Original Title: The Big Thing: We Are In A World War That Isn’t Going To End Anytime Soon.
Original Author: Ray Dalio
Translation: Peggy，BlockBeats

Editor’s Note: While the market is still repeatedly pricing in short-term questions like “how long will the conflict last” and “where will oil prices rise to,” this article tries to pull the perspective back to a longer time horizon. Ray Dalio, founder of Bridgewater Associates, believes that the current cluster of regional conflicts is stitching together into a “world-class conflict” that has not yet been clearly named, and that its evolutionary logic is more like the cyclical phase of the period on the eve of major wars in history.

Through a “big cycle” lens, the article breaks down the situation today into a series of structural changes happening in sync: alliances are being redrawn, clashes over trade and capital are escalating, key corridors are being “weaponized,” conflicts across multiple theaters are unfolding in parallel, and domestic politics and financial systems are gradually coming under strain. Within this framework, the Iran-U.S. conflict is no longer just a Middle East issue—it becomes a window for observing the rebuilding of the global order: how it will affect ally trust, resource allocation, and strategic decision-making, and then spill over into broader regions such as Asia and Europe.

Even more worth attention is that the article repeatedly emphasizes a variable that’s been overlooked: whether a war is won or lost does not depend on absolute strength, but on each side’s ability to withstand long-term attrition. This judgment shifts the analysis from “who is stronger” to “who can last longer,” and also places the United States in a more complicated position—it is both the most powerful country today and the one most “overextended” in global commitments.

In the author’s view, the assumptions implicitly embedded in the market right now—that the conflict ends in the short term and order returns to normal—may themselves be the biggest miscalculation. Historical experience shows that wars often do not have a clear starting point; instead, they evolve step by step from economic, financial, and technological conflicts, and become visible across multiple regions at the same time. The conflict pathways listed in the appendix (the Middle East, the Russia-Ukraine war, the Korean Peninsula, and the South China Sea) point to the same issue: the real risk is not whether any single conflict breaks out, but whether these conflicts begin to interact and link up with one another.

As the world slides from a “rules-based order” to a “power-based order,” conflicts will no longer be exceptions and may instead become a new normal. Understanding this shift is the starting point for judging every variable in the future.

Below is the original text:

I’d like to start by wishing you all the best during this challenging period. At the same time, I also want to clarify that the picture outlined by the observations that follow is not the picture I hope will come true; it is simply the picture I believe is closest to reality, based on the information I understand and a set of indicators I use to objectively judge the real world.

As an investor who has been involved in global macro investing for more than 50 years, I have no choice but to study all the factors that have influenced markets over the past 500 years, in order to deal with the constant stream of changes hitting me from every direction. In my view, most people tend to focus on and respond only to the most attention-grabbing events right now—for example, the situation in Iran—while they overlook those forces that are much larger, more important, and evolving over a longer time frame. Yet it is precisely these factors that are driving the situation today and determining where it will go next.

As far as the present is concerned, the most important point is this: the war between the United States, Israel, and Iran is only one part of the world war we are in, and this war will not end anytime soon.

Of course, what happens next regarding the Strait of Hormuz—especially whether control of its passage will be taken out of Iran’s hands, and which countries are willing to pay how large a price in manpower and finances—will have extremely far-reaching implications for the entire world.

In addition, there are a whole series of questions that are also worth focusing on: whether Iran still has the capability to harm neighboring countries with missile and nuclear weapons threats; how many troops the United States will send and what missions those troops will carry out; how gasoline prices will change; and the upcoming U.S. midterm elections.

All of these short-term questions matter, but they also risk causing people to lose sight of the truly bigger, more critical issues. More specifically, precisely because most people are accustomed to looking at problems from a short-term perspective, they now generally expect—something the market is pricing in accordingly—that this war will not last long and once the war ends, everything will return to “normal.”

But almost nobody is discussing an important fact: we are in the early stage of a world war that is not going to end quickly. Because I have a different framework for how I judge what’s happening, I want to explain why below.

Here are several big questions I believe truly need attention:

Questions worth attention

1、We are in a world war that won’t end anytime soon.

This may sound somewhat exaggerated, but one thing is beyond dispute: we live in a highly interconnected world, and that world is experiencing multiple “hot wars” at the same time. For example, the Russia-Ukraine—Europe—United States war; the Israel—Gaza—Lebanon—Syria war; the Yemen—Sudan—Saudi Arabia—UAE war, which also involves Kuwait, Egypt, Jordan, and other relevant countries; and the United States—Israel—Gulf Cooperation Council states—Iran war. Most of these wars involve major nuclear-armed countries. In addition, a large number of important “non-hot wars” are happening in parallel—trade wars, economic wars, capital wars, technology wars, and contests over geopolitical influence—and almost every country is pulled into them.

When these conflicts come together, they form a very typical kind of global war similar to historical “world wars.” For example, past “world wars” were also usually composed of multiple wars linked to each other; they often had no clear starting dates and no explicit declarations of war, but instead gradually slid into a war footing without anyone fully noticing. Those past wars eventually converged into a typical world-war propulsion mechanism, affecting and interacting with one another; today’s wars are showing the same structure.

In Chapter 6 of my book Principles for Dealing with the Changing World Order—“The External Order and the Big Cycle of Disorder”—published about five years ago, I have already described this war propulsion mechanism in detail. If you want a more complete explanation, you can read that chapter—it discusses the evolutionary trajectory we are going through right now, and what will most likely happen next.

2、It’s very important to understand how each side aligns, and what the relationships between them are.

To objectively judge how each side is lining up, it’s actually not that difficult. We can see it clearly through various indicators—for example, formal treaties and alliance relationships, voting records at the United Nations, statements by national leaders, and the actions they actually take. For instance, you can see China and Russia standing together, and Russia standing with Iran and North Korea and Cuba; and this group of forces is largely opposed to the United States, Ukraine (the latter is aligned with most European countries), Israel, the GCC states, Japan, and Australia, among others.

These alliance relationships are crucial for judging the future situations of the relevant parties. Therefore, when observing the situation today and forecasting the future, we must take them into account. For example, we can already see evidence of this kind of alignment relationship in the actions taken by China and Russia at the UN regarding whether Iran should be allowed to open the Strait of Hormuz.

For another example, many people say that once the Strait of Hormuz is closed, China will be especially hurt. That claim is actually wrong. Because China’s mutual-support relationship with Iran will very likely keep allowing the oil shipped to China to pass through; at the same time, China’s relationship with Russia will ensure that China can obtain oil from Russia. In addition, China itself has a large number of other energy sources (coal and solar power), and it also has massive oil reserves—enough for about 90 to 120 days. Another point worth noting is that China consumes 80% to 90% of Iran’s oil production, which further strengthens the power foundation within the China-Iran relationship. Taken together, in this war, China and Russia appear to be the relatively economic and geopolitical winners. As for the oil and energy economy side, the United States is in a relatively favorable position, because it is an energy exporter in its own right—which is a significant advantage.

There are many ways to measure these alliance relationships, including UN voting records, economic ties, and important treaties. The pattern they present is basically consistent with the description I provided above. (If you’re interested in looking at these representative major treaties, you can refer to Appendix 1. Similarly, if you want to understand major wars that already exist or might occur today, and how my indicator system judges the probability of them happening or escalating within the next five years, you can refer to Appendix 2.)

3、Study historical similar cases, and compare them with today’s situation

This method is rarely used, but it has been extremely valuable to me in the past and it is valuable now—and it may be valuable to you as well.

For example, whether you look back at several similar historical cases or reason it out logically, it’s not hard to see that: how the United States—the dominant power in the post-1945 world order—is performing in a war against Iran, a middle-power country; how much money and military equipment it will spend and burn through; and to what extent it protected—or failed to protect—its allies will be closely watched by other countries. Those observations will greatly influence how the future world order changes. Most importantly, we know the outcome of the war between the United States—Israel—and now the GCC states—against Iran will have a major impact on what other countries, especially in Asia and Europe, will do next, and this will further deeply shape how the world order evolves.

These changes will unfold in ways that repeatedly appeared in history. For instance, by studying history, it’s easy to identify empires that overextend themselves, establish indicators to measure just how much they have overextended, and see how they are harmed by that overextension. Placed in today’s context, it naturally leads us to look at what the United States is doing: the U.S. now has 750 to 800 military bases across 70 to 80 countries (by the way, China has only 1), and it carries security commitments spread around the globe—commitments that are costly and also highly exposed to vulnerable points.

Meanwhile, history also tells us clearly that overextended great powers cannot successfully fight wars on two or more fronts at the same time. This inevitably triggers doubts from the outside world about whether the United States still has the capacity to fight another front—for example, in Asia and/or Europe.

Therefore, I naturally go on to think further: what the current war with Iran means for the geopolitical landscape in Asia and Europe, and what it means for the Middle East itself. For example, if some issues emerge in Asia in the future—testing and exposing whether the United States is willing to take on challenges—I would not be surprised. At that time, the United States will find it hard to respond effectively, because it has already made a large number of entangling commitments in the Middle East; on top of that, with the midterm elections approaching, U.S. public support for the war with Iran is lacking, making it very unrealistic for it to fight another war on another front.

This kind of dynamic may produce a result: as other countries observe how U.S.-Iran relations evolve, they will recalibrate their own judgments and behavior, thereby pushing the remaking of the world order. For example, the leaders of countries that have U.S. military bases deployed within their territories and have long relied on U.S. security commitments are likely to learn from the actual experiences of the Middle East countries that also rely on U.S. protection, and adjust their strategies accordingly. Similarly, countries near key straits, those that hold strategic positions, or those with U.S. military bases deployed in potential conflict areas (for instance, Asian regions where a possible U.S.-China conflict might break out) will also closely watch how the Iran war develops and draw their own conclusions.

I can say with confidence that this kind of thinking is genuinely happening among the leadership teams of countries, and similar situations have appeared multiple times already in similar stages of the “big cycle.” The judgments and adjustments made by leaders of each country are part of a classic evolutionary path toward large-scale war—this process has played out repeatedly, and it is happening now as well. Putting today’s situation together and comparing it with this classic cycle of international order and conflicts, I believe we have reached Step 9. Do you also have a similar feeling?

Below are the rough steps of this classic evolutionary path:

· The economic and military strength of the dominant world power declines relative to the rising power; the two sides’ power comes gradually closer, and they begin to confront each other in economic and military terms around their differences.

· Economic warfare escalates significantly, manifesting as sanctions and trade blockades.

· Economic, military, and ideological alliances gradually form.

· More proxy wars.

· Fiscal pressure, deficits, and debt rise—especially in the dominant countries whose finances have already been overly expanded.

· Key industries and supply chains gradually come under government control.

· Trade choke points are “weaponized.”

· The acceleration of new war-fighting technologies.

· Conflicts across multiple theaters begin to occur at the same time.

· Within each country, demands for high loyalty to the leadership rise, and opposition voices to anti-war policies or other policies are suppressed—just as Lincoln quoted from the Bible: “A house divided against itself cannot stand,” especially during wartime.

· Direct military conflicts break out among major powers.

· To sustain the war, taxes, debt issuance, money injections, foreign exchange controls, capital controls, and financial repression increase markedly; in some cases, markets may even be shut down. (For the investment logic during wartime, see Chapter 7 of Principles for Dealing with the Changing World Order.)

· Finally, one side defeats the other, establishes a new order, and the victorious side leads the design.

Among the many indicators I track, many show that we are in a stage of the “big cycle” in which the monetary system, some domestic political order, and the geopolitical order are all starting to fracture.

These signals indicate that we are transitioning from a “pre-conflict stage” to a “conflict stage,” a period broadly similar to the historical moments between 1913–1914 and 1938–1939. Of course, these indicators are not precise predictions; the picture they depict and the timing are also not certain.

These indicators are more like directional prompts. History tells us that wars often don’t have a clear starting point (unless something major triggers formal declarations of war, like the assassination of Archduke Franz Ferdinand, Germany’s invasion of Poland, or the Pearl Harbor incident). Economic, financial, and military conflicts typically begin before formal war breaks out. Major wars are often preceded by a series of signals, such as:

1） Armaments and resource stockpiles begin to be consumed;

2） Fiscal spending, debt, money injections, and capital controls continue to rise;

3） Opponent countries learn each other’s strengths by observing the conflict;

4） Overextended dominant great powers are forced to deal with dispersed and far-apart multi-front conflicts.

All these factors are crucial, and the indicators I have observed are already enough to keep people on alert.

During this phase of the cycle, the typical evolution path of conflicts is not de-escalation, but continuous escalation. Therefore, what happens next depends to a large extent on how the Iran-U.S. conflict unfolds. For example, some countries have already grown more skeptical about whether the United States will honor its defense commitments. At the same time, perceptions that nuclear weapons have both defensive and offensive capabilities are pushing policymakers in more countries to discuss acquiring nuclear weapons, expanding nuclear stockpiles, and strengthening missile and anti-missile systems.

Let me emphasize again: I am not saying the situation will inevitably continue to deteriorate along this cycle and ultimately evolve into a full-scale world war. I don’t know with certainty what will happen next, and I still hope that the world will ultimately be built on a relationship of mutual win, rather than being destroyed by mutual loss. I have also been trying, in whatever ways I can, to push for this outcome. For example, over the past 42 years, I’ve maintained very good long-term relationships with senior policymakers in China and the United States—and also some people outside the system. So, as it has been in the past, especially during the current period of high antagonism, I have continued to try to support a mutual-win relationship in ways that both sides can accept and recognize. One reason is that I have feelings for people on both sides; another reason is that mutual-win relationships are clearly far better than mutual-loss relationships. Even so, doing this is becoming harder and harder now, because some people believe, “The friend of my enemy is my enemy.”

When the “big cycle” reaches this stage—that is, the eve of a major war—the fundamental contradictions that cannot be resolved through compromise often push each step of the cycle forward one after another, until it ends in violence. That’s why it becomes very important to understand this typical structure of the big cycle and continue to observe what is happening in the real world. I provide you with this analytical framework so that you can use it to compare with how real events unfold, see what I see, and then decide how you want to respond.

Correspondingly, I believe there is one thing that especially needs to be seen clearly: the world order has shifted from one dominated by the United States and its allies (for example, the G7), built on multilateral rules, to a world where there is no single dominant force to maintain order and where more people follow “might makes right.” This means we are very likely to see more conflicts. Anyone who seriously studies history will realize that today’s world order is closer to the state of most periods before 1945 than to the post-war order we are familiar with; and the implications behind that are very significant.

4、As history has repeatedly shown, judging which country is more likely to win is not most reliably determined by who is stronger, but by who can endure the pain for longer.

This is clearly also one of the key variables in the U.S.-Iran war. The U.S. president assures the American public that this war will end within a few weeks, at which point oil prices will fall and life will return to its original normal and prosperity. But whether a country can endure pain in the long run depends on many observable indicators, such as public approval ratings (especially in democracies), and the ability of government leaders to maintain control (especially in authoritarian systems where public opinion constraints are weaker).

In war, victory does not automatically arrive when the enemy is weakened; victory only appears when the other side surrenders. Because you can’t eliminate all enemies. In the Korean War, when China entered the war despite being far weaker than the United States and with the United States possessing nuclear weapons, Mao Zedong is said to have once said: “They can’t kill all of us.” The meaning is simple: as long as there are people who keep fighting, the enemy cannot truly win the war. The lessons of Vietnam, Iraq, and Afghanistan are already very clear. Real victory is when the victorious side can disengage and ensure that the defeated side no longer poses a threat. The United States still looks like the strongest country in the world, but it is also the most overextended great power, and among the major powers, it is the most fragile when it comes to bearing pain over the long term.

5、All of this is unfolding in a typical “big cycle” way.

The so-called “typical big-cycle way” means that events are mainly driven by five major forces: big-cycle fluctuations of money, debt, and the economy between monetary order and disorder; the breakdown of political and social order caused by wealth gaps and value divisions; the breakdown of regional and global order caused by wealth gaps and value divisions; major technological progress that is used simultaneously for peacetime and wartime purposes, along with accompanying financial bubbles—bubbles that usually ultimately burst; natural events like droughts, floods, and pandemics.

I don’t want to go into more complicated detail here to explain how the big cycle operates, how these five forces drive change, and what the 18 deeper underlying determinants behind them are. But I still recommend that you understand this framework, and I also recommend you read my book or the YouTube video with the same name: Principles for Dealing with the Changing World Order.

6、Having a good set of indicators, and tracking them continuously, is extremely valuable.

Many of the indicators I use to track these evolving situations have already been explained in Principles for Dealing with the Changing World Order. I especially recommend Chapter 6, “The External Order and the Big Cycle of Disorder.” If you also want to understand investment-related changes that are almost unimaginable in peacetime but often occur in wartime, then I also recommend Chapter 7, “Understanding Investments in War from a Big Cycle Perspective.” I recently shared these two chapters online, and you can read them there.

That’s my overall assessment of the bigger picture up to this point. Because this assessment affects not only my investment decisions, but also how I handle other aspects of my life, I will talk about these issues further next. As mentioned earlier, there are also two appendices in the text that follow: one with information about the relevant alliance relationships among countries, and another with a brief overview of the major conflicts that already exist or might emerge.

Appendix

Appendix 1: Relevant Treaties

Below are some of the most important treaties I believe, including a 1-to-5 rating of the strength of the implicit commitments they carry, and a brief description of each treaty. Overall, other indicators for measuring alliance relationships—such as leader statements and actual actions—are broadly consistent with the relationships reflected in these treaties. However, it is becoming increasingly clear now that all these treaties, especially those involving the United States, may change, and that real action ultimately weighs more than the text of agreements.

1、The United States’ key treaties:

2、China—Russia—Iran—North Korea key treaties:

Appendix 2: Wars that have occurred and potential wars

Listed below are what I consider the most important wars—either already occurring or potential—at present, including my brief judgment of each situation and my probability assessment that they will break out or escalate into military conflicts within the next five years.

War between Iran—United States—Israel
This is already a full-scale war, and it appears to still be escalating, with all sides continuing to consume resources. Key variables to focus on include:
a） Who ultimately controls the Strait of Hormuz, Iran’s nuclear materials, and Iran’s missiles;
b） How much manpower and financial cost each country is willing to pay in order to win the war;
c） The level of satisfaction each belligerent has with its own alliance relationships;
d） Whether Iran’s allies (such as North Korea) will directly enter the war or support Iran through arms sales, or whether conflicts break out in Asia—forcing the United States to face a difficult choice between fulfilling commitments and choosing not to act;
e） Whether peace and security can be restored in the Gulf region.

Direct war involving Ukraine—NATO—Russia
This is an active war involving almost all major military powers (except China), with extremely high risks. However, despite three years of conflict, it has not expanded beyond Ukraine—this is a relatively positive signal, meaning a larger-scale war has been temporarily avoided. Currently, Russia is fighting directly against Ukraine, NATO is providing weapons support to Ukraine at huge fiscal cost, and Europe’s military spending and preparations for war against Russia are rising. Because NATO is not directly participating, and because fear of nuclear war is restraining escalation—for now, the conflict is contained. Risk signals that need attention include: Russia attacks NATO territory or supply lines, NATO directly intervenes militarily, and accidental clashes occur between Russia and NATO member states. I believe the probability of these situations occurring and causing the war to expand is not high; within the next five years, it is roughly 30%–40%.

War related to North Korea
North Korea is a highly provocative nuclear state and has shown its willingness to fight on behalf of allies in confrontation with the United States. It possesses missiles capable of carrying nuclear warheads and striking the U.S. homeland (though current reliability is still limited), but over the next five years, this capability will improve significantly. North Korea has close relations with China and Russia and may become an effective proxy force for them. At the same time, North Korea is extremely aggressive in demonstrating and developing missile capabilities, but it is not inclined to sell such related weapons to other countries. I think the probability of some form of military conflict occurring within the next five years is 40%–50%.

South China Sea—Philippines—China—United States conflict
There is a defense treaty somewhat similar to NATO between the United States and the Philippines, and China’s coast guard and the Philippines have already had multiple standoffs. These frictions could further draw in U.S. Navy patrols. The threshold for triggering conflict is actually low—for example, ships colliding, China attacking Philippine ships, implementing a blockade, or a missile incident. Once it happens, the U.S. will face pressure over whether it will fulfill treaty obligations. However, U.S. voters at home may not support such military intervention, which would put U.S. leadership in an extremely difficult position—one that is also highly symbolic. I believe the probability of this conflict occurring within the next five years is about 30%.

Overall, among these potential conflicts, the probability that at least one will occur within the next five years, in my view, is above 50%.

[Original Link]

Click to learn more about how BlockBeats is hiring

Welcome to join the official BlockBeats community:

Telegram subscription group: https://t.me/theblockbeats

Telegram discussion group: https://t.me/BlockBeats_App

Twitter official account: https://twitter.com/BlockBeatsAsia