On The Record: Ray Dalio discusses the shifting global order

Yeah, the other side of trade is capital and there are big imbalances. That means there are big interdependencies. The United States needs a lot of capital, right? Countries are worried that the capital that they're owning could be cut off and there's a natural dynamic that's playing an important role and that's also showing up now already in the form of central banks shifting to gold. We're seeing the central banks build up gold reserves as is traditional when great conflicts emerge. And so we also could see that related to Greenland that you could see the not making the purchases of the American capital and then that would have a dynamic for the capital markets which would be probably more significant in its impact than the trade wars.

It's the beginning of the end of the monetary system as we know it. It's not just the US dollar, it's the fiat monetary currencies. So the UK, the euro, Japan, China all have similar debt problems and so on and are dealing with the same interrelationships which is the reason you're seeing gold being chosen by the central banks. They want a currency. Gold has always been the main currency and it's the only non-fiat currency. In other words, not the currency that can't be printed that they want. And so that's why you're seeing central banks move and sovereign wealth funds move to gold. And that's the nature of the shift of the monetary system.

We'll see.

Time is not history is not on his side regarding that position.

Well, there are five major forces. There's the monetary system which from money comes credit comes markets comes economic activity. And that cycle is we're reaching the point that there's not enough there's too much debt. And so all the major countries are having to deal with that. They have to deal with essentially the writing down of that debt which is normally done through the creation of printing of money. And when they do that that devalues money. So we're going through that cycle. Interrelated to that cycle is the domestic political cycle. In other words, the state of the economy and what large wealth gaps and large values gaps cause conflicts that cause populism to be each extreme and the breaking down of orders that like the breaking down of democracy. Democracy does not work as well when you have need two sides to be able to compromise. We're beyond compromising. So that's what we're seeing. And then there's the breakdown of the international world order from a law-based with a strong power kind of to now a power-based self-interested amount of where there's also comparable powers between the United States and China in particular and so that's natural. This is these things have always happened. There's also acts through history acts of nature droughts, floods and pandemics that certainly are more important. And then always technology is important. So we're having these revolutionary technology which can have great productivity benefits. It can be terrific in many ways. And but it's also can be used for wars and it also will produce greater wealth gaps. And so I think in this year you're going to see much more looking at wealth taxes and that is going to cause people to move from place to place than it's going to have impacts. So that's what it looks like to me. While so a lot more to argue about and a lot more to for when they disagree to push each other around to determine because it'll be power that will determine how things go.