The founder of the hedge fund Bridgewater Associates, Ray Dalio, has been concerned with long-term economic and political developments for decades. According to his analysis of around 500 years of history, world orders often run in recurring cycles.

Dalio calls this pattern the “Big Cycle.” In such cycles, new money, power and world orders emerge, develop over decades – and finally collapse again.

Historical cycles often last decades

According to Dalio’s analysis, such major historical cycles last on average about 75 years – sometimes significantly longer or shorter.

The last major upheaval was the period between the global economic crisis in 1929 and the end of the Second World War in 1945. Afterwards, a new world order emerged under the leadership of the USA, which continues to shape the international financial and security system to this day.

“In my book”Principles for Dealing With the Changing World Order” I have described six phases of the so-called “Big Cycle”. Phase 6 is the collapse – a time of great disorder. Phase 5 is the phase immediately before. That’s exactly where we are now.”

These include, among others:

• High and rapidly growing national debt as well as geopolitical conflicts Doubts about the value and stability of money – especially the reserve currency.
• That’s what drives Capital from paper currencies out and in in Gold.
• The transition from a world order with one dominant power and relative stability to one World order characterized by conflicts between several major powers is shaped.
• The collapse of alliances like NATO
• Growing wealth and income differences within countries lead to:
• Rise of populism – both from the right and from the left – as well as irreconcilable differences that cannot be resolved through compromise or the rule of law.

Historically, when these factors occur simultaneously, this can often lead to economic problems and political conflicts.

Confidence in currencies could also decline in such phases. Investors then increasingly looked for alternative stores of value – such as gold.

More political tensions in democracies

Such phases are particularly difficult for democratic systems, writes Dalio. If social divisions increase sharply and political camps can hardly find compromises, this could destabilize political systems.

Historically, there have always been cases in which democracies became more authoritarian in times of crisis. Dalio refers, among other things, to developments in the 1930s.

However, the investor also emphasizes that the course of history is not predetermined. Good political decisions could mitigate crises.

Nevertheless, he is skeptical. Given the current developments, he is “not particularly optimistic”.