainable Debt Growth and Speculation:
* Characteristics: Debt growth becomes excessive and unsustainable, used increasingly for speculative investments rather than productive ones. Asset prices become detached from their underlying earnings. This is often accompanied by a widening wealth gap.
* Mechanism: The illusion of prosperity encourages more borrowing and risk-taking. People extrapolate past returns into the future, ignoring the accumulating debt. The central bank faces a dilemma: raise rates to curb inflation and the bubble (risking a downturn), or keep rates low and let the bubble inflate further.

4) Peak and Tightening: Central Bank Action or Inability to Service Debt:
* Characteristics: The bubble bursts. This can be triggered by the central bank raising interest rates to curb inflation, or by the market's realization that existing debt cannot be serviced.
* Mechanism: Higher interest rates make debt repayment more difficult, leading to defaults. For countries, this can manifest as difficulty in selling government bonds or a flight of capital.

5) Deleveraging: The Painful Adjustment:
* Characteristics: This is the phase where debt levels decline relative to incomes. Dalio identifies four key levers for deleveraging, which are often used in combination:
* Austerity (Cutting Spending): Governments, businesses, and individuals reduce spending. While necessary, this can be deflationary and lead to further income contraction, paradoxically increasing the debt burden initially.
* Debt Reduction/Restructuring: Debts are written down, defaulted on, or restructured (e.g., lower interest rates, longer repayment periods). This can be painful for creditors (e.g., banks, bondholders).
* Wealth Redistribution (from "Haves" to "Have-Nots"): Governments may increase taxes on the wealthy or implement policies that redistribute wealth to stimulate demand. This can lead to social and political unrest.
* Monetization of Debt (Printing Money/Quantitative Easing): Central banks print money to buy government debt and other financial assets. This is often the most palatable option for policymakers but carries the risk of inflation and currency devaluation, especially if confidence in the currency is lost.
* Mechanism: The goal of deleveraging is to bring debt and income back into a sustainable relationship. The "beautiful deleveraging" is achieved through a balanced mix of these four levers, allowing debt to decline relative to income without causing excessive deflation or inflation. A "ugly deleveraging" occurs when the wrong mix of policies is applied, leading to depression, hyperinflation, or social disorder.

6)Debt Crisis and Potential Bankruptcy:
* Characteristics: If the deleveraging process is poorly managed, or if debt levels are simply too immense, a country can face a full-blown debt crisis, potentially leading to national bankruptcy. This is particularly true for countries that borrow in a foreign currency or those whose currency loses its reserve status.
* Mechanism: The inability to roll over debt, a collapse in bond prices, soaring interest rates, and hyperinflation (if money printing becomes excessive) can all signal national bankruptcy. The ultimate consequence for a country with a reserve currency that prints its own money is often a devaluation of its currency and a loss of its reserve status.

How the Overall Big Cycle Interacts:

Dalio emphasizes that economic cycles are intertwined with political and geopolitical forces:
* Internal Political Cycle: Economic hardship during deleveraging often leads to populism, political polarization, and social unrest, as the "haves" and "have-nots" clash over wealth distribution.
* External Geopolitical Cycle: The rise and fall of empires are closely linked to their economic strength. A nation's ability to service its debt, its economic competitiveness, its share of world trade, and the strength of its currency as a reserve currency are all crucial indicators of its power. Declining economic power due to excessive debt can weaken a nation's military and its influence on the global stage, potentially leading to conflicts and a shift in the world order.

Technical Nuances and Dalio's Key Insights:

* Money vs. Credit: Dalio meticulously distinguishes between money (what you settle transactions with) and credit (a promise to deliver money). The vast majority of "money" in an economy is credit, and it's the expansion and contraction of this credit that drives economic cycles.
* The Role of Central Banks: Central banks play a pivotal role in managing debt cycles through interest rate policy and quantitative easing. Their ability to print money is a powerful tool, but it has limits, especially for non-reserve currency countries or when confidence in the currency erodes.
* Reserve Currency Status: Dalio highlights the immense advantage of having a reserve currency (like the USD). It allows a country to print money to pay its debts without immediate, severe inflationary consequences, as much of that newly printed money is absorbed by global demand for the reserve currency. However, even this has limits, and excessive printing can eventually undermine confidence and lead to a loss of reserve status.
* Productivity as the Long-Term Driver: While debt cycles cause short-term fluctuations, Dalio stresses that long-term prosperity is ultimately driven by productivity growth. Countries that fail to improve productivity will eventually become uncompetitive, regardless of their debt management strategies.

Conclusion:

Ray Dalio's "How Countries Go Broke" provides a powerful and historically informed technical framework for understanding the mechanics of national debt crises. By emphasizing the cyclical nature of credit, the interplay of economic, political, and geopolitical forces, and the limited tools available to policymakers, Dalio offers a stark warning about the consequences of unchecked debt accumulation. His work is a crucial guide for policymakers and investors seeking to navigate the complex and often perilous landscape of global finance, providing a lens through which to anticipate and potentially mitigate the inevitable challenges of the "Big Debt Cycle."

[Caden Crum · Rating 4 out of 5]

Look, I know everyone is not as well versed in Dalio’s literature as me. For many, this is the first book they’ve read. Because of that, I can excuse the first 100 pages of this book being largely repetitive and arguably verbatim of what was included in his last book, The Changing World Order. However, after page 100, this man starts to cook. It gets a bit technical, even for a finance major, but he does a great job of describing the problem we and the rest of the world face in terms of debt and I love his visually appealing the graphs were. His solution of working down the debt-to-GDP ratio to 3% by cutting spending 4%, hiking taxes 4%, and slashing interest rates by 1% is a bit idealistic and probably over-simplified, but it would work great as a fallback plan if Congress cannot find a more palatable solution. Solid read

[Kyle Fitzy Shanklin · Rating 4 out of 5]

An important yet dense look at a very pertinent subject. This was my first foray into Dalio, and while some insights were interesting, I wasn’t expecting to be picking up a textbook. I grasped the concept of big and small credit cycles pretty quickly, but the book kept drilling deeper and deeper. I eventually switched to the audiobook just to get through it, because well… it’s a lot. I switched back to reading and the final few chapters saved it for me. Seeing how Dalio would tackle an impending credit crisis and reading his predictions for the future made it worth finishing. 3.5 stars, rounded up to 4.

[Michael V · Rating 4 out of 5]

Ray argues that small, careful changes over long periods builds up momentum without too much stress in a single category. I would gladly reach across the aisle to consider some of his data-driven solutions.

Unfortunately, I'm not in the room at all. Good luck everyone!

[Borja Alvarez · Rating 4 out of 5]

Muy buen libro, he podido entender las dinámicas de los ciclos de deuda y cómo afectan a los países. Ray Dalio además expone casos particulares de países, y también conecta con la dimensión geopolítica.

Muy interesante

[Melissa]

Twitter/ tariffs

[Katherine Baldock · Rating 3 out of 5]

Get a fucking editor, if I have to read “early March 2025” one more time I’m going to freak.

[Preetam Chatterjee · Rating 5 out of 5]

When you crack open a Ray Dalio book, you’re not so much “reading” as you are signing up for an intensive boot camp where your drill instructor is a billionaire hedge fund legend who also happens to believe history is one giant recycling machine.

And in *How Countries Go Broke: The Big Cycle*, Dalio wastes no time setting the stage: This is not a casual beach read; this is “I hope you came hungry, because I’m serving you the full buffet of macroeconomic doom and historical pattern recognition.”

He’s upfront about his goals. He wants you to walk away with:

(a) a working mental model of the “Big Debt Cycle,”

(b) a more practical grasp of how supply and demand actually work—practical in the sense of “stop trusting econ textbook diagrams drawn in chalk” and start thinking like someone whose money is on the line, and

(c) an understanding of the “Overall Big Cycle,” which is his master timeline of how economies, politics, and global power all loop through booms, busts, revolutions, and resets.

It’s part prophecy, part history, part therapy session for anyone feeling vaguely unsettled about the world right now.

If you’ve read Dalio before—*Principles for Navigating Big Debt Crises* or *Principles for Dealing with the Changing World Order*—you know the man loves patterns. He is basically the David Attenborough of financial crises: “Here we see the great debt bubble in its natural habitat, inflating magnificently before collapsing under the weight of its own exuberance.” This book feels like him putting all his greatest hits together, shined up, arranged neatly, and labelled for easy reference—like the museum gift shop edition of decades of hedge fund thinking.

**Part I** is the “fast pass” tour—Dalio’s own recommendation if you want the essentials in one sitting. He sketches the Big Debt Cycle with the confidence of someone who has bet billions on understanding it: debt rises faster than incomes → spending booms → asset prices climb → debt burdens become unsustainable → confidence wobbles → the air rushes out of the bubble → defaults, deflation, and despair follow → central banks panic, cut rates, and print money → the system reflates until the next round. It’s depressingly elegant, like watching the same tragic play over and over, just with different actors and costumes.

**Part II** slows down and pulls you into the weeds, but in a surprisingly readable way. Dalio doesn’t bury you in equations; he prefers storytelling with charts as his supporting actors. He’ll jump from the Dutch tulip mania to Weimar Germany to Japan’s asset bubble to modern-day China, showing you the same beats in different centuries. The moral: don’t get cocky, because no empire or economy is immune to math and human nature.

Where he really sharpens the point is in Chapter 2, his riff on supply and demand. This is Dalio in pure “let me save you from Econ 101” mode. He wants you to stop thinking of it as an abstract equilibrium line on a graph and start seeing it as a living, breathing tug-of-war between real people with shifting moods, imperfect information, and short-term incentives. That mental shift is important because, in his world, those little micro-decisions—when multiplied across millions of households, businesses, and governments—add up to the massive tides we call “the economy”.

Then comes **Chapter 8**, the one he says you can’t skip. This is where the Big Debt Cycle gets married to two other heavyweights: the political cycle and the geopolitical cycle.

The political cycle is his take on how societies swing between more concentrated, top-down control and more decentralised, bottom-up reform movements—each with their own strengths and failure modes. The geopolitical cycle zooms out further: rising powers challenging established ones, shifting trade patterns, and the eventual passing of the baton (or the sword).

The reason Dalio says we’re “on the brink” is that, in his reading of history, all three cycles are converging right now. Debt levels are high, political divisions are sharp, and the balance of global power is tilting—especially with the U.S. and China circling each other like two alpha predators in a shrinking jungle. To him, this isn’t just interesting theory; it’s the prelude to a period of massive, potentially chaotic change.

Now, here’s where reading this book became personal for me. I’ve read plenty of economic history, but Dalio’s format—cycling between narrative, chart, and principle—hit me in a way that reminded me of sitting with an old, hyper-experienced uncle who’s been through wars (financial ones) and now just wants you to avoid stepping on the landmines he’s seen blow up other people. It’s a strange blend of paternal care and cold realism.

He’s not here to sugarcoat; he’s here to make sure you know the difference between a good party and the start of a hangover.

That said, it’s not without its quirks. Dalio can sometimes sound like a man too in love with his own frameworks. His “Big Cycle” terminology is catchy, but if you strip away the branding, a lot of what he’s describing is familiar to anyone who’s read Kindleberger, Minsky, or Turchin. It’s the packaging—and his knack for connecting financial and geopolitical dots—that makes it feel fresh. But if you’re allergic to repetition, be warned: Dalio believes in saying the same thing multiple ways until it sticks, and he is not shy about recycling phrases from his earlier books.

Another quirk is the occasional overconfidence. The way he lays out the cycles can sometimes feel a little too neat, as if the messy, nonlinear chaos of real-world events will obediently line up to match the chart. History loves patterns, sure, but it also loves curveballs—technological breakthroughs, pandemics, political assassinations—that blow up the clean symmetry. Dalio acknowledges this, but you can tell he trusts the cycles more than he fears the outliers.

What I did appreciate, though, is his willingness to talk about how his own mental models evolved through mistakes. He doesn’t position himself as an untouchable oracle; he owns the times he misread a market or underestimated a risk. That’s where the “memoir” energy seeps through: this is not just macro theory; it’s the accumulated scar tissue of someone who’s had to live with the consequences of being wrong.

Compared to other big-picture economics books, Dalio’s sits somewhere between Carmen Reinhart and Ken Rogoff’s *This Time Is Different* (more academic, data-heavy) and Niall Ferguson’s *The Ascent of Money* (more historical narrative, less direct application). Dalio is more prescriptive: he doesn’t just want you to understand the cycles; he wants you to position yourself—financially, politically, and even psychologically—to survive them.

And yes, he’s building an AI avatar of himself so you can interact with “Dalio-bot” directly. This could be either the most useful financial coaching tool ever… or the first step in replacing economics professors with chatty billionaire holograms. I’ll reserve judgement until I’ve asked it to predict my grocery bill.

By the time I closed the book on Sunday, I realised Dalio had done something rare: he’d taken a sprawling, centuries-spanning topic and made it both coherent and urgent. Whether you buy his exact framing or not, you come away feeling that history’s rhythms matter—that ignoring them is like ignoring the tide when you’re standing on the beach.

So, my verdict? This is not the “fun” kind of book you casually flip through before bed. It’s the kind of book you highlight until your pen runs dry, then stack next to your desk as a constant reminder that yes, the next downturn is coming, and no, you’re not as ready as you think. It’s slicker and more digestible than his earlier works, but still meaty enough to challenge you.

If Dalio’s right, we’re headed into a storm where debt, politics, and geopolitics all collide. If he’s wrong, at least you’ll have learnt enough history and economics to spot the next cycle before it swallows you whole.

Either way, it’s worth the ride—just don’t expect him to flinch. He never does.

[Robert G · Rating 2 out of 5]

First I will explain the good part of this book and why I feel it deserves a bump up to 2 stars instead of one. Dalio is one of the few Republicans to acknowledge that there is actually a problem with our debt and that if we don't do something about it and soon, then we are all headed for financial disaster in terms of either hyperinflation or defaulting on the debt.

Where Dalio misses the mark:

1. The US is the richest country on the planet. According to the Fed paper "Changes in U.S. Family Finances from 2019 to 2022: Evidence from the Survey of Consumer Finances" (published and available on the web), the average US household is worth just over $1 million. No other large country in the world has this much aggregated wealth. Yet, we owe over $37 trillion in total debt (almost $30 trillion in public debt and another $7+ trillion in intragovernmental debt). How exactly did that happen, and why is it that we are paying $1 trillion dollars in interest on that debt? How come we are adding $2 trillion to that debt each year simply because we have not figured out how to live within our means? How the hell did we get here? Dalio does not talk about the history of the debt and how we got here. If he had, he would have mentioned that our debt problem started in the early 1980s shortly after Ronald Reagan was elected president and reduced taxes on the rich. He also does not mention how both George W. Bush and Donald Trump lowered taxes on the wealthy, which made our debt problem worse.

2. Dalio suggests that cutting the deficit by 3% of GDP, which currently equates to roughly $1 trillion, would be enough to prevent defaulting on the debt in the near future. While this would certainly be better than doing nothing, it is not guaranteed since the debt would still be increasing by at least $1 trillion per year. If a deep recession were to materialize, or perhaps another pandemic that reduces GDP, then we would be right back in the same boat. What many economists believe is that debt should be repaid in good times. That means balancing the budget and generating a surplus.

3. According to Dalio, reducing the budget deficit by 3% of GDP involves either increasing taxes, reducing spending, or lowering interest rates. Or, some combination of all three that adds up to a 3% reduction of GDP in the budget deficit, which he believes is the best solution.

4. Lowering interest rates falls under the purview of the Federal Open Market Committee (FOMC). The problem with lowering interest rates is that it has a tendency to increase inflation. Tariffs also tend to increase inflation. How is the FOMC supposed to significantly reduce interest rates while tariffs are also applied to most foreign goods? Not a peep from Dalio on this. In the book, Dalio acknowledges that the FOMC might not decrease interest rates since their priorities are a low inflation rate and maintaining high employment. If the FOMC refuses to lower interest rates, then he says that would only leave increasing taxes and/or reducing spending to reduce the budget deficit.

5. Has Dalio even heard of a fellow named Grover Norquist? Norquist Is quoted as saying: "My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub." How about the pledge to not raise taxes he has made most Republican lawmakers sign? This pledge reflects a broader ideological commitment among many conservatives to limit government intervention in the economy. As such, any discussion of fiscal policy must navigate these political realities, balancing the need for economic stimulus with the prevailing resistance to tax increases. Probably most significant is his promise to primary any Republican lawmaker that votes to raise taxes. Can you hear what congressional Republicans are probably saying to themselves: "You want us to raise taxes? Are you trying to get us primaried in the next election?" Dalio does not say one word on this. It is a little unrealistic to suggest raising taxes without analyzing the obstacles and political consequences and discussing how to successfully counter Norquist.

6. We can't really lower interest rates too much due to the prospect of high inflation. Republican lawmakers are fearful of losing their jobs if they raise taxes. The only thing left is to cut spending. According to BlackRock CEO Larry Fink in a YouTube video with the title "The U.S. Deficit Will Overwhelm This Country":

"We will never grow out of our deficit problem if we think we have to cut spending."

"The interest payments on our debt is just going to be overwhelming."

Dalio refuses to specify the cuts he would make to the budget. However, based upon recent history, it appears that the Republicans would love to slash Social Security, Medicare, finish off what is left of Medicaid, and eliminate the Affordable Care Act - which has been one of their long-term goals.

7. The main idea behind cutting government spending is that we spend too much. But is that really true? According to an online article by Bobby Kogan, published in March 2023 and titled "Tax Cuts Are Primarily Responsible for the Increasing Debt Ratio":

"The United States is a low-tax country compared with other nations in the Organization for Economic Cooperation and Development (OECD), the United States ranks 32nd out of 38 in revenue as a percentage of GDP. But it’s not just that the United States is near the bottom end of revenue; it is nowhere close even to the average. Over the CBO’s 10-year budget window, the United States will collect $26 trillion less in revenues than it would if its revenue as a percentage of GDP were as high as the average OECD nation. When compared to EU nations, that number rises to $36 trillion." If we collected an average of $2.6 trillion per year over the next 10 years, we would balance the budget and have a modest surplus left over to begin paying down the debt.

This is also confirmed in the online article "More Revenue Is Required to Meet the Nation’s Commitments, Needs, and Challenges," published by Richard Kogan et al. on June 17, 2024.

Another option to consider is to increase revenue by modifying the estate tax by lowering the exemption from roughly $14 million to $200 thousand and increasing the top tax rate from 40% to 60%. This would probably increase tax revenue by at least $1 trillion; possibly much more since the SCF net worth estimates are at least a little conservative. Dalio says nothing about other ideas on how to increase tax revenue.

In conclusion, the problem with our debt can't be solved economically or mathematically. It can only be solved politically. Dalio does not provide any analysis or ideas on how to inspire Republicans to raise taxes against the Norquist primary threat. That would only leave cutting spending, which we have all seen eliminates health care coverage for the weakest and poorest of us to help pay for tax cuts for the richest of us.

We have the wealth and resources to solve our excessive debt problem, but the party in power right now, the Republicans, refuse to apply those resources to balancing the budget, generating a surplus, and beginning to pay down the debt. We either need to vote the Republicans out, or they need to have a change of heart. I doubt that they will ever have a change of heart since they seem to be quite beholden to the very rich that donates sizeable amounts of money to their reelection campaigns.

[Collin Kennedy · Rating 4 out of 5]

This was a great read. I’d say having an economics background definitely helped, because even though Dalio tries to guide readers who don’t have as much of a technical economics background to certain sections and chapters with less of a technical economics background, this book still implicitly assumes you’re hitting a pretty high threshold of baseline macroeconomic knowledge.

If I had to boil down my key takeaway:

It’s all about income in relation to debt. It’s not just how much debt there is in absolute terms, but how income and debt are growing in relation to each other. If debt grows faster than incomes/GDP, this inhibits consumers’, producers’, and the government’s ability to spend and invest in other things, as they have to spend a larger and larger proportion of their income servicing their ever-growing mountain of debt.

If a country does find itself in a debt crisis, it must be able to orchestrate a “beautiful deleveraging” vis-à-vis a central bank that can monetize the country’s debts. If a country can’t monetize it’s debts (circa Greece 2011 womp womp), you’re cooked. Why? If a country continues to issue more and more debt, and people begin losing faith in its ability to repay, a selloff of the currency/debt will cause a devaluation of the currency, which makes its debt burden larger in real terms, which causes a further selloff and devaluation of the debt/currency. The country may then also issue more debt to deal with the problem, which only exacerbates the problem further (low demand for country’s bonds -> interest rates rise -> borrowing more expensive for the country -> increased credit risk -> lower demand for country’s bonds), so on and so forth — a debt death spiral.



While much of the book is a description of how countries go broke in general, with much of the empirical evidence he collected for the purpose of this book isolated to the tables and relatively simple charts he includes, I felt the deep-dive into Japan’s debt crisis, effectively as a case-study in chapter 16, was super informative. After Japan’s debt bubble burst in the early 90s, the country took a very long time to recover economically, in large part because the BoJ was not aggressive enough with its monetary policy. It cut rates but not slowly enough, deflation was persistent, and banking system kept alive “zombie firms” when it should’ve been restructuring debts and recognizing loan losses.



On a completely different note, this book made me appreciate the United State’s reserve currency status way more than I already do. Having a reserve currency is a massive shield against default risk . This is something everyone in the United States truly takes for granted. The U.S. reserve currency status (ie, everyone in the world wants dollars, foreign governments issue debt denominated in dollars, transactions are settled in dollars, etc) is a huge benefit for the U.S. Mainly, we avoid the following debacle that most other countries ultimately experience: say a country is not a reserve currency country. It issues debt denominated in dollars (they have to pay the debt back in dollars), but their central bank can only print its own currency obviously. In order to pay back the debt, it has to convert its pesos to dollars. If people begin to lose faith in this country, and begin selling off its currency and it begins to weaken, this makes the debt load in dollar terms heavier(both through devaluation of the currency and because it will have to issue more debt at a higher interest rate). Then the country may have to print more pesos in order to have enough money to pay back in dollars, which further fuels inflation and devalues the peso, making the debt burden heavier, so on and so forth in a brutal debt spiral that typically ends in default or hyperinflation.



Also, the United States isn’t completely fucked (yet). Dalio’s solution to ensuring US avoids a big debt crisis is what he calls a “3% solution”: Cut deficit spending to 3% of GDP (down from like ~6-7%), and these cuts can come from 3 sources, tax hikes, spending cuts, and/or rate cuts. He thinks it should be a combination of the three to minimize pain in the economy (fiscal tightening with easy monetary policy). Points out that bond holders will get a lower real yield, they would benefit from bond prices increasing, and bonds would be safer (lower default risk as the U.S. avoids this larger problem). The good news is that reigning in deficit spending this much is not unprecedented: The US did something similar under Clinton during the ‘93-’98 period, where the deficit was taken from 4% of GDP to a surplus of 1% of GDP. (A 5-percentage point improvement). There is hope!





My biggest gripe or issue with the book (which I think is also pretty minor) was that it was sometimes hard to understand which “cycle” he was referring to. Big cycle, Overall Big Debt cycle, debt cycle, blah blah blah. I think if he had just gone for the standard “business cycle” to describe the expansionary/contractionary fluctuations on a smaller time-horizon and then opted for whatever name to describe the “Overall” one, it might’ve been a little more clear and easier to follow.

Fun fact(s):

Dalio worked with Larry Summers to create the TIPS market (Treasury Inflation-Protected Securities)


Another interesting dynamic that Dalio describes that I’ve never thought about (was never mentioned or discussed in any of my macroeconomics classes) is how part of the pain of deleveraging can be shifted onto foreign investors/debt holders, as the resulting currency depreciation acts as a hidden tax. Ie, if I own Japanese bonds as an American, and rates in Japan start to come down and my return goes up (in yen terms), I’m actually probably losing money because of the currency depreciation against the dollar. In other words, when I have to convert my yen gains to dollars, those gains are effectively wiped out by the shittier (for me) exchange rate.


“The problem of all sorts of people having all sorts of preferences that they will fight for and not being able to resolve their disagreements is to me the biggest problem that we face -i.e., as a country and a civilization - which is that there is so much arguing over the exact ways to prevent the disaster that it won’t be prevented.” (348)

[Owen · Rating 2 out of 5]

To start, I agree with the broad idea he proposes that long-run government debt is not sustainable and the issue needs to be addressed at an institutional level, but the book completely falls flat on expanding on why or how that happens. It mostly reinforces what people are already worried about regarding government debt, and I believe misguides those who are uninformed about the facts and existing economic thinking regarding the situation we’re entering.

For such a large topic, the book also feels oddly self-contained. There’s almost no dialogue with other thinkers. Ray’s refused to engage with decades of research on public finance, political economy, and institutional constraints. There is so much complexity he brushes past by asserting a basic sequence of debt buildups and breakdowns, as if the policymaking process is just a matter of governments forgetting past lessons. He rarely asks why this forgetting happens, or what it implies for institutional design, which to me is the absolute core of this topic and why I find it interesting.

He also ignores a huge question: why haven’t institutions done more to prevent this? He gives repeated warnings about how printing money leads to devaluation and how debt monetization inevitably backfires, but very little explanation of the political incentives that lead to these outcomes. Why do advanced economies with independent central banks still lean toward fiscal unsustainability? What are the constraints on policy reform? How do voters, markets, and special interests interact in these processes? These are big questions for understanding debt dynamics that have been studied, and if he included them, would make a much more convincing and engaging argument. Instead, he chooses to try to convince the audience by saying, “I’ve made money and can predict issues in these national debt markets across the world, so I know the context of what’s going on”.

The main reason I didn't like this book was that he frames the debt as a big cyclical event we've constantly fallen back into, never learning from the past. Yet, his solutions in the end are short-sighted and only aim to address the current cycle. Sure, if we keep that policy forever, in a perfect condition, it would work with the proper checks, but has history ever been in this perfect condition? Of course not. What I was expecting was a more informed proposal that would address some of the fundamental issues he's mentioned, like how rates on government debt are mispriced, how to keep a balanced budget independent of politics despite it's need in political times, or even how governments can better smooth this big cycle. I know those are big topics and questions that are almost impossible to answer, but he sets up this problem so broadly that it was what I was expecting.

One thing I do praise Ray for is looking at central banks as institutions using their tools and making decisions to smooth the business cycle within the context of the currency and the national environment surrounding them. I see his point that central banks’ decisions can push us into these debt cycles, but he doesn't place the blame on them. He instead blames the governments and incentives that force central banks to make these decisions. I think putting the blame for debt on central banks leads people to believe in the U.S. that we need to abolish the Fed, which is entirely misplaced. Although he is contradictory in the end, when he then wants the Fed to adjust interest rates directly against equilibrium to help the debt.

I think there is a much better way that Ray could have framed this book to make it a lot more engaging. 1. Share his experiences as an investor throughout his lifetime, looking at the specific crises he's profited from. 2. State in-depth conditions of that nation and what led to those conditions. 3. Connect these various disconnected cycles to a global cycle. 4. Point out how these similar cycles have institutional similarities and disincentives that lead to the big cycle rather than boiling it down to solely bad leaders or political ignorance (although it’s a part, it doesn’t fix this big cycle alone).

TLDR; I think this book is fine if you're looking for how to watch out for these debt cycles and can manage you're wealth around it, but it fails in addressing and explaining the issues in the long run.

[Tyler Hart-Loi · Rating 5 out of 5]

Ray is a master as modeling and risk management. He’s a lot like me who experienced people when he was young who were bankers and investment managers but didn’t understand what they did as a gold caddy.

This specific book highlights a lot of the craziness I have seen over the last couple years (2016) when I first started tracking the historical chart of the S&P 500 trying to find why stocks go up and down based on historical data. It has led me down a crazy run of book reading lately to understand how stocks, bonds, and history can be used to price in future projections. Too bad I studied finance and not mathematics. Would have redone it.

Anyhow, this book highlights data from his firm Bridgewater. The firm uses data and computing power to predict future outcomes. As he talks about, he is right 70% of the time which is phenomal for investors w 15 uncorrelated asset classes.

He speaks of headwinds: debt, internal/external conflict, climate change and demographic changes that are too grand to overcome with fiscal and monetary policy. He also draws from demographers like Neil Howe about the 80 (+-25 years) long term or “Big Cycle” where institutions are questioned and the world order gets reshaped. Our current period is similar to 1905-11 and 1933-38 periods. Rise in authoritarian regimes at the Central Government levels, crumbling balance sheets (negative bond valuations on US Federal Reserve), unsustainable central government spending and the high probability of a shifting world order that he points out highlights a move away from the US dollar as a world reserve currency and potential for a new global reserve currency as foreign central banks buy up gold reserves (original store of wealth).

This will be a global shift that I am not sure most people are prepared for. Navigating the 2018 junk corporate bonds that the fed bought up during COVID (US CEO’s dumped them to buy back stocks to keep their prices elevated so they could get their bonus), the elevated PE ratios of s&p 500 companies (2nd highest ever), the rise in private credit, huge explosion in dollar compared to foreign currencies and unprecedented growth in home prices even though wages have been stagnant in the US(it was actually all assets and caused by inflation and Central Bank Bond buying).

My wife thinks I’m crazy but on the bright side Ray Dalio and Jeffrey Gundlach see it too. What do I know, I am just a powerplant engineer and when I try to explain my job to people they think I’m a wizard. I guess our odd contrarian group of people will be reading up on silicon and germanium trying to figure out how shit works when everyone else will start freaking out in the next couple of years with the world’s uncertainties.

[Reading · Rating 3 out of 5]

2.5 I followed Mr Dalio's advice selectively skimming this book and like many other reviewers I found that there was not a lot of original material here, despite the author's tone sometimes coming across as 'look how insightful and groundbreaking this observation is'. Let me state for the record that I probably wouldn't enjoy the authors company - on the opening page he observes "...how the NATURAL mechanics of money, credit, debt, and economic activity, combined with HUMAN NATURE, add up over time to create the big debt cycle." Ah yes, nature in economics and the all encompassing 'human nature'... "Greed is good...".

I was moderately surprised that the author suggested significant budget cuts and increased taxes, though where he would cut want. Unfortunately it's not looking good as - 2024 budget deficit was 6.4% of GDP and 2025 is projected to be 6.2% Given Mr Dalio's objective for it to be 3% to avoid risk of US default. No surprise given Trump's big ugly bill that had limited, often cruel spending cuts but significant spending increases in military & ICE budgets. Additionally the bill is estimated to reduce federal tax revenue by $5 trillion over the next decade. So, combined with the FED thus far holding interest rates, ALL of this is the opposite of what was proscribed by the author. Ruh roh, if even Ray Dalio is concerned...

Not enthusiastic about writing much more as again, Ray is just not my kinda guy. He's the sort of chap who says "I recommended regularly checking in on how those in the bottom 60% are doing and feeling.", well that's nice of him to check in on them. 'Hey, how you do? What's that, shitty? Well, keep up the good work, and here's an extra cookie.' I'm sorry but everything I gleaned from this book leaves me with the impression that he's concerned about optics vs actually adjusting budget priorities to truly create a more equal and healthier world. He should read Winners Take All, charity ain't gonna do it Ray, the pitchforks are coming.
________________________&

Sidenote:
He spends BARELY ONE PAGE covering economic and global impacts related to "The Force of Nature (Droughts, Floods, and Pandemics)! OK, I get it, this isn't a book about those issues but still, it's a book about economics, budgets, debt, etc, and those topics demand more than a page and a quarter! Heck, he spends two and a half pages on AI!

[Naina · Rating 4 out of 5]

I have to admit… I didn’t read every word of this book nor does the author quite encourage you to.

The reader aims to make his knowledge accessible for all audiences. He’s even made videos in both 40 minute and 5 minute versions. You can read every word of every page or you can read the bolded parts of each page of the italicized parts of each chapter. He even suggests which chapters can be skipped and which is absolutely vital (Chapter 8). A couple of complaints I have would be that it is very repetitive (ie he tells us at least 3 times printing money is not literally printing money). This book really did not need to be nearly 400 pages. If you are aiming to read every word the repetition gets a bit old. Another complaint is that he constantly plugs his other books and suggests the reader pick it up especially in part 3. Also, he really claimed reading the Art of War helped him understand Chinese fiscal policy… lolwut. I just read that, and I can’t draw too many connections. This is one of many areas he could have added more detail.

The special fonts are useful but at the end of the day I’m not sure many readers from a non finance background would pick this up. You need some basic understand of what a bank run is, what it means to have credit/debit, what is nominal vs real etc..

Another bone to pick I had was that I didn’t really feel like he offered a new take. For example, in part 1, he really emphasizes the need to track the ratios of debt and debt service to income. He made it sound like he was reinventing the wheel with tracking this ratio but he’s not really. Also, I thought in part 3 he would dive more into examples especially from history but he never really gets super specific other than with the US’ current predicament. He thought on the economies of China and Japan and dedicates chapters to them but it’s very topical. I was hoping to see more history from this book given the tittle.

The author wrote this book in March 2025. It is fairly recent at my time of writing this and I like that he is able to reflect on current events. One very interesting thing he touched on were the chips particularly made in Taiwan and how chips are more important than oil. This is congruent with another book I’ve read Chip Wars wherein Miller literally said the same thing.

Overall, I have a deeper understanding of this topic and I’m grateful he wrote it. 3.5/5

[RWAR_Rani · Rating 3 out of 5]

Ray Dalio’s How Countries Go Broke outlines a financalcycle for nations, driven by debt, economic policy, and global trust. It begins with productive growth, where innovation, education, and responsible borrowing fuel expansion, and the currency remains strong. As prosperity grows, the country enters a phase of borrowing-fueled expansion, drawing in investment and accumulating more debt, often to fund consumption rather than productive activity. Eventually, the system tips into overextension and decline, marked by stagnant productivity, rising inequality, and increasing reliance on deficit spending and money printing. This leads to a crisis, where confidence collapses, inflation rises, and the risk of default or social instability intensifies. Ultimately, the nation must endure a period of reset and realignment, implementing painful reforms and restructuring in order to stabilize and begin a new cycle.

This book is dense—in a smart, deliberate way. Ray Dalio packs it with data, charts, historical context, and well-researched insights that reflect his deep understanding of global financial cycles. While the content can feel overwhelming at times, especially for casual readers, I appreciated the author's thoughtfulness in offering several “reading paths,” which he outlines clearly at the beginning of the book. Personally, I took the streamlined approach, reading the bolded key points to grasp the core concepts without diving into every technical detail. For someone with a background in finance, the book felt similar to a textbook—thorough and informative, but not something I’d read cover to cover unless I was required to for work. That said, the structure allows readers to engage at their own depth, which makes it a valuable resource whether you're looking for a high-level overview or a deep analytical dive.

This was a timely read, as it feels like we are the crisis phase (as of July 2025). Dalio doesn’t offer false hope or one-size-fits-all solutions. His core advice is to understand the mechanics of decline, stay flexible, reduce dependence on fragile systems, and be prepared for fundamental change—while looking for long-term opportunity on the other side of crisis.

[Joe · Rating 2 out of 5]

This book is primarily powered by hubris and confirmation bias.

Early on, Dalio's attempt to inject credibility to the reader is (paraphrased) "you can trust me, I'm rich". After that, you can see that Dalio believed he has found the "theory of everything" when it comes to credit and economics and is doing everyone a favor by writing this book to get a peak into his mind. To me, it highlighted the common case of a wealthy individual over-counting their intelligence and discounting luck. Dalio also makes many weird comments that aren't rooted in fact. He repeated refers to his theories as "universal truths" and "perpetual motion machines" - his theories are neither. Other opinions as fact are presented such as:

Because credit is a stimulant that creates a high, people want more of it.

.

Dalio also uses many cases throughout history to prove his theories. However, like many books, he only focuses on the indicators or situations that prove his point. What about other, similar cases where things turned out differently? I think of Good to Great: Why Some Companies Make the Leap... and Others Don't and how Jim Collins looked for all instances and tried to find what was different rather than just the instances that supported his thesis.

Overall, for all my dislike of the author and his writing style, there are some solid theories of economics and credit that should be taken seriously. I like to compare/contrast this with The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy as they play in the same space - both complementary and as opposition to each other.

[Stephen · Rating 4 out of 5]

Much of this book has already been covered in the author's previous books. However, this volume is useful because it focuses on the late stages of the long term debt cycle. A place where we are now. It almost seems as if we are accelerating into a crisis. With public debt growing at a rate faster than the economy, debt to GDP ratios are mushrooming. Not exactly out of control, but feeling quite unstoppable. And yet, we also know that there will be a limit that will eventually be reached.

This book focuses on the external resolution of debt piles. It is the situation where an economy can't resolve the debt issue internally through fundamental reform, so it has a resolution forced upon it by an external force. This could be the consequence of a military misadventure, or it could be nothing more than the external funders of the economy losing faith in the debt of that economy. Either way, it gives rise to a monetary crisis that will change the way in which that society organises its affairs. The change is painful, and the more the society resists the pain, the longer the process will continue.

This is where America is now. There is an argument that we are close to the resolution point. America has unwisely provoked an economic and commercial conflict with China and is not doing too well. If the US continues along this tack, it will eventually encounter a moment of national humiliation - its very on Suez Moment. This book outlines the pathway to that moment and provides a glimpse of a process of renewal that lies beyond it. However, the journey from here to there is likely to be very unpleasant.

It could be possible to delay the moment of crisis, but that would mean two things - Americans pay more tax, and Americans receive fewer entitlements. Both of these are unattractive politically, which is why they haven't been implemented so far. The core of the book is that if the US can't make that choice internally, then an external factor will force it upon them. I am very sympathetic to that view, which is why I think highly of this book.

[Vahn Parsons · Rating 5 out of 5]

"A debt is a promise to deliver money. A debt crisis occurs when there have been more promises made than there is money to deliver on them.

[...]

Big debt crises are inevitable. Throughout history, only a very few well-disciplined countries have avoided them. They are inevitable because lending is never done perfectly relative to the incomes that are needed to service it."

A more focused, concise, and timely version of Ray Dalio's earlier "The Changing World Order", this work zooms in on the debt crises currently facing global economies by applying the general principles of long cyclic patterns to the short term credit/debt bubbles being burst.

It is strong in educative value by using very plain language and generalized patterns in data to explain topics such as linked and fiat currency, the role of monetary policy (i.e., interest rates and easing/tightening) and difference between short - and long-term debt cycles - all together painting a picture of how unsustainable debt crises become. Together with the online resources and other books in this sort of series, Ray Dalio leaves a lasting impression in terms of how to think when navigating the credit, debt, and financial markets.

Where it is weaker is the proposed solution, which other than a broad stroke "beautiful deleveraging" (using a 3% rule to reduce spending, increase taxes, and reduce interest rates) and using some case studies where the opposite was done as examples of ugly deleveraging, does not go into more detail about where those compromises will come from to get the most bang for buck. However, at least in the case of the US and China, the discussion is raised.

[Diciyayemotu · Rating 4 out of 5]

Interesting perspective on what ties together different forms of economic crises and how patterns can be recognized. It gave me a basic understanding about interest rates and the interplay between gold and fiat currencies that I never quite grasped in my Macroeconomics 101 course. Surely, I play a part in my ignorance, but Dalio gave a good practical explanation of how he thinks about these entities.

He was certainly correct in his assessment that Trump would try to pressure Jerome Powell and to reduce and tear down the indipendence of the Fed. That gave certainly some credibility to him.

Nevertheless, Dalio is also part of a creed of investment "gurus" that wrongly predict the downfall of the economic and political world order eight times in two decades and feel validated when it does happen on the ninth time of prediction. Still, he differentiates himself from other apocalyptics by advocating a circular order of events and that we can maybe have hope in the long run. I see this view as somewhat simplifying and Dalio certainly has his own political opinions that I personally would not advocate. It is even more tragic that his mere pointing out that governments should refrain from extensive spending cuts on education, families and social systems feels so refreshing. Attention on such a policy course has been sorely missed in the last few years, as political discussions have overwhelmingly focussed on the ills of migration, especially in Germany.

[Hit No · Rating 3 out of 5]

Ray Dalio’s How Countries Go Bankrupt is a solid, well-researched examination of sovereign debt crises, drawing on historical patterns and Dalio’s signature framework-driven thinking. It’s packed with useful insights for those curious about macroeconomics and global financial stability. However, the delivery—especially in audiobook form—leaves much to be desired.

The material is dense and analytical, filled with data-heavy explanations, charts, and frameworks that are difficult to follow without a visual aid. Listening to this as an audiobook makes it even harder to digest. This is not a narrative or story-driven work; it’s more like a structured briefing, better suited to physical reading or digital browsing, where you can pause, re-read, and reference charts.

Content-wise, it’s good. You learn how monetary and fiscal policies interact with debt cycles, and how nations stumble (or are pushed) into default. But even for readers interested in economics, it can feel dry and mechanical. It’s not a gripping or particularly lively read—more informative than engaging.

In short: worth reading if you’re serious about understanding debt crises, but choose the print or ebook version. Audiobook listeners will likely find themselves zoning out or rewinding often. For casual readers, it may feel more like homework than revelation.

[Franz Schrepf · Rating 5 out of 5]

Ray Dalio is the adult in the room when everybody is loosing their mind.

I've read every single Ray Dalio book and his newsletter religiously to understand what is going on in the world right now. While there are many repeated themes in the book, I couldn't thank Ray Dalio more for publishing this book right now as the world is becoming even more turbulent.

Chapter 16 and 19 are by far the most valuable. The former outlines the big cycle of Japan, which is some 30-40 years ahead of the US. I was not aware of that the average Japanese household was richer than the US in 1990, yet has lost 60% of their purchasing power since then as a direct result of the governments handling of its debt.

The latter chapter addresses Ray Dalio's outlook on the future, how he believes policy makers should tackle the current debt crisis in most of the developed world, and why the US is about to reach a "point of no return" where it will enter a debt death spiral - taking on debt to service the existing debt.

Another part which stood out to me was China's big cycle. Ray Dalio has a unique insight into the Chinese economy and markets since he's helped get them off the ground in the 1980s. Turns out there are similar problems to the US which are brewing under the hood.

All of these combined explain why the world feels like a powder keg. And what you can do about it.

[Aaron Michael · Rating 3 out of 5]

In the early 1960s, the US short-term money and credit cycle was expansionary, which was great for the US markets and economy until 1965-66 when inflation rose to 3.8% and the Fed tightened monetary policy, inverting the yield curve for the first time since 1929. These events produced, in 1968, what would be the peak inflation-adjusted price in the S&P 500 for the next 25 years, with that long period of bad performance due to the Big Cycle influences I described earlier in this study. It also led to a recession in 1969-70. That long period of terrible stock and bond market performance and terrific gold and other inflation-hedge asset performance was primarily due to the needed creation and devaluation of money to deal with the debts (i.e., the debtors' obligations to deliver money) being too large relative to the actual amount of real money in existence. That paradigm taught me a lot about the need to be able to make money in all types of market environments and the skills required to do it. It also puts me today in a very different mindset from most investors who haven't been through something like that and have views based just on their experiences and so think that being long only in equity-like assets and ignoring the Big Cycles is the best way to invest. (p. 217)