Original Title: A Legendary Investor on How to Prevent America’s Coming ‘Heart Attack’
Original Author: Emily Holzknecht and Sophia Alvarez Boyd, The New York Times
Translation: Peggy, BlockBeats

Editor’s Note: Against the backdrop of high U.S. fiscal deficits, escalating geopolitical conflicts, and renewed scrutiny of the dollar’s creditworthiness, discussions about America are shifting from “Is it still the world’s strongest economy” to “Are the institutions, debts, and international order supporting U.S. hegemony still stable.”

But when “America remains powerful” and “America is losing order” are both true, a more critical question begins to emerge: Is the challenge America faces just an ordinary cycle adjustment, or is it a loosening of a long-term order?

This article is a translation of an interview with Ray Dalio from The New York Times podcast “Interesting Times.” Dalio is the founder of Bridgewater Associates, who has long observed macro order changes from the perspectives of debt cycles, reserve currencies, and the rise and fall of empires.

In this conversation, Dalio breaks down the American issue into a set of deeper structural variables: how debt accumulates, how political divisions deepen, how international order fails, and whether technology can still offer new productivity outlets.

First, the debt cycle is changing a country’s capacity. In the past, the U.S. relied on strong fiscal credit and the dollar’s reserve currency status to finance long-term at low costs, maintaining military spending, welfare, and global commitments. But now, expenditures have long exceeded income, debt and interest burdens are rising, and fiscal space is continuously squeezed. This means debt is no longer just a number on the balance sheet but increasingly a constraint on national action: whether the U.S. can continue to protect allies, sustain welfare, or bear war costs will be limited by fiscal realities.

Second, domestic political divisions are increasingly tied to issues of wealth distribution. Previously, political disagreements could be partly absorbed through growth, taxation, and welfare expansion; different groups had conflicting interests but still shared a trust in the system. Now, rising income inequality, value conflicts, and ideological polarization overlap, making any deficit reduction plan a matter of “who pays more taxes, who receives less welfare.” This means fiscal adjustments are no longer just technical but also questions of political legitimacy. The more reform is needed, the harder it is to reach consensus.

Third, the international order is reverting from rules-based to power-based. Post-1945, the U.S. led the creation of a world order centered on multilateral institutions, rule systems, and dollar credit. Even during the Cold War, the U.S. held overwhelming advantages in finance and institutions. But now, geopolitical conflicts, camp realignments, and supply chain security issues are weakening the stability of this order. Analogies like Iran, the Strait of Hormuz, or the Suez Crisis point to the same core issue: when rules cannot be enforced, markets will eventually reassess the relationship between power, credit, and security.

Fourth, the pressure on the dollar does not mean the renminbi will immediately take over. Dalio’s more nuanced view is that the renminbi may become a medium of exchange in more trade scenarios, but that doesn’t mean Chinese debt will become the world’s primary store of wealth. The real question is: in a world where fiat currencies face devaluation pressures, what safe assets will capital seek? Gold has re-emerged as a key reserve asset for central banks, reflecting this uncertainty.

Fifth, AI could both alleviate crises and amplify them. Historically, technological progress has been seen as a major export for the U.S. to fix debt and growth issues; if AI significantly boosts productivity, it could improve income, growth, and debt repayment capacity. But now, AI also creates new wealth concentration, job displacement, and security risks. It could serve as a buffer against fiscal pressures or become a new amplifier of social division and geopolitical competition.

If we condense this conversation into a single judgment, it is: America’s problems are not just a single crisis but a simultaneous reevaluation of debt, politics, international order, and technological variables.

In this sense, the discussion is no longer just about whether the U.S. is declining but about a larger structural issue: when the old order can still operate but its underlying conditions are loosening, how should markets, nations, and individuals redefine “security” and “credit”?

Below is the original content (reorganized for clarity):

Image source: The New York Times

TL;DR

· Dalio’s core judgment: the U.S. is not weakening in the short term but entering a long-term downward cycle.

· The real risk isn’t lack of money but excessive debt, which will gradually erode national capacity.

· The hardest part of resolving deficits is that they ultimately become political conflicts over “who pays and who benefits.”

· The root cause of political divisions in the U.S. isn’t just values but the imbalance in wealth and interests.

· The postwar U.S.-led rule-based order is failing, and the world is returning to power politics.

· The dollar won’t be immediately replaced by the renminbi, but the world will pay more attention to safe assets like gold.

· AI may rescue growth but could also deepen divisions in employment, wealth, and security.

· Whether the U.S. can repair itself depends less on markets and more on education, social order, and avoiding war.

Original Content

I feel that recently, we seem to be at a moment of “the end of the American empire.”

Partly because the Iran conflict has reached a stalemate; partly because Donald Trump is exerting pressure on U.S. allies; and partly, I think, because of an increasingly strong feeling: China, America’s biggest competitor, is watching coldly, waiting for its collapse.

This week’s guest has long been focused on this issue. He has a grand historical theory predicting America’s decline. To some extent, he is an atypical “Cassandra”—constantly warning, but not always taken seriously.

Ray Dalio founded one of the world’s largest hedge funds, Bridgewater Associates. But now, he is more interested in discussing not just markets and investments, but the decline of the American empire and whether we can still pull this “American empire” back from the cliff.

Below is a post-edit transcript of the “Interesting Times” episode. For a full experience, we recommend listening to the original audio. You can do so via the player above, or through The New York Times app, Apple, Spotify, Amazon Music, YouTube, iHeartRadio, and other podcast platforms.

The Cyclical Logic of the U.S. Crisis

Ross Douthat (Host): Ray Dalio, welcome to “Interesting Times.”

Ray Dalio (Founder of Bridgewater): Thank you. It’s quite interesting to be a guest on “Interesting Times” during these “interesting times.”

Douthat: Everyone says so. You’ve spent your career betting on the markets, and many of your judgments over the past decades have paid off. Recently, you’ve been saying that the current United States might not be a particularly good bet.

So, if someone is observing the U.S. now, trying to decide whether to bet on “the American empire” remaining dominant in the 21st century, what key forces or factors should they focus on?

How Debt Is Draining National Capacity

Dalio: I want to correct that statement first. I’m not saying the U.S. is a bad or a good bet. I’m just describing what’s happening.

In my about 50 years of investing, I’ve learned that many events I consider very important have never happened in my lifetime before, but they have occurred many times in history.

So I started studying the last 500 years, trying to find the reasons behind reserve currencies and the rise and fall of empires. You see a recurring pattern. There is indeed a “long cycle,” and its start often coincides with the formation of a new order.

There are three types of order: monetary order, domestic political order, and international world order. These are three powerful, evolving forces.

First, the monetary order. There’s a debt cycle here. When debt relative to income keeps rising, and debt service costs relative to income also increase—whether for countries or individuals—

Douthat: Or empires.

Dalio: That’s true for any entity!

Douthat: Yes.

The underlying issue behind political splits is wealth distribution.

Dalio: All these factors squeeze other expenditures. That’s the problem. For example, the U.S. now spends about $7 trillion annually, with income around $5 trillion—that is, expenditures are about 40% higher than income. This deficit has persisted for some time, leading the U.S. to accumulate debt roughly six times its income—by income, I mean the actual money the government receives.

Exactly. But the result is that the currency itself also depreciates. That’s the mechanism at work. Because of this, long-term debt cycles, short-term debt cycles, currency cycles, and economic cycles exist—they push the economy from recession to overheating and back.

Related to this are domestic political and social cycles, which are closely linked to monetary issues. When a society develops huge wealth gaps and value differences—

Douthat: You mean, income inequality?

Dalio: Gaps between the rich and poor, and between groups with different values. When these differences become irreconcilable, political conflict arises, and such conflict can threaten the entire system.

So, I believe the first cycle is happening. I also believe a second cycle is happening—that is, the irreconcilable split between the political left and right. We can discuss these later.

The International Order Is Returning to Power Politics

Douthat: How do international factors come into play?

Dalio: The same logic applies internationally. After a war, a dominant power emerges, establishing a new world order. An order is a system. This cycle began in 1945.

Douthat: For us, that’s true. The U.S. was the leading force in creating this system.

Dalio: Exactly. The U.S. built a system largely modeled on its own institutions, meant to be representative. For example, the United Nations is a multilateral world order. Different countries operate within it, and in theory, there should be a rule-based system.

But the problem is, without enforcement mechanisms, this system isn’t truly effective. It’s an idealistic system, and when it can be maintained, it’s a good one. But today, we no longer have a truly rule-based multilateral system.

We are returning to a state that existed before 1945, when geopolitical disagreements constantly arose—like the current tensions over Iran.

How are these disagreements resolved? You don’t submit them to an international court for judgment and enforcement. Ultimately, power prevails.

Douthat: Exactly. But even during the height of the “rule-based international order,” for most of that period, the U.S. was in conflict with the Soviet Union.

Dalio: That’s right.

Douthat: So, the Cold War was ongoing. The window when great power conflicts were temporarily set aside, and the system operated purely on rules, was actually quite short. And even then, U.S. power was decisive, right?

Dalio: Of course. Because the Soviet Union didn’t have real strength. It had military power, but at the end of WWII, the U.S. controlled about 80% of the world’s monetary wealth, had half of the global GDP, and was the dominant military power. So, we had the capacity to provide funding abroad, and those receiving it valued it highly. In contrast, the Soviet system was only a small part of the picture. From a financial perspective, it was nearly bankrupt and not a significant power.

Douthat: So, the military balance is real, but in terms of financial power, the U.S. is the dominant player.

Dalio: Exactly. Fortunately, under the doctrine of mutual assured destruction, we haven’t had to actually use that military power. Still, I remember the Cuban Missile Crisis—when I was a kid, watching the developments, not knowing if nuclear war would happen. But it didn’t, and later the Soviet Union collapsed.

Douthat: In your cyclical view of history, what role do random events play?

Dalio: All events happen in sequence. The key question is: do they trigger conflicts? And in a world without courts to resolve disputes, domestically or internationally, how are these conflicts resolved?

For example, the current Middle East situation, especially involving Iran. There’s conflict, which can escalate into war because there’s no other way to resolve it. And now, the world is watching: can the U.S. win, or will it lose?

We tend to evaluate this in black-and-white terms: who controls the Strait of Hormuz? Who controls nuclear materials? Can the U.S. win this war?

We should also recognize the camp dynamics behind it. Russia and Iran tend to support each other, just as other factions have their own backers.

Douthat: To emphasize again, compared to the past few decades, is the most notable aspect that the other camp’s strength has increased?

Dalio: It’s about the relative power shift and the breakdown of the existing order. Plus, a huge debt-credit relationship is involved. For example, when the U.S. runs large deficits over the long term, it must borrow money. During conflicts, this becomes very dangerous. Interdependence is also a factor.

In a higher-risk world, you must be self-sufficient because history shows you can be cut off at any time. Any side can be disconnected.

Douthat: Yes. I’m very interested in how these factors interconnect. Suppose the final outcome of the Iran issue is that people believe the U.S. lost or at least failed to achieve its goals. Maybe the Strait remains open, but the regime stays in power, and the outside world gets the impression: the U.S. tried something but failed. Do you think this impression could influence perceptions of America’s debt repayment credibility?

Dalio: I just spent about a month in Asia, meeting with leaders and others from different countries. The impact is huge—similar to when Britain lost control of the Suez Canal, which was seen as the end of the British Empire. Because Egypt controlled the Suez. It’s a very significant event.

Douthat: Yes, that was in the 1950s.

Dalio: Exactly. And that was when people started to no longer want to hold British debt and assets. Now, different countries are asking: will the U.S. still protect us? Or has the U.S. already lost the ability to do so? Because Americans don’t want a prolonged war, it must end quickly and cheaply—

Douthat: And be popular, right?

Dalio: It has to be popular.

Douthat: Our wars are often unpopular now. But I want to stay with the Suez analogy because I find it very interesting. Many people use this analogy. In the Suez Crisis, Britain, France, and Israel tried to regain control of the canal after Egypt nationalized it.

So, it’s similar to Iran: a key chokepoint in global trade, around which Western powers and a regional power clash. But I think the key point of the Suez incident is that Dwight Eisenhower and the U.S. basically told Britain: no, you can’t do that.

So, the crisis of confidence in the British Empire, the pound, and everything else partly stems from the realization that this was the post-WWII order, with the U.S. as the leader.

Now, does China need to play a similar role? Does a moment like that need to happen for people to truly lose confidence in the U.S.? Do they need to see a new hegemon emerge before abandoning the old one?

Dalio: By the way, I don’t think China will ultimately become a traditional hegemon. We can discuss that later.

Douthat: I’m very interested in that.

Dalio: But I want to say that Britain’s decline was already underway before the Suez Crisis, due to debt issues and a clear loss of power. Britain’s decline actually started before Suez because people realized the U.S. was not only a global power but also in better fiscal shape.

Douthat: So, if that analogy is valid, what is the equivalent today? If people believe the U.S. is no longer as trustworthy as we once thought, that its debt repayment prospects are lower, etc.—which relates to your earlier point about China and whether it will become a new hegemon—will people shift to China? Will they abandon the dollar as a reserve currency? If confidence in the U.S. erodes, where will capital flow?

Dalio: I’ll share my view, but I also want to say that this is a typical cycle phenomenon. For example, when Britain replaced the Netherlands, the process was similar. Britain was stronger financially and more capable overall. The Netherlands lost out, leading to a shift from the Dutch Empire to the British Empire; at that time, the Netherlands held reserve currencies and debt. Similar patterns have repeated over history.

So, you don’t necessarily need a specific figure like Eisenhower—

Douthat: No, but you need a successor power. That’s exactly what I want to ask.

Dalio: Then I think what will happen—answering your question about where capital and wealth will flow—is that a country can still be a dominant power but also face serious financial problems.

For example, in 1971, when the dollar system collapsed, the U.S. was still the dominant power. But by then, the U.S. had too much debt to fulfill the gold convertibility promise, leading to the monetary system’s collapse. We then experienced stagflation in the 1970s. Similar situations could happen again.

The U.S. Dollar, Gold, and Safe-Haven Assets

Douthat: So, that’s a scenario: a crisis occurs, but there’s no successor power yet. The Soviet Union didn’t replace the U.S. in the 1970s.

Dalio: Correct.

Douthat: The U.S. just went through about a decade of very difficult times.

Dalio: Your fiscal situation would still be very poor. That means holding bonds isn’t a good store of wealth. To answer your question, money has two functions: as a medium of exchange and as a store of value.

I think now you see that, for various reasons, China’s currency is increasingly becoming a medium of exchange. But I highly doubt that Chinese debt or similar assets will become a serious store of wealth because, historically, they haven’t been good at protecting wealth.

Douthat: Right.

Dalio: And I don’t think any fiat currency will be an effective store of wealth.

Douthat: Explain to our listeners, what do you mean by fiat currency? The currency issued by a nation but not backed by gold or other assets, right?

Dalio: That’s right—it’s a currency they can print at will.

Douthat: They can print money.

Dalio: So, looking back at history, in all similar periods, fiat currencies tend to depreciate, while gold rises. Today, gold is the second-largest reserve asset for central banks. In other words, the dollar is first, then gold, then the euro, then the yen.

So I believe the real question is: what kind of currency can serve as a store of wealth? Gold remains the top candidate largely because “there’s no better alternative,” having proven itself over thousands of years.

Douthat: So, alternatives to the dollar will become more attractive, but that doesn’t mean people will immediately shift to “buying Chinese debt.”

Dalio: From a trading perspective, the traditional approach is that when countries start using a currency for trade, they gradually build reserves in that currency. It’s like their cash accounts—when they need to pay for goods or services, they need enough cash on hand. So, I expect these reserves to grow.

The problem is, storing wealth in debt assets is tricky. So we’re entering a new world where everyone is asking: what is a safe store of wealth?

Douthat: For ordinary Americans, if they look at this cycle and think: well, this has happened before, and now it’s happening again. We’re in a period of overspending and deficits, and an adjustment is inevitable—what do you expect that adjustment to look like?

One possibility is the 1970s: high inflation, slow growth, stagflation. Another is a Great Depression scenario: market collapse, crisis, poverty, and deflation. Which should we be most worried about now?

Dalio: I think everyone should be most worried about how little they understand about the future, you see?

Douthat: I see. That’s what I’m worried about too. That’s why I asked you.

Dalio: So, what I mean is: we don’t know what the world will look like in three to five years. There’s far more we don’t know than we do. I believe we are entering a more disordered era, and that’s the bigger risk.

So, what should the answer be? I think it’s about knowing how to build a well-diversified portfolio that can handle such uncertainties.

Simply put, if you ask, “What should my typical portfolio look like?” it should include stocks, bonds, and investments in other countries—diversification is good. I can’t detail every allocation here, but I believe every portfolio should have 5-15% in gold, because when other assets enter a severe downturn, gold often performs best. That’s one reason gold has been a good investment in recent years—the market is moving in that direction.

So I’d say: stay balanced, learn to diversify your investments well, and hedge against other risks.

Douthat: As an investor, I do want investment advice. But as a commentator or columnist—whatever I am—I prefer to describe or predict reality. Even if we accept that we can’t know the future exactly, if history teaches us anything, if these cycles do repeat, and if we are heading toward a bottom or reset, maybe there will be a rebound. But I want to understand what life at the cycle bottom might look like—more like long stagnation and ongoing dissatisfaction, or more like crises and street conflicts? Because the 1970s and 1930s seem very different. That’s my question.

Dalio: I can tell you what I worry about. I think we face several major issues: monetary problems, domestic political and social conflicts, and international geopolitical tensions. Looking ahead, we’re approaching midterm elections. I believe the Republicans are likely to lose control of the House. After that, political and social conflicts could intensify, especially between now and the 2028 presidential election.

I worry these divisions could become irreconcilable. I don’t know how things will develop. I don’t know if respect for rules, laws, and order can be maintained.

I worry—though I’m not predicting—about larger-scale violence. Larger violence could indeed happen. The U.S. has more guns than people.

Douthat: The population—

Dalio: I’m not predicting—let me finish.

Douthat: Okay.

Dalio: I just see these possibilities. I think everyone can observe their surroundings and judge for themselves. Overall, my response to your question is: we are entering a more disordered period. I believe the risks are greater than before, and they are following that trajectory. We’re discussing this in words now, but I usually visualize these patterns in charts, and these events are aligning with historical models.

You asked me, and I’m giving my answer. For these reasons, I think people should keep their portfolios well-diversified and stay alert to these kinds of developments.

Douthat: Please talk about how you see debt, political, and social landscapes interacting, because if you ask people now what causes their divisions, they usually won’t say government debt interest payments. They’ll list a long string of disagreements.

I’m curious: when interest payments rise and squeeze other investments, what kind of economic forces are at work that interact with social disorder?

Dalio: Their disagreements are fundamentally about “who has the money and who can get it,” which is closely related to fiscal deficits.

I recently wrote a book trying to explain this mechanism through 35 case studies, called “How Nations Go Bankrupt.” I’ve also been talking to top leaders from both parties. Everyone agrees on these mechanisms.

When I tell them they must reduce the fiscal deficit to 3% of GDP through a combination of raising taxes, cutting spending, and controlling interest rates—because that’s the only way—

They say, Ray, you don’t understand. To win elections, I have to make at least one of two promises: “I won’t raise your taxes,” or “I won’t cut your benefits.”

The country’s divisions are reflected in the wealth of billionaires versus struggling households, left versus right, populism, and so on—all involving monetary and financial factors. So, fiscal deficits and monetary issues are a major part of social conflict.

Douthat: So, when you talk to politicians and they tell you we can’t raise taxes or cut spending, I guess they’ll then say that people see these issues as threats to opportunity or equality. Those relying on healthcare and social security see it as a guarantee of equality; those relying on low taxes to start businesses see it as a guarantee of opportunity.

If you want to convince them to cut the deficit to 3% of GDP, what do you tell them they will be spared from?

Dalio: From a financial crisis.

Douthat: What would a financial crisis in the U.S. look like? What exactly would happen?

Dalio: A financial crisis means the government’s spending capacity would be severely limited. In other words, they couldn’t afford military, social benefits, etc., and fiscal constraints would be tight. Demand would fall short of supply, interest rates would rise, which would suppress borrowing and hurt markets. This would force the central bank to try to print money to balance things out, leading to currency devaluation and stagflation.

Douthat: I see. So, the worst-case scenario is a crisis similar to 2008, eventually evolving into 1970s-style stagflation? Sorry, I’m not trying to push you—

Dalio: No, I’m happy to answer.

Douthat: I just want to give you some context: I’m 46, and almost my entire life has been shadowed by predictions of “unsustainable U.S. fiscal deficits.” The first presidential election I remember clearly was Ross Perot’s 1992 campaign, which largely centered on these issues.

Like many Americans, I tend to dismiss arguments about deficits. But the first time I really felt deficits and overspending impacted ordinary people was during the inflation in Biden’s early years.

So, it’s helpful for me and the audience to understand: why will the 2030s or late 2020s be different from the past 20 years? After all, we’ve had deficits all along.

Dalio: Thanks for your curiosity! I think I must answer this. It’s like patches gradually building up in your arteries. Like you said: “I haven’t had a heart attack yet.”

Douthat: “I feel fine.”

Dalio: Then I can say: okay, I understand—you haven’t had a heart attack. But can I show you an MRI scan to see these patches accumulating in your body? Can you understand what these patches mean—if they keep developing, you’ll have a heart attack. Do you understand? Do you understand what these numbers mean, where you stand now? Listen, this is your life, your choice. You need to ask yourself: “Is this right, or wrong?” This is what you must do for your own well-being.

Douthat: In your narrative, if you combine this diagnosis with your assessment of how the current U.S. political system operates—and I share your view—it seems that before real change happens, the U.S. will at least experience a mild “heart attack.”

You initially said that, although I set the question as a podcast host, you’re not actually bearish on America. Do you think there’s a possibility that the U.S. might experience a “minor heart attack” and then recover?

Can AI help ease America’s predicament?

Dalio: I believe we are entering a more disordered period because several forces are converging: monetary issues; irreconcilable domestic social and political divisions; and problems with the international order. I also want to add two more factors. One is the recurring natural forces in history—

Douthat: Like pandemics.

Dalio: Droughts, floods, and pandemics. And if you look at most people’s assessments of climate change, it’s not improving but worsening. Then there’s technology and AI.

We must include technology and AI in this picture because they will play a role. And they will do so in three ways. First, they could greatly boost productivity, helping to alleviate some debt issues—perhaps. We can discuss this further. But I don’t think it will happen that quickly.

Douthat: I often hear from AI experts that if AI just increases GDP growth by X percentage points, or productivity growth by X, it could help address the problems you mentioned.

Dalio: Exactly.

Douthat: It could make debt more manageable.

Dalio: That’s my point. Because it can generate income, which can help pay off debt and interest, etc. So, that’s one of AI’s impacts.

The second impact is that AI is creating enormous wealth gaps. Those benefiting are approaching the question of “who will be the first trillionaire.” Wealth inequality has widened significantly, and AI will displace many jobs. So, this is the second factor. Regardless of how we handle it, these gaps will become issues—they will likely turn into political problems, but they are real.

The third is that technology itself can be used to harm others—it’s a powerful tool. It can be used by other countries, by malicious actors, or by those seeking to steal funds. It can be used to cause harm.

Douthat: Yes. But in your cycle theory, from the last point, technology could also intensify geopolitical tensions. It could reinforce Cold War dynamics and domestic tensions.

Dalio: Exactly.

Douthat: But it could also ease fiscal pressures.

Dalio: Yes, it could boost productivity.

Douthat: But if it causes some negative effects, it’s likely to bring some positive ones too.

Dalio: The key is how these impacts ultimately offset and balance each other.

Douthat: Yes.

Dalio: And we don’t know what the future will look like because human capacity to predict the world three to five years ahead is limited. Over the next five years, these five forces will combine, and the world will feel like experiencing a time warp. Huge changes will happen, and all these forces will converge. After passing through this period, the world on the other side will be almost unrecognizable. It will be a period of intense change and turbulence.

So, what should one do? Since we can’t truly predict the future, my approach—and my advice—is to learn how to balance your portfolio.

Douthat: But for politicians, hearing your view, they might think: okay, I know Ray Dalio wants us to cut the deficit to 3% of GDP, but he also believes we’re in an unprecedented five-year “time warp.” Maybe we should wait and see what the world looks like in five years before painfully reorganizing healthcare and social security.

Dalio: I don’t think they care what I think. (laughs)

Douthat: Well, that’s not quite what I meant. But—

Dalio: I think they care more about what voters think.

Douthat: Yes, of course. I’ve talked to some people in Washington, and there are sincere concerns about the deficit, and some are trying to act.

What I’m really interested in is that, in your narrative of empire rise and fall—like Spain, Britain, the Dutch “small empires”—there seem to be no such cases: a great power goes through this cycle, hits bottom, then rebounds and begins a new ascent. Are there such examples?

Because, as Americans, that’s our goal. If someone accepts your narrative, they might say: okay, but history isn’t deterministic. We can make choices and enter another cycle, right?

Dalio: Yes. I think that’s possible. But it requires some things to happen—and history hints at this. Plato talked about such cycles—

Douthat: Yes.

Dalio: In “The Republic,” he discussed democracy and its problems, because people don’t always vote for what’s truly good for them or for the strength of the state. About 60% of Americans read below a sixth-grade level, and productivity issues exist. But they vote, and they largely determine outcomes.

The question is: how does change happen under democracy? According to Plato, ideally, a “benevolent dictator” is needed—someone strong enough to control the situation and willing to sacrifice for the country. In a sense, they can unify people again.

Whatever the way, you need a strong leader from the middle—someone who recognizes that partisan conflict is a problem but also has enough strength to keep the system running as needed. Only then can debt restructuring, education reform, and structural efficiency improvements happen.

Running a large company is hard enough; governing a country and doing it well is even harder. So, you need an extraordinary person with immense strength; you need leadership that can be followed, not constantly undermined.

Douthat: So, you’re looking for a Franklin Roosevelt or Ronald Reagan figure in this crisis?

Dalio: Well, I think it’s more difficult now than ever before.

Douthat: Because we’ve gone further—

Dalio: Everyone has their own view. Do you know how hard leadership is? (laughs) I mean, can you imagine? So, can you lead people toward the middle, unify them, and get them to do the hard things?

Douthat: Yes. But in these discussions, I often think: we are also very wealthy. Today’s America is even richer than in the 1980s, and much richer than during the Great Depression. Despite inflation pressures or sudden rises in unemployment, this wealth itself is a stabilizer.

You also seem to see another scenario. For example, Japan. Japan has a long history of massive debt; I wouldn’t say it handles it very successfully. Its economic vitality has declined, and it’s become more stagnant, no longer the “potential global taker” of the 1980s or 1990s. But it maintains a certain stability as a wealthy, aging society. Do you think that’s a possible scenario for the U.S.?

Dalio: I think you’ve raised two related but distinct questions. The first is about higher living standards and whether the U.S. can become wealthier. Historically, that’s always been true. All those periods before WWII had similar conditions. The real key is how people get along.

Douthat: You mean, when debt peaks, empires tend to be wealthier than ever before?

Dalio: Yes. If you look at per capita income, life expectancy, or any welfare indicator—starting from the 15th century or the Dark Ages—you’ll see these metrics were relatively flat early on. That is, at every point in history, from a global or societal perspective, we are wealthier than before. That’s valid.

But that didn’t prevent