Dalio's broad strokes thesis that US will decline and China will take over is right iff there is sufficient trust in the PRC's monetary, judicial, and fiscal infrastructures. USD took over from the pound sterling not just because the UK was exhausted post-WW2, but more that major global market participants trusted US institutions from US soft power projection, and were comfortable transacting in USD under Bretton Woods.
For Dalio's thesis to bear out, he needs the PRC to convince major global market participants and other nations that a PRC-chartered, RMB-led Bretton Woods 2 (or equivalent, because history rhymes) makes more sense to follow than the current status quo. The challenge is the PRC has a significant soft power projection PR image issue on its hands at the moment with a lot of perceived bellicosity by not just its regional neighbors, but increasingly around the world.
The US during its post-war ascent was significantly involved in many domestic political knife fights in other nations, outright regime changes, or military engagement that are interpreted as bellicose by some standards: Greece, Italy, Albania, Syria, Burma, Egypt, Iran, Guatemala, Indonesia, Korea, Vietnam, Cuba, Congo-Leopoldville, Laos, Dominican Republic, Brazil, Iraq, Cambodia, Chile, Bolivia, Ethiopia, Angola, East Timor, Argentina, Afghanistan, Poland, Chad, Nicaragua, Grenada, Panama, Haiti, Zaire, Yugoslavia, Palestine-Israel, Libya, Venezuela.
What is curious to me is the USSR was similarly involved, but everyone decided to trust the USD and not the RUB. I have my theories about why that happened, but to the current topic, for various reasons the PRC is not quite so extensively involved in other nations' affairs, yet their soft power image is not sufficiently strong enough to mount a credible replacement to the USD.
I think part of the discrepancy between currencies and nation state dominance is acknowledgement by market participants that China's debt-to-GDP ratio is more than twice as much as the US ratio. As an investor, I also have deep reservations over the long-term with how China organizes its public financing from land sales (I think they're vastly underpricing the sales).
Dalio makes a compelling case, but hand waves away the above issues with "China will grow out of these temporary nitpicks". I suspect Jiping's administration played China's hand too soon; if China had stuck to its mercantilist knitting for another 2-3 decades, I believe it would have made a compelling and persuasive nation state for others to follow at the end of that period with no bellicosity involved. As it stands, I suspect the hand was played too soon because their runways of demographics, energy-debt, and food production are colliding in undesirable ways they're trying to fix by externalizing the costs.
Read Ray Dalio’s just recently release 576 page book “ Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail” and you will get a far deeper understanding how he comes to that conclusion. I personally thought it is an incredible well researched book with lots of analysis including historical perspectives. Worth the read to understand the big cycles.
Rise to Globalism by Stephen Ambrose and Doug Brinkley is an adequate precis of US ascent to global power, which IMHO contains the seeds of its demise.
The Battle for the Soul of Capitalism, The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns by John Bogle is the economic/fiscal/investing perspective I align with at the "non-billionaire" level.
China analyses is fluid at this time as you can imagine. Stay in touch with the usual The Economist, Bloomberg, Foreign Affairs, Parameters, and similar sources. IMO China's ascent and America's decline are both to a large degree psychogenic at this juncture, and a catalyzing condition to commit a path hasn't been developed yet.
eande's suggestion is good. If you find Dalio's theses persuasive, then I recommend you read his other three books to understand the quant angle he is coming from. You have to understand that as a billionaire, he can afford to be as much as a generation or even two off of his projections, and he'd still shrug that off. We don't have such luxury, so you have to be more discerning on his projected timelines, the numbers behind them, and the global market context it all takes place within.
For Dalio's thesis to bear out, he needs the PRC to convince major global market participants and other nations that a PRC-chartered, RMB-led Bretton Woods 2 (or equivalent, because history rhymes) makes more sense to follow than the current status quo. The challenge is the PRC has a significant soft power projection PR image issue on its hands at the moment with a lot of perceived bellicosity by not just its regional neighbors, but increasingly around the world.
The US during its post-war ascent was significantly involved in many domestic political knife fights in other nations, outright regime changes, or military engagement that are interpreted as bellicose by some standards: Greece, Italy, Albania, Syria, Burma, Egypt, Iran, Guatemala, Indonesia, Korea, Vietnam, Cuba, Congo-Leopoldville, Laos, Dominican Republic, Brazil, Iraq, Cambodia, Chile, Bolivia, Ethiopia, Angola, East Timor, Argentina, Afghanistan, Poland, Chad, Nicaragua, Grenada, Panama, Haiti, Zaire, Yugoslavia, Palestine-Israel, Libya, Venezuela.
What is curious to me is the USSR was similarly involved, but everyone decided to trust the USD and not the RUB. I have my theories about why that happened, but to the current topic, for various reasons the PRC is not quite so extensively involved in other nations' affairs, yet their soft power image is not sufficiently strong enough to mount a credible replacement to the USD.
I think part of the discrepancy between currencies and nation state dominance is acknowledgement by market participants that China's debt-to-GDP ratio is more than twice as much as the US ratio. As an investor, I also have deep reservations over the long-term with how China organizes its public financing from land sales (I think they're vastly underpricing the sales).
Dalio makes a compelling case, but hand waves away the above issues with "China will grow out of these temporary nitpicks". I suspect Jiping's administration played China's hand too soon; if China had stuck to its mercantilist knitting for another 2-3 decades, I believe it would have made a compelling and persuasive nation state for others to follow at the end of that period with no bellicosity involved. As it stands, I suspect the hand was played too soon because their runways of demographics, energy-debt, and food production are colliding in undesirable ways they're trying to fix by externalizing the costs.