Name: The World in Transition: Debt, Democracy, and the New Economy
Uploaded: 2025-10-28
Duration: 17 min 17 s

Technology, debt, and politics are colliding to reshape economies and redefine global power. Ray Dalio, one of the world’s most successful investors and influential thinkers on markets and society, shares what history’s long cycles reveal about today’s challenges – why some nations thrive while others falter, why the U.S. may be entering a phase when great powers lose authority, and what it takes to succeed as governments become equal partners in the economy.

The World in Transition: Debt, Democracy, and the New Economy

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So, where I want to start is what I was doing last night, which was digital ray. You're, you've now, I think the thought you're putting into this digital twin we call it, I guess you call it sort of an AI clone and how you're first of all, let's say, why are you doing this? I think you're rolling it out in a different way than I've seen other leaders do that. And nice to see you. Oh, nice to see you. Thank you. um. You know, for most of the last 50 years what I've done. And I recommend to other people is that whenever I would be in a position of making decisions, I would think about the criteria that I would use to make those decisions and I would write them down. and that helped me think them through. And help me communicate with other people. And then it if I put them in computer code. I could then backtest them. I could have a game plan. And I did that for 40 years, maybe something like that. And I did it about everything, not just the investing. I did it about how to manage country. My company and all that and that I, I did it by uh artificial intelligence, but artificial intelligence mean computer would make the decision, but I did it through expert systems and a great team that helped me do that and um so that there's been this evolution. I created an app for inside uh the company which I called the coach that people could go to and ask questions and so on. And it evolved and then I evolved into the stage of my life which I'm now in, which is I want to pass along. Um, thoughts or ideas or principles that helped me and then AI as we now know it came along and so this was a natural extension of that and it made me very clearly understand how different that is than LLMs and well, an autonomous agent, I'm curious, will we see digital Ray give us advice on gold or any of the other like I would, I would worry about that. Can it give us investing advice, or are you deliberately staying away from that? The purpose of this is really for me to convey principles and understanding. Like my it should do whatever I want to do. And do it well and it's very different from LLMs. L LLMs and those types, they don't have values, they don't have personality. They don't have, uh, you can't say to it, uh, who do you love or what wine do you like or anything like that. So there's a big difference between uh those generic decision makers and so on and the person. And so what I wanted to do was communicate well with people. And so right now a lot of people would like to have conversations with me. We can do that now because of all of that, so we literally can have conversations, but it requires the curating of that and to make sure that that's the same as the conversations that I would have. And so, you know, like we all can have conversations rather than just. I'm not here answering your questions. Why not have conversations, and I think it's going to be, you know, fantastic. So because it will be, you know, like what do I want it to be, not only me being able to communicate and operate that way, but also I can make a better me than in some ways because what I learned through my experiences is that what the The computer could do was many things I couldn't do like process a lot of information quickly and fast and you know, and unemotionally and with a lot of thought and so on and so I can make a better me, but it has to be me believing it's great and me communicating. Well, and I'll get to the real, you know, and I think by the real Ray Dalio in a minute. Do you want it to outlive you? It feels like That kind of Gilgamesh, you know, only I don't care too much about that thing. The real question about the outlive is only whether it can be good and useful. OK. In other words, I wouldn't want it to escape my sense of, yeah, that's great, and it could teach me and I can teach it. It's a partner. Everything that's going on in AI has to be a partnership. Once you understand. That it's in the value of that partnership that you're only going to be able to quality control it and so on. So it's the partnership that matters if it's a better partnership, but if it can evolve without me, I'm not sure it can then I don't know. Dorian Gray, you never know. It may evolve to something you never intended to be, but let me go back to So the real Ray Dalio for I think more than 40 years you've been going to China. In fact, you, I'd say you helped to really design the thinking behind the financial system there and we're on the cusp of a very important meeting between President Trump and Xi Jinping in China. I'd love to get your thoughts right now as to you've just come back from Beijing recently. Give us a sense of what the thinking is and what you would expect. I feel like we don't have a lot of insights right now into what's happening there. I think we have to understand that we're in a new time in a new world order, um, and in that world order some things are unsustainable. Um, there's a great competition and could be there are different kinds of wars. There's a technology war, a financial war, geopolitical war. There could be a military war, and so on. And given that dynamic, there's a certain interdependencies and problems that go along with that. For example, the model that China exports to the United States goods, earns money from that, takes that. Money then and buys the bonds has created an interdependency that is unsustainable because there's a creditor debtor relationship and there are so many intertwined dependencies that are threatening because so for example, it's understandable that the Chinese might worry that they could be cut off from the value of the bonds that they may not get. debt and so they tend to want to buy maybe not have as many as much debt, and they would buy more gold. That means they lend less money to the United States and so there are a number of what I'm saying is these interdependencies are also used as pressure points and so on in every way. So we're coming into a world in which, most importantly, how can you get You look at that list of interdependencies and you say how can I be safe or what and now in this world that they are also looking at how can I use that country's interdependency as a weapon and in that world we're now coming to have that breakdown. Now whether that's done peacefully or not is the question. I think that everybody recognizes now. That it's very important that that is done peacefully. So if they can go above it and say, well, I can, you know, you can understand I'm not necessarily going to view your bonds as very good, and they could say I can't depend. The United States can say I can't depend that you're going to sell me. What's an optimal deal in your mind between the US and China at this point, because I get to some of the principles you talk about in. You know how countries go broke at this, what does success look like from where you sit? Well, for the immediate term, it's that they Don't hurt each other so much that they raise the stakes and get into a bigger fight. For the longer term, it is that if they can almost go above it and set and understand each country's circumstances and find out how can they make arrangements so that there is a um an A realignment of things so that they can produce good outcomes. There's a challenge in doing that because any administration or even the current administration might change their mind. So deals are very difficult. We're now more in a deal world than we are in a long term relationship world. That includes also the political system because you could change who the leader is and then you're going and what those treaties mean they don't mean. So I think the important thing to realize is that we've changed the world order in a in a world that used to be a multilateral world order shaped by the United States in which after World War II. There were organizations like the World Bank, the IMF, the United Nations in which there was supposed to be a system for collective decision making by these rules, and that's over. And now we're in a world where power matters and so they are in that world of power power mattering. And the uses of these powers, what we hope for is that that doesn't become so damaging that it really is a problem for the world. So talk a little bit about the Middle East. You know, since we're here, you've been coming here a long time as well, and with that shifting world order we're certainly seeing this become. A more powerful hub and also a hub that's having different alliances as well. What are you seeing and what I think the Gulf countries that are operating are operating under the most wonderful evolutionary process of which there's um The the vibrancy, the freedom, the ability to be creative and productive, the inclusivity of people. It's a, it's a wonderful, wonderful environment that is being produced by leaders who truly believe that that's the better way to be peaceful and prosperous. Together in a world in an area which is very, very difficult to pull that off it and and so you see really a clash of values that's going on. um, so I think it's it's quite an exceptional region. It's a region, the Gulf states and and with with great leadership and so on. So that you know we're seeing that. Why are we here? Why do people come here, how they're operating, and it's really that visionary leadership that's something. When I first met MBS or NBC and so on, the clarity of the aspiration and the ability. to then make a transformation from something that was couldn't have been more different to what it is and where it's going is quite something. So I, I, everybody always comes to you for investing advice. I know that you, you know, gold, everything else. I want to, before we get a little bit to that, talk about the US and the clarity of aspiration there. What are you seeing in terms of just how it's unfolding with regard to the US economy? You often talk about the risks, the tariffs. Talk about the vision there. I think that the issue is very much That you can't look at the US as a whole nowadays. You have to look at everything in terms of the very, very big differences and how those differences are handled, right? So if you're looking at, let's say the AI world and really what amounts to about 3 million people, 1% of the population, uh, leading and then really the, let's say the 5 or 10% around them, you have one world that the whole world is dependent on, and then you have the bottom 60% of the population. They consider this, um, 60% of the American population has below a 6th grade reading level. And that's tough. And so scores are going down too, and, and, and with that, you know, almost becoming useless or unproductive and because of those things you have a dependency, an extreme dependency, you know, is it a bubble? Is it not a bubble? We will debate. That we will eventually find out but in any case, but in any case, it is in itself an issue. And so when you interview people, it's a world issue, not just in the United States. You're going to be interviewing the Chancellor of the Exchequer for the UK. OK, there's not. Enough money. There's a big wealth gap, OK. And so now the question is how do, what do they do when you don't have enough money and you have this big wealth gap, then you you do you go get the money and then and then people run. I can convey advice this afternoon. What advice do you have for the chancellor? Uh, it, uh, well, first of all, I guess recognize that it's a very difficult decision and this and then you have to get to the mechanics of it, right? Deal with it as a mechanical, not an ideological thing, and on that basis what you have is a choice of what who's going to pay. How are you going to do this? I would say be very practical as to what is the implications of losing people who have wealth. Can you grab their wealth? What is it going to be relative to them productivity? There's only one good path, and that is to create productivity, you know, if there's a wealth gap difference, it's because there's a. Activity difference and you have to make most of the people productive and you find a way to be most of it. So how can you be attractive and make places productive and then you have to deal with the devaluation of the money. There's different kinds of money. It all has a claim. So debt is somebody's promise to pay. Who's going to pay? Are the debtors then going to have their money devalued? What is the what is the best mechanics to deal with this very difficult situation? I know we don't have a lot of time left, but I think the area of money is fascinating. What do you think we misunderstand? You know, you get asked a lot about gold. I know you said at one point people have maybe 15% of their portfolio gold, yeah, and that the US are, what is, what are you trying to convey around that? I don't understand. Gold, like they think of gold as being a um Is it going to go up? Is it going to go down? Uh, it's a speculative thing, gee, I don't know about getting into gold and so on, and they don't realize that it, um. It's almost like cash. It is an alternative form of money. In fact, it is the oldest form of money, and, and I'm not just giving you that opinion because it's the 2nd largest money currency that central banks hold for that. And so to recognize that, OK, so think of it as almost a type of cash. That is an alternative type of cash that also diversifies their other kind of cash. For example, it's real returns are negatively correlated with most of their other assets and their cash for reasons we don't have a time to get into. But if you're saying that just like you would say, how much cash should I have in my portfolio without necessarily thinking cash is a speculative thing. To bet on, you should think how much in a sense gold should I have in my portfolio given its characteristics and just a strategic asset allocation, you know, what is the expected return, what's its correlation and the like, you would have something like maybe I don't know, 10% of the portfolio or some 10 it's between 5 and 15 it's between 5 and 15%. Uh depending on your particular circumstances, but the answer to your question is to look at it that way. Don't look at it as in the other way, and you just ask yourself, do I have that amount? And by having that amount it'll diversify my portfolio. So much more to talk about, and I'm going to ask Digital Ray when I get home tonight. Please join me in thanking Ray Dalio, and I look forward to continuing the conversation. Thank you. Thank you.