Perché i Paesi falliscono: Il grande ciclo dell'economia

by Ray Dalio, Riccardo Spagnolo (Translator)

Il debito pubblico dei grandi Paesi può minacciare il nostro benessere collettivo? Ci sono limiti alla crescita del debito? Un grande Paese con un’importante valuta di riserva come gli Stati Uniti può davvero andare in rovina? E come si presenterebbe questo scenario? Ecco alcune domande che stanno alla base del grido di allarme per l’economia globale contenuto in questo volume.

Politici, responsabili delle politiche governative e investitori discutono da decenni su questi interrogativi, senza trovare delle risposte esaustive. Ray Dalio, uno dei più grandi investitori del nostro tempo, che ha previsto la crisi finanziaria mondiale del 2008 e la crisi del debito europeo del 2010-2012, condivide per la prima volta la sua dettagliata spiegazione di quello che definisce il “Big Debt Cycle”. Comprendere questo ciclo è fondamentale per aiutare politici, investitori e il pubblico in generale a capire dove ci troviamo e in che direzione ci stiamo muovendo. Il modello di Dalio indica soluzioni sorprendentemente semplici per gestire i problemi legati al debito che Stati Uniti, Europa, Giappone e Cina stanno affrontando oggi.

'Perché i Paesi falliscono' mostra come questi problemi siano collegati ad altre forze – politiche interne degli Stati, relazioni geopolitiche, cambiamenti naturali (come siccità, inondazioni e pandemie) e tecnologici (soprattutto l’AI) – che insieme stanno causando ciò che Dalio definisce “sconvolgimenti del grande ciclo nell’ordine mondiale”. Leggendo questo libro, comprenderete meglio che cosa sta succedendo e come reagire di conseguenza.

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

482 pages, Kindle Edition

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...

[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.

[John Lutz · Rating 5 out of 5]

I’ve been a fan of Ray’s since I’ve started investing and familiarizing myself with market trends, but I’ve never taken the time to read his work as an author - so as a first “Dalio book” for me my review is a bit biased as I’m reading a lot of these ‘principles’ alongside their definitions for the first time. (I can see how some may have found parts of it repetitive if they’ve read his previous books, but I enjoyed the context as someone who hasn’t)

Dalio releasing this book in March of 2025 would come to a shock to someone who read it that didn’t know the date it was published. The analysis on the federal reserve’s independence (alongside its importance), state of the government debt, and overall world order is shockingly appropriate.

I found the historical debt cycle review of China (yet also a bit anecdotal) and Japan more than worthy of inclusion. China’s resilience economically matches up with what I learned from my reading of “Chip Wars” earlier last year. While Japan’s debt problem is as topical as ever as I’m writing this review in January of 2026.

Provided with Ray’s reasoning for his “3% 3-part solution” I have to agree with him. I think cutting spending, tax increases, and a small yet meaningful interest rate cut makes sense especially given the current /good/ economic conditions to do it in. That being said, his remarks about the current political affairs ongoing in the US paint a larger picture of why he points out in the book with detailed data (rightfully so) with how unprecedentedly divided the US is on both spectrums that a bipartisan agreement would be an almost unthinkable task (but one can hope).

That being said, I appreciated his take on the issue and the historical patterns he pointed out to solidify the understanding of why he was led to his solution, and predictions of the future - which I thought wrapped the book up quite well.

I also appreciated his thoughtful instructions on how to read the book (different per chapter!). As someone who’s been reading “market jargon” for a few years I can only imagine how intimidating some of this information would be if I wasn’t as familiar with the topics at hand.

This is a great book.

[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.

[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.

[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.

[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.

[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

[Nick · Rating 5 out of 5]

The author masterfully frames the developments in economics and politics (including geopolitics) in terms of debt/money cycles. The style of writing is accessible to both casual and “involved” readers. I particularly enjoyed the mathematical analyses behind the cycles described. However, I was surprised to see some takes on issues from US internal politics to China-related international affairs. This is likely to be due to the author’s different optic to my own, largely affected by age, wealth, nationality, and experience. Overall, i gave the book 5 stars because it gives a holistic, and fair overview, of its propositions in historical context. Furthermore, I quite liked the unique approach to seeing how markets operate.

[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.

[Jacqui Busch · Rating 4 out of 5]

I simultaneously think capitalism is stupid, and that USA should undertake what he suggests at the end of the book. If we do an even amount of cutting and taxing (and hopefully the Fed does their part too) and then adjust the particulars from there, then at least we'll hopefully still have a country in 10 years (assuming no other country nukes us while DJT is acting up). I am decidedly of the 60% of the country who is on the dole (specifically, I'm on disability), and the cuts to things like Medicaid will really, really hurt, but I would be comforted by knowing that the rich are doing their part to rein in the deficit, too. And if we don't do something soon, we will run out of money to fund entitlements altogether, which would be far more painful overall.

[James · Rating 2 out of 5]

Long and very repetitive.

There is a lot of financial details and specifics which is great if you are in the finance field and want a really in-depth view of countries and their debt cycles. With that being said it is still so repetitive.

In each chapter or section there are points/perspectives being made that get over-repeated too much. Great, interesting but delivered in an extremely dull way. Way too much filler in the book.

Seems like this book was partly a cash grab to jump on the recent economic instability in the US financial market.

The book should have been 1/3 the length that it is.

[Chris Reifel · Rating 4 out of 5]

This is a good book for gaining a better understanding of why we are are in a critical place with respect to our National Debt. The Author does a nice job of detailing the Economics of the Big Cycles and provides the reader with numerous opportunities for deep dives throughout the book.

[Malinda · Rating 4 out of 5]

So this had big concepts explained pretty well and I grasp now how countries go broke. I know a few indicators, what the cycles look like, and the history examples were helpful. I appreciated how the author would say that this section may get too detailed for some so if you skipped to go to a certain chapter.

[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!

[Manish · Rating 4 out of 5]

Deeply technical book, with formulae and graphs

[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

[Nilesh Jasani · Rating 3 out of 5]

How Countries Go Broke: The Big Cycle presents itself less as a narrative exploration and more as a dense economist’s report, heavy with data and driven by the formidable reputation of the famous investor behind it. The text tackles one of the most defining issues of the modern era: the excessive accumulation of debt, particularly government borrowing across the world's largest economies. The writing style is dry, methodical, and utilitarian, clearly targeting a data-hungry, financial-world readership that is likely already conversant with the nuances of sovereign credit and macroeconomic levers. For the uninitiated, the book’s stark conclusions regarding the trajectory of empires and currencies might hold a certain morbid appeal. The author’s track record of market success brings credibility that a university professor writing on the same topic with similar examples would never have. However, lay readers may feel adrift in the granular details as the book prioritizes a rigorous framework over accessibility. In some ways, this is a high-level briefing document for those who view the world through spreadsheets and yield curves.

For this reviewer, the book serves primarily as a springboard to examine the prevailing consensus on public sector debt. It is a subject where the alarming reality has been visible for over a decade. Public sector debt in most developed countries has reached record levels that, by any traditional metric, are worryingly unsustainable. One does not need a deep historical compendium to understand the basic arithmetic: a debt series cannot rise indefinitely faster than the income supporting it without eventually triggering a painful reversal. A desk analyst can recite any number of historical defaults or currency crises to flag the risk, but the points of unsustainability are better articulated through simple logic rather than historical analogy. The vicious cycle of ever-rising interest burdens is obvious. As debt piles up, the cost of servicing that debt consumes a larger share of the budget, necessitating further borrowing just to keep the lights on, which in turn raises the risk premium and the interest rate, accelerating the spiral. This mechanical inevitability is clear to anyone willing to look at the issue without the rose-tinted glasses of modern monetary theory. A system may fudge and buy time, but one can easily show how this cannot continue forever, and the more one kicks the can down the road, the worse it will be for the future generations that run out of trickery.

However, the more critical discussion—and one that is often glossed over in purely economic analyses—centers on the political realities of reversal. The book, like many others in this genre, offers solutions and prescriptions for fiscal sanity. Yet, these solutions are, for all intents and purposes, politically infeasible. To believe that policymakers will proactively implement the austerity measures necessary to reverse these debt trends is to fundamentally misunderstand the incentives of power. A reversal requires inflicting significant pain: social (through reduced services), economic (through higher taxes or reduced spending), and, most importantly, political (for leaders attempting to enforce these measures). There is no incentive for a sitting government to volunteer for a recession or a decline in living standards to secure a stable balance sheet for a successor ten years down the line. This reviewer would love to be proven wrong by a brave Volker-like personality who is able to implement the strictest of measures while being able to retain the job long enough, but it is abundantly clear that proactive reversals—so often desired by theoreticians, commentators, and those not currently holding office—are simply not in sight. The political capital required to tell a population that the party is over does not exist in modern political economies.

If we accept that a managed, proactive solution is a fantasy, the central question shifts from "how do we fix this?" to "what causes the uncontrollable unravelling?" This is where the reliance on historical cycles, a core tenet of the book, becomes problematic. While the author and many contemporaries attempt to draw robust lessons from history to predict the timing and nature of this unravelling, the reality is that history is worse than a poor guide. The past offers almost no reliable pattern for the type of pain that will emerge, regardless of the terminology used to describe these "cycles." The book posits an 80-year "Big Cycle," suggesting a rhythmic rise and fall of powers and credit systems. But one must ask: why 80 years? Why not a 250-year cycle, or a 10,000-year cycle? The specificity of the duration implies a precision that simply does not exist in the chaotic data of human civilization.

To proclaim the existence of an 80-year cycle with any statistical validity—even granting a generous 25-year leeway for error—one would need a dataset containing at least 20 to 30 distinct data points. In the context of modern financial systems, we barely have 160 years of reliable data, covering perhaps two of these alleged cycles. Furthermore, these 160 years have been characterized by such profound secular changes that they render cyclical comparisons largely moot. The world of the gold standard, the world of Bretton Woods, and the world of globalized fiat currency are effectively different planets. Drawing a straight line of "cyclicality" through the Industrial Revolution, the advent of nuclear weapons, the internet age, and the rise of artificial intelligence ignores that secular forces of change are far more dominant than any underlying cyclical rhythm. The variables have changed so drastically that the equation cannot be solved with the old constants.

The limitations of these historical models are nowhere more evident than in the case of Japan. For over three decades, Japan has been the poster child for unsustainable debt levels. By every model present in the 1990s, the Japanese sovereign debt market should have collapsed, the yen should have evaporated, or hyperinflation should have taken hold. Yet, despite the constant hand-wringing and the "widow-maker" trade of shorting Japanese government bonds (JGBs), the unsustainable levels have not reversed. The collapse has not arrived. If one argues that Japan is paying the price through stagnant growth, one can easily counter with the example of the United States. In the US, debt continues to rise unabated to eye-watering levels, yet economic growth remains robust, defying the correlation that high debt must equal low growth. Conversely, numerous nations with relatively low debt levels remain trapped in economic and bond market funks, unable to generate growth despite their balance sheets that worry their bondholders but would appear nothing but liveable by the standards of what some other economies with higher debt levels are allowed to live easily with.

The failure of these predictions points to a fundamental issue in macroeconomic modeling: the problem of overfitting. One can add a countless number of parameters to explain why Japan has stagnated and not exploded or why the US thrives: the status of the reserve currency, the domestic ownership of debt, the confidence in the legal system, the specific financial architecture, or mere happenstance. However, the number of historical episodes available to explain is far smaller than the number of parameters one can model. In other words, with the benefit of hindsight, almost everything that has happened appears to be exactly how it should have been. The "why" is always clear after the fact. But ex-ante, looking forward, whatever one forecasts based on these models has as much chance of being right as any other forecast based on the same data. The "Big Cycle" is a narrative imposed on chaos, not a roadmap found within it. The author can rightfully claim the returns he has generated from his models, but this does not mean his models can forecast the timing or the path of the reversal.

This does not make the debt problem any less valid. The mathematics of leverage is unforgiving. When the bubble finally bursts, everyone who warned about it, including the author of this book, will appear prophetic. They will be lauded for their foresight, and their models will be cited as proof of the inevitable. But this is a survivor bias of predictions. The more honest and important admission should be that no amount of historical analysis can actually help us navigate the immediate future. History cannot tell us what to do over the next two quarters, the next two years, or even the next two political cycles. The triggers for the unraveling will likely be novel, specific to the technological and geopolitical realities of the moment, and entirely invisible to a model calibrated on the rise and fall of the Bretton Woods, 1997 Asian crisis, or any other collapse of any other time or place.

Ultimately, How Countries Go Broke serves as a significant, albeit dense, contribution to the library of financial warnings. It correctly identifies the tectonic stresses in the global economy, even if its predictive utility is hampered by the very historical framework it champions. For sure, the book is a valid testament to the author’s worldview and offers a coherent, if debatable, theory of everything for the long term.

[Melissa]

Twitter/ tariffs

[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.

[Quinn Rouse · Rating 4 out of 5]

I'm not an expert on financial markets, and I never will be, but I think this book is such a worthwhile read to actually understand a bit about the lifeblood of our financial system. I feel like previously, any time I would hear about debt to GDP ratios, or treasury bonds, or interest rates, my eyes would just glaze over under the implicit assumption that I simply would not understand what was going on. I think this book helped me raise my tolerance to a couple minutes now!

Dalio does a great job of understanding and targeting to the audience of his book. Each chapter holds a short summary at the beginning, and a recommendation for what type of reader will enjoy it, with the understanding that some readers are coming in with a much more casual understanding of the economy, and some readers are coming in with years of experience and knowledge. I can't speak to the upper end of that skill curve, but as someone more towards the beginning I think he does a solid job of explaining some of the key concepts. I did read every chapter, and unfortunately I think there were definitely some points that would have benefited from more explanation in some of the more in depth chapters for those of us casuals that did want to dive a bit deeper.

I think my biggest gripe with this book stems from that: Dalio so frequently does not explain his charts and their axes. Yes, he'll add analysis of what the lines mean and how they relate to his main point (and I am grateful for the visual references), but the amount of times I had to google what the hell each of the axes were showing (if they were even labeled in the first place) was staggering. Again, I think for the most part he navigated the waters of the novice to expert curve quite well, but my god some of those charts and numbers needed more explanation. It was especially frustrating to me in the final third of the book, where he'll throw around sentences like "I estimated that the positives impacts of today's new techologies will be about 150% of what happened over the last 30 years" (386) and then not expand at all. Where does that number come from? What evidence does he have to support it? What the hell does "150% more impact" even mean?

It's evidently clear to me that he's got an incredibly strong understanding of the global markets, but some of these other charts and "statistics" just seemed fishy to me. That and he was a bit too much of an AI glazer for my liking, but that's beside the point.

Overall though, I think this book is such a phenomenal read for those that want to just have a basic understanding of debt and how it interacts with the economy and fiscal policy. It also does such a good job at threading the needle for both newcomers and experts to enjoy. Although I do criticize how he'll just throw around financial acronyms and stats without explaining them, I understand that doing so effectively would have ballooned this book to at least twice it's length, and that it would be impossible to condense that amount of knowledge into a beginner friendly package.

Although Dalio's overall model does have us moving in a less than perfect trajectory, I do take comfort in cyclical models, knowing that just as bad times must follow good ones, good ones must follow bad. And although things may become bad, that our collective grip on our Sisyphean boulder may falter, I take pride in knowing I'll being able to participate in whatever small way I can to push the boulder back up the hill again, helping as best I can those who come after.

[Andrew · Rating 3 out of 5]

In his earlier book "Principles for changing with the changing world order, Ray Dalio started building his legacy by codifying his understanding of how the world works into principles, based on his belief that once you understand how the system works, you can forecast the future. In that book, he laid out 5 trends that shape the world order, which are revisited as the backdrop for this book:

1. The Big Debt/Credit/Money Cycle: This cycle involves periods of increasing debt and money printing, which can stimulate the economy but also lead to crises when debt becomes unsustainable.
2. The Big Internal Order/Disorder Cycle: This cycle focuses on the internal stability of countries, marked by shifts between periods of social harmony and prosperity and times of internal conflict, wealth inequality, and social unrest.
3. The Big External Order/Disorder Cycle: This cycle deals with the relationship between countries, particularly the rise and fall of dominant powers and the potential for conflict when a new power challenges the existing world order.
4. The Force of Nature: This trend includes natural events such as droughts, floods, and pandemics that can cause massive disruption, loss of life, and significant shifts in domestic and world order.
5. Human Innovation and Technology: This is a powerful driver of progress, allowing societies to innovate and advance, which in turn influences economic competitiveness and the relative power of nations.

This book elaborates on the first trend, which starts with demand for debt exceeding supply. The government has to take on debt in order to stimulate the private sector, which the central bank has to print money to buy because no one else wants it. This help raise asset prices which in turn makes private lenders more willing to lend, which eventually creates a bubble where there is an oversupply of debt. If the government does not take the necessary steps to engineer what the author calls "a beautiful deleveraging", the whole system breaks down, and an example of a bad outcome is what happened to Japan.

There's a lot of math and a lot of charts, so if you want to understand how it all works you need to read the book, it doesn't translate well in audio. But the audio book is fine to get an appreciation of how the author says things work, if you are not trying to validate it.

Since this book was published in Mar 2025, most readers should be interested to know how the author assesses the current situation. In short, we are nearing the end of the cycle that started in 1945, which means that all 5 trends are converging to create a new world order. Looking at the current bi-partisan climate within the US, the big power competition created by the rising China, the handling of COVID and climate change, as well as the latest advances in AI and quantum, he believes that a new world order is almost unavoidable, though not necessarily imminient.

That said, he also offers some policy prescriptions on how the US can still engineer a beautiful deleveraging, which is centered around his "3% 3-Part Solution" which involves 1) cutting spending, 2) increasing tax revenue, and 3) lowering interest rates. It is interesting to me that the Trump administration does seem to be doing exactly this, though perhaps not in the way the author envisioned. Instead of cutting spending, it is reducing the national debt by imposing tariffs. Instead of increasing taxes, it is increasing tax revenue by on-shoring US companies. And of course, there is constant pressure on the Fed to cut rates.

[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.