Changing World Orders

When the World Doesn't Look Like It Used To

On the night of August 15, 1971, Richard Nixon went on television and told Americans that the dollar would no longer be convertible into gold. Ray Dalio was twenty-two years old, working as a clerk on the floor of the New York Stock Exchange. He listened, and his stomach dropped. He thought the monetary system as he knew it was ending and the market would collapse on Monday. The opposite happened. Stocks rallied four percent. Gold took off. The dollar fell against everything that mattered.

Dalio went looking for an explanation and found that this had happened before, almost exactly the same way, on March 5, 1933, when Franklin Roosevelt told the country he was suspending gold convertibility. Stocks had rallied then too. The lesson he took from a moment that looked unprecedented was that nothing about it was unprecedented. He had simply never been told. That insight, repeated over fifty more years of running Bridgewater Associates, became the seed of this book.

Changing World Orders is Dalio's attempt to explain why empires rise and fall, why currencies live and die, and why the period we are living through right now looks so much like the period between 1930 and 1945. He studied five hundred years of data across eleven major powers and every significant Chinese dynasty going back to the Tang. He came away with a single uncomfortable conclusion. The disorders that feel singular to anyone living through them are almost always reruns of something that happened before, and the people who get destroyed by them are the people who could not see them coming.