Key Takeaways
- • Ray Dalio, founder of Bridgewater Associates, argues in a LinkedIn post that the US-Israel-Iran war is part of a broader world war that "isn't going to end anytime soon," and that markets are wrongly pricing in a return to normal once fighting ends.
- • Dalio identifies at least four interrelated shooting conflicts (Russia-Ukraine-Europe-US, Israel-Gaza-Lebanon-Syria, Yemen-Sudan-Saudi Arabia-UAE, and US-Israel-GCC-Iran), alongside trade, economic, capital, and technology wars.
- • Dalio assesses that China and Russia are the relative geopolitical and economic winners of the Iran conflict, while the United States is advantaged as a net energy exporter.
- • Dalio places the current environment at Step 9 of his 13-step "Big Cycle" framework (multi-theater conflicts), comparing it to the 1913-14 and 1938-39 transition periods, though he stresses the indicators are not precise on timing.
- • Dalio cites the US maintaining 750-800 military bases in 70-80 countries as an overextension risk that could limit its ability to fight on multiple fronts.
Summary
Ray Dalio, the Bridgewater Associates founder and global macro investor, argues in a LinkedIn article titled "The Big Thing: We Are In A World War That Isn't Going To End Anytime Soon" that the US-Israel-Iran conflict is one component of a larger world war. He writes that markets and most observers are focused on near-term issues, including control of the Strait of Hormuz, Iran's missile and nuclear capacity, US troop deployments, gasoline prices and the upcoming US midterm elections, and that markets are pricing in a return to "normal" once the war ends. Dalio describes his view as one he believes to be true based on his indicators rather than one he wishes to be true.
Dalio points to a set of interrelated shooting wars, including Russia-Ukraine-Europe-US, Israel-Gaza-Lebanon-Syria, Yemen-Sudan-Saudi Arabia-UAE, and US-Israel-GCC-Iran, many involving major nuclear powers. He adds that non-military conflicts over trade, capital, technology and geopolitical influence now affect most countries. He draws parallels to past world wars, which he says emerged from interrelated conflicts without clear start dates, and references Chapter 6 of his book "Principles for Dealing with the Changing World Order."
On alignments, Dalio says China is aligned with Russia, which is aligned with Iran, North Korea and Cuba, a group he describes as largely opposed to the US, Ukraine, Israel, GCC states, Japan and Australia. He argues China is not particularly harmed by a Strait of Hormuz closure, citing its relationships with Iran and Russia, its energy mix of coal and solar, and oil inventories of roughly 90-120 days. He notes China consumes 80-90% of Iran's oil output. Dalio concludes that China and Russia are the relative economic and geopolitical winners, while the US benefits on energy as an exporter.
Dalio frames the US as the dominant power of the post-1945 order facing a middle power in Iran, and argues that its performance, resource expenditure and defense of allies will shape how other nations, particularly in Asia and Europe, behave. He cites the US's 750-800 bases in 70-80 countries, noting China has one, and argues that overextended powers struggle to fight on multiple fronts, which he suggests could complicate US responses in Asia or Europe, especially given limited American public support for the Iran war ahead of the midterms.
Dalio presents a 13-step sequence he describes as a recurring pattern in the "Big Cycle," from rising-power rivalry through sanctions, alliances, proxy wars, financial stress, weaponized chokepoints and multi-theater conflict, to direct major-power combat, financial repression and eventual settlement of a new order. He says current events indicate progression to Step 9, and that indicators suggest the monetary order, some domestic political orders and the geopolitical order are breaking down, with a transition from the pre-fighting to fighting stage analogous to 1913-14 and 1938-39. He explicitly cautions that the indicators are "broadly indicative" and imprecise on timing.
Dalio points to a set of interrelated shooting wars, including Russia-Ukraine-Europe-US, Israel-Gaza-Lebanon-Syria, Yemen-Sudan-Saudi Arabia-UAE, and US-Israel-GCC-Iran, many involving major nuclear powers. He adds that non-military conflicts over trade, capital, technology and geopolitical influence now affect most countries. He draws parallels to past world wars, which he says emerged from interrelated conflicts without clear start dates, and references Chapter 6 of his book "Principles for Dealing with the Changing World Order."
On alignments, Dalio says China is aligned with Russia, which is aligned with Iran, North Korea and Cuba, a group he describes as largely opposed to the US, Ukraine, Israel, GCC states, Japan and Australia. He argues China is not particularly harmed by a Strait of Hormuz closure, citing its relationships with Iran and Russia, its energy mix of coal and solar, and oil inventories of roughly 90-120 days. He notes China consumes 80-90% of Iran's oil output. Dalio concludes that China and Russia are the relative economic and geopolitical winners, while the US benefits on energy as an exporter.
Dalio frames the US as the dominant power of the post-1945 order facing a middle power in Iran, and argues that its performance, resource expenditure and defense of allies will shape how other nations, particularly in Asia and Europe, behave. He cites the US's 750-800 bases in 70-80 countries, noting China has one, and argues that overextended powers struggle to fight on multiple fronts, which he suggests could complicate US responses in Asia or Europe, especially given limited American public support for the Iran war ahead of the midterms.
Dalio presents a 13-step sequence he describes as a recurring pattern in the "Big Cycle," from rising-power rivalry through sanctions, alliances, proxy wars, financial stress, weaponized chokepoints and multi-theater conflict, to direct major-power combat, financial repression and eventual settlement of a new order. He says current events indicate progression to Step 9, and that indicators suggest the monetary order, some domestic political orders and the geopolitical order are breaking down, with a transition from the pre-fighting to fighting stage analogous to 1913-14 and 1938-39. He explicitly cautions that the indicators are "broadly indicative" and imprecise on timing.
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