This week, we speak with Ray Dalio, founder and Chairman of Bridgewater Associates, the world’s largest hedge fund. Dalio is known for his practical yet unconventional understanding of economics, which he spells out in his video “How the Economic Machine Works.” He’s also of several macro books on investing, economics and philosophy. His latest latest book, The Changing World Order: Why Nations Succeed and Fail, is a deep dive into history and will be published January 12, 2021.
We tend to misuse the term “unprecedented” for things that have not occurred in our lifetimes, but as Dalio explains, we should adopt a broader historical view. Many of what we believe to be unique events have historical correlations and in fact have occurred before: Money printing and monetization of debt, expanding, wealth gaps, the rise of a great power to challenge the existing hegemony — all have historical parallels that provide insight into the present.
He describes the “mechanics” of what happens when rising debt, increasing wealth gaps, and economic downturn all occur simultaneously. Dalio notes the effects society, markets, politics, and the economy eventually reach a critical point, and we are nearing that juncture where the collective decisions made by central banks, governments and key institutions will have enormous ramifications for the future of the global and US economies.
Dalio explains the basic “opportunity” that led to his success: parents who took care of him, access to health care and a good public school education. This was the “American Dream,” and he uses his philanthropies to bring those same opportunities to as many people in his home state of Connecticut as he can (among other charitable interests).
A list of his favorite books are here; A transcript of our conversation is available here.
You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Overcast, Google, Bloomberg, Stitcher, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business next week with Mario Giannini, CEO of private equity firm Hamilton Lane. One of the few publicly traded PE shops, the firm oversees more than $500 billion in privately invested assets.
Ray Dalio’s Authored Books
The Changing World Order: Why Nations Succeed and Fail (January 12, 2021)
Ray Dalio’s Favorite Books
The Hero with a Thousand Faces (The Collected Works of Joseph Campbell) by Joseph Campbell
The Lessons of History by Will Durant
River Out of Eden: A Darwinian View of Life by Richard Dawkins
Ray Dalio’s Current Reading
The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000 by Paul Kennedy
No Rules Rules: Netflix and the Culture of Reinvention by Reed Hastings and Erin Meyer
Battlegrounds: The Fight to Defend the Free World by H.R. McMaster
The World: A Brief Introduction by Richard Haass