Ray Dalio: The World Is Already in a Major War—Comparable to 1938 and Not Ending Soon
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Ray Dalio: The World Is Already in a Major War—Comparable to 1938 and Not Ending Soon
Almost no one is talking about the fact that we are in the early stages of a world war—one that will not end anytime soon.
Navigating Web3 tides with focused insightsAuthor: Ray Dalio
Translated and edited by TechFlow
TechFlow Intro: Ray Dalio, founder of Bridgewater Associates, has published a 23,000-word essay warning that the current conflict involving Iran is not an isolated incident but rather the early stage of a world war—comparable to the periods of 1913–14 and 1938–39.
Basing his assessment on 50 years of global macro investment experience and 500 years of historical research, Dalio argues that the United States is overextended (maintaining 750–800 military bases across 70–80 countries versus China’s single base), geopolitical blocs are clearly delineated, and the “Big Cycle” has entered its ninth phase—meaning the probability of at least one major conflict erupting within the next five years exceeds 50%.
Note: The original article is lengthy; this version is a condensed edition highlighting core arguments and key data points. For the full text, please click the original link.
Core Argument: A World War Has Already Begun
As a global macro investor for over 50 years, I must study all factors affecting markets over the past 500 years. Most people focus narrowly on attention-grabbing current events—such as what’s happening in Iran—while overlooking larger, more consequential, long-term forces. What matters most today is that the U.S.-Israel-Iran war is merely one component of a broader world war—one that will not end soon.
Though this may sound hyperbolic, it is indisputable that we now inhabit an interconnected world in which multiple shooting wars are underway simultaneously: the Russia-Ukraine-Europe-U.S. war; the Israel-Gaza-Lebanon-Syria war; the Yemen-Sudan-Saudi Arabia-UAE war (also involving Kuwait, Egypt, Jordan, and others); and the U.S.-Israel-Gulf States-Iran war. Most of these conflicts involve nuclear powers, and alongside them run major non-shooting wars—trade wars, economic wars, capital wars, technology wars, and geopolitical influence wars—in which most nations are participating.
Collectively, these conflicts constitute a classic world war, analogous to prior “world wars.” Historically, such world wars comprised interlinked conflicts that often slid into full-scale war without formal declarations or clear start dates. These past wars coalesced into classic world war dynamics affecting all participants—just as today’s conflicts are doing.
Most people adopt a short-term perspective: they expect—and markets price in—the belief that this war will be brief and that we’ll soon return to “normal.” Almost no one discusses the reality that we are in the early stage of a world war—one that will not end quickly.
Bloc Formation and Key Relationships
It is straightforward to objectively observe how nations align, using indicators such as treaties, formal alliances, UN voting records, leaders’ public statements, and actions. For example, China is aligned with Russia; Russia, in turn, is allied with Iran, North Korea, and Cuba. This bloc broadly opposes the U.S., Ukraine (which stands with most European countries), Israel, Gulf Cooperation Council states, Japan, and Australia.
These alliances are crucial when imagining the positions and capabilities of relevant actors. For instance, some claim China would suffer uniquely if the Strait of Hormuz were closed—but this is incorrect. China’s mutual support arrangement with Iran could ensure continued oil shipments to China, while its relationship with Russia guarantees alternative oil supplies from Russia. China also possesses abundant alternative energy sources (coal and solar) and holds massive oil reserves (approximately 90–120 days of consumption). Notably, China purchases 80–90% of Iran’s oil output—further strengthening their bilateral ties. Taken together, China and Russia appear to be relative economic and geopolitical winners in this war.
The Classic Phases of the Big Cycle
Numerous indicators suggest we are in a phase of the Big Cycle where monetary order, certain domestic political orders, and the global geopolitical order are collapsing. These indicators point to a transition from the pre-war phase to the active combat phase—roughly comparable to 1913–14 and 1938–39.
The classic dynamic of this phase is escalating—not de-escalating—conflict. The canonical sequence of steps leading to major war has recurred repeatedly—and is recurring now. Observing today’s events through the lens of this classic international order/conflict cycle makes it unmistakably clear we have already reached Step 9:
1. The relative economic and military power of the dominant world power declines, while that of a rising power increases.
2. Economic warfare intensifies dramatically, via sanctions and trade blockades.
3. Economic, military, and ideological alliances solidify.
4. Proxy wars increase.
5. Fiscal stress, deficits, and debt rise.
6. Governments assume increasing control over critical industries and supply chains.
7. Strategic trade chokepoints are weaponized.
8. Powerful new weapons technologies are developed.
9. Multi-theater conflicts increasingly occur simultaneously (we are here now).
10. Internally, demands for loyalty and support toward national leadership intensify.
11. Direct military conflict erupts between major powers.
12. Taxes, debt issuance, and money creation surge to finance the war.
13. Ultimately, one side defeats the other and achieves uncontested control over the new order.
American Overextension
Historical analysis readily identifies overextended empires, quantifies the degree of their overextension, and reveals how overextension undermines them. The U.S. currently maintains 750–800 military bases across 70–80 countries (China, by contrast, operates just one)—and carries costly, vulnerable commitments worldwide.
An overextended great power cannot successfully fight on two or more fronts simultaneously—raising doubts about America’s capacity to wage war elsewhere (e.g., in Asia and/or Europe). It would thus be unsurprising to see emerging challenges in Asia designed to test and expose U.S. resolve. Given the U.S.’s extensive commitments in the Middle East—and weak domestic public support for an Iran war (amid mid-term elections)—this would prove especially difficult for America.
Who Wins: Not the Strongest, But the Most Enduring
History shows the most reliable indicator of which nation may prevail is not raw strength—but rather endurance: which nation can bear the greatest suffering for the longest time.
This factor is clearly at play in the U.S.-Iran war. The U.S. president has assured the American public the war will conclude in weeks, gasoline prices will fall, and prosperity will swiftly return.
Although the U.S. appears the world’s strongest nation, it is also the most overextended major power—and therefore weakest in its capacity to endure prolonged hardship.
Probability Assessment of Wars Within the Next Five Years
Basing my assessment on these indicators, here are the probabilities that existing or potential wars will erupt or escalate within the next five years:
Iran-U.S.-Israel War: This is an ongoing, full-scale war that appears to be intensifying.
Ukraine-NATO-Russia Direct War: Probability of escalation beyond Ukraine: ~30–40%.
Taiwan → U.S.-China War: Probability of direct U.S.-China military conflict: ~30–40%; highest risk period: 2028.
North Korea–Related War: Probability of some form of military conflict involving North Korea within five years: 40–50%.
South China Sea–Philippines–China–U.S. Conflict: Probability of such a conflict within five years: ~30%.
Across all these potential conflicts, the probability that at least one occurs within the next five years exceeds 50%.
I am not asserting that events will inevitably progress along this cycle to full-blown world war. I do not know what will happen—and I still hope for a peaceful world built on win-win relationships. But it is vital to understand the typical Big Cycle and observe what is unfolding.
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