I found the new book (2021) by Ray Dalio; investment hedge fund manager and author of 2017’s “Principles” & 2018’s “Princicples for Navigating Big Debt Crisis” after watching his “How The Economic Machine Works” video on youtube (which I highly recommend watching).
After studying relationships between global economics and politics, public health for a while this looked like an interesting book from the point of view of an experienced investment manager.
The book details in quite a bit of depth the common steps involved in cycles that have occurred in countries or empires that have risen to world power status before succumbing to decline and new order (new order>rise>the top>decline back to new order).
It details a lot of markers that influence these steps in the cycles and contains lots of measures to categorise the cycle stage of an empire including:
- Education
- Innovation and technology
- Debt burden
- Expected economic growth
- Infrastructure and investment
- Internal conflict
- Cost competitiveness
- Military strength
- Reserve currency status
- Economic output
- Trade
- Governance and law
- Geology & acts of nature
- Wealth gaps
- Population psychology
- Global partnerships
- Climate change
The detail and explanation around money and markets is really excellent as expected, Ray Dalio really gets into currency types, valuation, credit and debt.
The ‘big cycle’ and determining factors are further explained using four historical examples: the Dutch Empire, the British Empire, an overview of China and its many dynasties and the US. It also touches on other countries such as Germany and Japan in less detail.
It was written or published in 2021 post COVID-19 and includes the global pandemic in some examples along with larger historical influences and markers such as the Spanish flu, WWI & WWII and the great depression among others.
I would say although I enjoyed much of the book, it does have a bias towards ‘the rise of China’ and it really feels like this is the narrative throughout which is not necessarily a negative thing as its just detailing the current situation of the world based on Rays analysis. The book ends with a long section of detailed determining scores and predicted trajectories for the worlds leading countries and essentially gives the reader the ideas to continue implementing the principles in the future as the world inevitably continues to change.
The only thing that seemed missing from a book with so much reference to data and significance factors seemed like a large reference list, however upon visiting Rays website economicprinciples.org there is a 57 page ‘citations and bibliography’ document which I will probably not take the time to scrutinise at this time but is pretty substantial and includes a huge variety of sources. There is also a load of other info and extra downloads on the site.
The book has definitely helped me think about global functioning and history in a new way. I would say its worth reading even if you aren’t directly interested in investing or global economics.
It would definitely be a useful book in helping plan future global investment strategies whether using broad index tracker funds, etfs, bonds or single company stocks.
If you are looking for ideas of how to invest check out this post all about the difference between ESG and impact investing.
Looking for more finance related books? Check out our best selection post.
