Changing World Order
Ray Dalio
Summary
The history of the rise and fall of empires written by one of the world's great investors. Think this will be the most important book to understanding the next decade. Expect a lot more turmoil going forward and Dalio lays out why based on the patterns of history.
Rating: 5/5
Notes
Time’s ahead will be different than those experienced in our lifetimes, though similar to many times in history
Big cycle moves between peace and prosperous periods to depression/revolution/war
When cycles align, tectonic plates of history shift and lives of all people change in big ways
The swinging of conditions b/w one extreme to another is the norm, not the exception
The future we encounter is likely to be very different than what most expect
No system of government, economic system, currency or empire lasts forever yet almost everyone is surprised when they fail
Currency devaluations can increase stock markets
We are like ants pre-occupied with our jobs of comparing crumbs in our brief lifetimes instead of having a broader perspective on big picture patterns and cycles, how they interrelate, where we are in the cycle and what comes next
3 major forces: end of long term debt cycle and printing money, internal and external disorder and rising power (China)
When wealth and value gaps are large and there is an economic crisis, it is likely there will be a lot of conflict on how to divide the pie
To see the big picture, you can’t focus on the details
The people who have wealth own the means to wealth production and work with people in political power to set the rules
All turbulent times are produced by conflicts (wars/revolutions) or severe acts of nature (drought, flood, pandemics)
Humanity’s power to adapt and get to higher levels of well being is greater than the bad stuff thrown at us
Key 8 strengths: education, competitiveness, innovation/technology, economic output, share of world trade, military strength, financial centre strength, reserve currency status
Rise starts with a strong education system
When there is an economic downturn, the country can default on its debts or print money
- They always print money which devalues the currency and raises inflation
Poor economic conditions cause more fighting for wealth and power which leads to war
Bad periods of destruction typically take 10-20 years
2 other major forces: pace of innovation and technological development and acts of nature like draughts, floods and disease
Real wealth (real goods) does not equal financial wealth
Wealth = power but wealth decline = power decline
To be successful, one must earn an amount equal to what one spends
The degree of inventiveness and innovation in a society is the main driver of its productivity
Societies that draw on people for their merits instead of privilege are more successfully sustaining
If you don’t understand how money and credit works, you don’t know how the system works
All entities deal with the same basic financial realities and always have
Debt eats equity
Biggest problem now is debts for most people are very large relative to their assets
Crises that occur during long term debt cycles happen once in a lifetime
When currency devalues, stocks go up as you need more currency to buy the same asset
All currencies devalue or die and when that happens, cash and bond holders are wiped out
Risk in holding lots of cash in currencies at the end of the long term debt cycles
To be successful, the system has to work for most people including the large middle class
Toxic mix: people/country in bad financial shape, large income/wealth/values gaps and an economic crisis (America?)
Signs of decline: populism, class warfare, loss of truth in public domain
Watch for rogue police forces as sign of massive decline
When in doubt, get out
Civil wars inevitably happen, be aware
People who lead revolutions are middle class intellectuals from good backgrounds
Almost all civil wars have foreign interference in them
International relations is driven by raw power dynamics
War won’t go as planned and will be far worse than imagined
Have power, respect power and use it wisely
During periods of economic distress and large wealth gaps, there are typically revolutionary large redistributions of wealth
In war, one’s ability to withstand pain is even more important than one’s ability to inflict pain
All markets are driven by four determinants: growth, inflation, risk premiums and discount rates
3 risks investors face: portfolios won’t provide returns needed to meet their spending, their portfolios could be ruined and large share of wealth taken (higher taxes)
The Dutch invented capitalism as we know it. Great for the Dutch and world but brought potentially deadly consequences
Before all-out wars begin, there is usually a decade of skirmishing
Transactions b/w countries are different than those within countries
The value of assets is reciprocal of the value of money and credit (if money is cheap, assets are expensive)
Wealth and income gaps are largest since the 1930s
Growing inequality of fiscal problems are critical drivers of empires’ decline
If you see capital controls in a certain currency, run from that currency
Conflicts produce struggle but struggle means progress
During crises, autocratic instead of democratic leaders are preferred
The technology war b/w the US and China is the most important
Our greatest war is with ourselves because we have the most control over how strong or weak we are
The future will be much different than you expect it to be
All empires decline and new ones rise to replace them
Next big risk point around 5 years from now
Know all the possibilities, think about the worst case scenario and find ways to eliminate the intolerable ones
Put deferred gratification ahead of immediate gratification so you will be better in the future
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Buy the book here
Free E-book download here
How the World Works
Noam Chomsky
Summary
A combination of books Chomsky wrote in the 80s and 90s about America and it's role in the world. Fascinating read and insight into one of the great thinkers of the 21st century
Rating: 5/5
Notes
The US invaded Greece in 1947 and supported a horrendous war which led to 160k Greek deaths. This was the model for Vietnam and allowed American business to gain and thrive
US policies in the 3rd world consistently opposed democracies if they couldn’t be controlled as real democracies believe government should respond to the needs of their own population rather than those of US investors
US-run contra forces in the 3rd world isn’t ordering killing - it’s brutal sadistic torture (Nicaragua, El Salvador, Guatemala)
From the Bolshevik revolution in 1917 till the collapse of the communist governments in eastern europe in the 80s, it was possible to justify every US attack as defense against the Soviets
If you want a global system that’s subordinated to the needs of US investors, you can’t let pieces of it wander off. It’s clearly stated in the documents of record
The US wants ‘stability’ meaning security for the upper classes and large foreign businesses
Solid case for impeaching every American president since World War 2 either outright as war criminals or involved in serious war crimes
El Salvador and Nicaragua were not covered by the US media in the 70s when US-supported brutal torture and murder were taking place
In the early 80s, America’s friends slaughtered 10s of thousands of Guatemalans with countless others tortured and raped
After Vietnam, the major US policy goal has been to maximize repression and suffering of countries demonstrated by their violence - blocked other countries from seeking aid
The US regularly carries out or supports aggression
For most of the 20th century, the US was the dominant economic power and used economic warfare as a weapon ranging from illegal embargoes to enforcement of weak IMF rules with their military becoming pre-eminent
The US tries to avoid negotiations with countries as the US fears it will lose and other countries will be better off
When a state has huge debts, it must divert the population from what’s happening and they do this by inspiring fear of our enemies (Russia in Europe)
The real enemy of the US has always been ‘the poor who seek to plunder the rich’. In America, it’s the opposite and has been for generations
‘The war on drugs’ was a manufactured media blitz by the US leadership to distract the population, increase repression in inner cities and build support for attack on civil liberties
The US government blocks international effort to seek peace (Russia and Ukraine)
Major media are large companies owned and interlinked with even larger conglomerates. The market is the advertisers and the product is audiences
The power in the US lies in the hands of people who determine investment decisions as they determine production, distribution and staff the government. They want a passive, quiescent population
The struggle of freedom is never over and requires active and sustained efforts
One important consequence of globalization is it extends the third world model to industrial nations where the average person has their jobs shipped away while the rich and elite continue to amass massive amounts of wealth
We’ve moved to an international state with the IMF, World Bank, G7 & EU, WEF where the general population doesn’t know what’s happening and it doesn’t know it doesn’t know
If the borrowing the US has done was used for constructive purposes like investment or infrastructure, the US would be better off, but it was used to enrich the rich - for consumption, financial manipulation and speculation which are all harmful
The class warfare of the last few decades has successfully weakened popular organizations leaving people to feel isolated
The US is so deeply in debt to the international financial community because of debt that they have a lock on US policy
Many of the large number of security council resolutions vetoed by the US have to do with Israeli aggression or atrocities
Invaders typically use local collaborators to run things for them by playing upon existing rivalries to get onne group to work for them against another
European wars were wars of extermination. If we were to be honest about history, we would simply describe it as barbarian invasion
There has always been racism but it developed as a leading principle of thought in the context of colonialism.
A standard technique of belief formation goes along with oppression
In the US, you’re not allowed to talk about the class differences, which is the real issue
When the US establishment talks about jobs, it means profits for its corporations
The elite are masters and they follow what Adam Smith said about ‘the vile maxim’ - all for ourselves and nothing for anyone else
People who aren’t owners and investors have nothing much to say in the US
Jefferson warned against banking institutions and corporations and said if they grow, aristocrats would’ve won and the revolution would’ve been lost
The ‘Free market’ is for the poor. We have a dual system - protection for the rich and market discipline for everyone else
There’s been a considerable increase in inequality and has the American society moving towards a third world model, thereby seeing increased crime and signs of social disintegration
A huge area of the media is dedicated to diverting people and making them more stupid and passive
There’s nothing individualistic about corporations who are totalitarian in nature
Free trade agreements result in reduced wages for local employees while predominantly benefiting the rich consumer while also destroying unions
Operation Paper Clip imported large number of known Nazi criminals
The American army’s counter-insurgency literature begins with an analysis of the German experience in Europe written with the co-operation of Naxi officials (instruments of statecraft - book)
US involvement in Chile with the coup in 1973 to reduce social democracy
The threat of a good empire is what the US worried about with reforms on uncontrolled capitalism
The US killed a few million people and destoryed 3 countries during the Vietnam war
A huge amount of business propaganda is to create wants
The answers to solve all these issues is to organize. Being alone you can’t do anything but if you join with other people, you can make changes
Under capitalism, investment is supposed to be as risk free as possible. No competition wants free markets - what they want is power
The government subsidizes corporations’ costs, protects them from market risks and lets them keep the profits
There’s never been much difference between the 2 business parties and the differences are disappearing
The CIA has been involved in drug running for generations (the politics of heroin book)
You need something to frighten people with, to prevent them from paying attention to what’s really happening to them. You have to engender fear and hatred
The first world lives in a highly indoctrinated society
Neoliberalism is nothing more than the imperial formula: free markets for you and plenty of protection for me. The rich would never accept it but they’re happy to impose it on the poor
The UN does mostly what US business wants
‘Politics is the shadow cast on society by big business’ - John Devery
If people dedicate themselves to organizing and activism, we’ll gain access to broader audiences
If you extrapolate to the future, it’s very ugly but the point is it’s not inevitable. It can be changed but we can’t change things till we understand them.
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