Time magazine: The world is on the brink of major economic turmoil


The Time magazine published a report by Ray Dalio, an investor and author of the book “Principles for Dealing with the Changing World Order”.

At the beginning of his report, Dalio says that he decided to study the ups and downs in the financial markets and the economies of global countries, so he looked at 3 important events in history that occurred in the period from 1930 to 1945, namely:

1- The largest volume of debt, the fastest growth and purchase rates of these debts, and the largest amounts printed by the Central Bank.

2- The largest gaps in wealth, income and values.

3- The largest international conflict between the superpowers, the most important of which is between the United States and China.

According to the author, history shows that painful transitions occur in the following cases: When there is a massive amount of credit, debt bubbles burst and cause an economic downturn.

The existence of major conflicts within countries due to great wealth and value conflicts that were exacerbated by poor economic conditions.

Major international conflicts due to the rising global powers that challenge the existing global powers at a time of internal economic and political crises.

Where are we and what does the future hold?

The author provides a quick summary of what he concluded in his study through five elements as follows:

1- Financial/economic strength
In the United States, we are now in the middle of what the study called the short-term debt cycle.

This coincides with inflation that precedes the economic downturns that are likely to come over the next 18 months.

We are also at a dangerously late stage in the long-term debt cycle, because levels of debt assets and debt liabilities have become very high.

2- The strength of the domestic system
In many countries, the most important of which is the United States, we have seen a growing proportion of the populist extremist population (about 20-25% of the right are extremists and 10-15% of the left).

While studying history, the author saw that rising populism and growing conflict occur frequently when there are large gaps between wealth and values ​​at the same time that economic conditions are poor.

Looking to the future, the next 18 months will be a period of major elections, which will lead to greater political conflict, the division between left and right is likely to increase, and the battles will be fierce, according to the report.

3- The strength of the international world order
It’s likely that conflicts between the United States and China will intensify, and that political tensions will lead to an increase in aggression towards Beijing.

China and the United States have already come dangerously close to some kind of war, whether it’s an all-out economic war or a military war.

4- Nature factors
It’s difficult to accurately predict the actions of nature, but it seems that they are getting worse, and are likely to be more costly and harmful during the next decade due to climate change.

5- Technology

What can we expect from technology and human creativity?

The question is almost like the actions of nature.

It’s difficult to know exactly, especially since artificial intelligence has the ability to cause massive gains or massive destruction, depending on how it is used.

The only thing we can be sure of is that these changes will be very impactful.

The report concluded, “It may be unrealistic to think that we can change the course of events materially, so the most important thing for most people is to imagine the worst, because if we imagine the worst, we will be prepared for it”.

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