Economist Fact-Checks Ray Dalio's China Analysis
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- čas přidán 14. 05. 2024
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Check out Dalio's original video here: • Principles for Dealing...
Check out Dalio's book here: amzn.to/3ttnsKg
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SOURCES:
I've linked my sources in the blog: www.moneymacro.rocks/2022-11-...
DATA USED:
Private Debt to GDP USA: fred.stlouisfed.org/series/QU...
Private Debt to GDP China: fred.stlouisfed.org/series/QC...
Inequality USA & China: data.worldbank.org/indicator/...
Broad money / GDP: data.worldbank.org/indicator/...
Timestamps:
0:00 - introduction
1:43 - Empire Theory USA
6:27 - Sponsor
7:53 - Empire Theory China
13:17 - Discussion
Attribution:
I used a clip from this video with old footage of this British Empire: • Tribute To The British...
Footage for sea might old empires from: • MICHIEL DE RUYTER trailer
Old USA footage from: • Los Angeles early 50's...
Big thanks to Zohar Ianovici for helping me with the research for this video: / zohariano
My gratitude to Joram Kok, Oskar Matthey, and Carlo Humpert for feedback on the script.
Neon sign from: www.neonlights.be/discount/M&M15
Narrated and produced by Dr. Joeri Schasfoort (University of Groningen)
Studio designed by Alex Moore Via www.dmsquaredagency.com
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As the saying goes "hindsight is 20/20" not sure why the smirky tone in this video and the outrage in the title using "...no sense". The book was released 1 year ago and written even earlier, before the "recent announcement of QE" and the issues with the housing market which you use to critique. About Internal Conflict metric, the recent "bai lan" movement and mortgage protests also appeared after the book was written so, yes, we now see that China is further down the empire lifetime curve but before covid it did not look that way and you still use most of his model so, a bit more respect maybe. I get it that his achievements pale in comparison to a 210k subs CZcamsr mind you but ... oh wait, his channel has 2million subs...so... you have the right to your critique and recent events do support you but what gives you the right to disrespect again?
@@valentinursu1747 the number of followers doesn’t say anything about quality. Especially on CZcams. Channels with more complicated content would have less followers than a easy to understand content. I went looking what the background of Ray Dalio is. He has a mba. That means he knows a little to nothing about macro economics. The guy of this channel has a phd in economics, that means he knows a lot more about it. About your comments on the content, the only thing I can say is that everything you say proves the book is a bad forecast. When the whole theory collapses in a year I don’t understand why you are even defending Dalio.
And as a econometrician I can give you this advice: invest in the market. The safest way to keep your money. Guys like Dalio can take a risk because the have enough money. But when you need it for your future play it safe.
Bro you should write a book
China people debts 217% from China GDP(+$40 trillion) ...??? where come from this data, China government or West Mainstream medias...???
🇺🇸 China has already surpassed USA! Your emotionally unwilling top let go!
Dalio tricked you into buying his book. Mission accomplished.
but why, dude is literally the last author on the planet that needs you to buy his book😂
@@tmp88 greed? or maybe one or more of his lackeys wanted to mooch off for some reason or another? or perhaps hubris or was it just a bet?
@@quranyeshua you still kinda do
Ya buddy, all billionaires line up for YOUR broke ass money. What would they do without it? 😳
I picked it up at my local library, and saw his CZcams video….
I think it’s understated but these types of videos are incredibly helpful. As most people are laymen economists most people simply take many qualified and “qualified” CZcams economists at their word. These types of “fact-checking” or “looking behind the curtain” videos are very helpful. It helps give more people more information and to make more informed decisions whether that simply be as little as subbing or unsubbing to channels.
Absolutely agree
Isnt Ray Dalio a billionaire hedge fund manager? 🤔
You buy his propoganda? Ever hear of a "fund manager talking his book".
You realize this channel is propaganda as well right?
@@NeostormXLMAX bruh you can say that about anything. It’s a non arguement to just say “everything is propoganda” which essentially says “nothing is trustworthy” and to another extent says “anything i dont approve of is propoganda”. Do you see the fallacy in your “arguement”? Anything can be propoganda sure, but that’s just as useful as saying anything can be garbage. Applying blanket statements does nothing.
I remember growing up in the '80s and being told that Japan would replace the United States as the next great superpower. By the time I was studying economics in the late 90s all of my professors were discussing what went wrong with Japan and why they were in such bad shape financially. I've seen this movie before.
Vassal states are not allowed to overtake their master.
@Oak Tree That's actually a pretty good way to look at it, though you have to remember that sometimes vassals can get powerful enough to break free to an independent status. Not that Japan or China are likely to be able to do that anytime soon.
@@andrewlechner6343 but japan is not a independent country, china is
@@user-he3dt7hr4u Politicly, Militarily, yes, they are independent. Economically, not so much. China is too economically intertwined with US controlled natural resources, industry, and trade routes. China would not be able to survive if its economy ever got cut off from the US and its allies.
@@andrewlechner6343 well, the same as america, could you imagine how high the inflation will be without made in china products? america is global power but if it decouple with china the hegemony will collapse but rich will still be rich even america dissolved rich will still be rich
So refreshing to see a CZcamsr that's not afraid of nuance
Those are a rare breed indeed
That's because Joeri isn't just a youtuber, he has his doctorate in economics and is a lecturer at the school of Economics and Business at the University of Groningen.
si es lo que esta mas de moda en usa😂 tildar de mentirosos a aquellos que nieguen que usa es y seguira siendo
Ya puede tener 3 doctorados
Eso no te hace perse tener razon
Y no hay pocos doctores en economia apoyando lo mismo en lo que se basa dalio precisamente..
Ademas estados unidos es tremendente ineficiente en su administracion
Tenga o no china problemas de diversa indole como mayor deuda por gdp
Pero es que china crece a un ritmo muy superior a estados unidos y tiene muchisimo margen de mejora aunque a medida que una economia se hace mas compleja se crece mas despacio
Estados unidos no deja de encadenar desastre tras desastre cosa que se obvia como su capacidad para seguir manteniendose simplemente elevando su techo de deuda creciendo menos de 1%
Me refiero a si a estados unidos le dara tiempo y margen para atajar dicha cuestion cuando ya se sabe que obviamente no
A diferencia de china..
Te pregunto, quien crees que es el publico de este hombre? Lee los coments a ver
Y justamente cuando habla de cuestiones sociologicas y legales ves que tiene poca idea
Las protestas no estan prohibidas esten mas limitadas o menos, por ponerte un ejemplo sencillo
Igual que no hay un solo partido politico hay 8, y aunque mande el pcch tiene dentro numerosas facciones
En el ultimo comite además lo que se hizo fue reforzar y unificar el liderazgo de xi por lo que la posible polarizacion esta mucho mejor resuelta que en el desastre estadounidense que van a arrastrar por y para siempre
Ni siquiera tiene el deep state un plan claro contra el crecimiento chino y por eso ves que ambas administraciones van a su puñetera bola en sus estrategias incluso en geopolitica
Solo estan d acuerdo en que es un problema
Pero precisamente, si ni en eso hay consenso no deja clara su terrible ineficiencia a la hora de planificar la economia a futuro?
Yo creo que es bastante obvia la carencia en absolutamente todas las capas de su sistema politico
Nose donde ve el fallo y en la importancia de saber a ciencia cierta como de polarizado esta hablando de opacidad cuando tratandose de usa rs obvio que tiene razon dalio y su polarizacion no solo es mas alta sino que es la mas alta de todo occidente seguida de brasil y españa
Es mas el en todo caso, el que habla de la sensacion que le transmite porque en ningun caso invalida lo expuesto
Sigue siendo un factor de riesgo para usa
Y muy grave ademas, porque les hara ser mucho mas torpes a la hora de planificar su pais a futuro con todo lo que implica
@@RhyliezthUniverse una de las cosas que hasta ahora no comprendo es la innecesaria verbosidad con las que muchos "intelectuales" de Hispanoamerica se expresan. Esta bien, puedes no estar de acuerdo con cualquier analisis, tu opinion vale, con o sin doctorados. Como yo lo veo, China tiene demasiados problemas que resolver, muchos mas que Estados Unidos, antes de quitarle el trono. Una cosa que le ayuda a los Estados Unidos es que la gente en el poder no tiene una pisca de nacionalismo, solo poder. Si, por ejemplo, un meteorito cae y destruye a los Estados Unidos, y de pronto Alemania es el pais mas atractivo para sus inversiones, creeme que el mismo dia vas a tener a toda la elite Estadounidense hablando Aleman. Este desapego a restringirse a una bandera por ahora es una ventaja sobre un pais que en conjunto esta trabajando hacia un mismo proposito a costas de ciertos privilegios individuales. El tipico individualismo versus colectivismo. China va a continuar siendo un pais muy poderoso e influyente, sin duda, pero dudo que llegue a reemplazar por ahora a los Estados Unidos. Quiza en unas decadas mas esto pueda cambiar.
@@DeMenteMinds para empezar soy español..
los argumentos que das tienen poca versosimilitud a la hora de presentar realmente algun tipo de ventaja
En todo caso es otra desventaja. Mientras hagan dinero como si su pais explota para dicha elite. Y bueno que decir que todas las elites son un poco así
El tema es donde tienen mas ventajas de cara al futuro y el margen en tu ejemplo.
Aun asi no creo que dicho argumento tenga mucho sentido o relevancia llegados a cierto punto.. nose muy bien que quieres decir
De hecho un problema añadido es que la elite tiene tanto poder en usa que no hay quien les gobierne y va cada cual a su bola. Por eso no pueden ademas desacoplar con facilidad.. porque su margen se reduciria al beneficiarse de la deslocalizacion y si esto se da sin buenas alternativas no solo provoca perdidas a estos sino el riesgo de que literalmente se piren, y logicamente una reduccion de beneficios y por ende decrecimiento a ganancia estrategica (que esto si) pero en un momento donde necesitan ambas cosas..
ni aun necesitandolo su pais querrian y tienen poco margen para ser atractivos mas que jugar con darles cualquier libertad.
Usa no tiene margen suficiente para ser mas atractivo
Al menos no en el tiempo requerido cosa que un gobierno centralizado al punto chino si (pese a que los gobiernos locales tienen su independencia y autogobierno)
De hecho es justamente el individualismo lo que los va a reventar y por ende es por ello por lo que estan a hostias entre todos en usa.. porque yo yo yo
Como te decia lo unico que podria hacer su gobierno es un mejor grid economico para que vaya la cosa donde quieren que es lo que ya se hace aqui y en china. El tema es que no tienen margen y tienen cero tolerancia frente a dejar de beneficiarse y podria producir que se fueran. El unico atractivo que tiene usa es que sacrificas un tanto por ciento de margen con darles libertad absoluta a sus elites por eso son una plutocracia. El tema es que al ir a su bola es ineficiente a mas no poder y esto no se traduce en ventaja
Aunque a priori suene a desventaja para china porque no van a dejarles hacer lo que quieran
Lo mismo con la polarizacion. No es una ventaja precisamente..
Lo que comentas del nacionalismo.. bueno esque el nacionalismo es para la propaganda de la gente de abajo. Las elites solo tienen su dinero
Solo se quedan en usa porque son intocables frente a la extrema dependencia de estos que ademas les limita estrategicamente
As an academic historian, Dalio's ideas are complete BS even without this analysis. We do not have historical records to support his claims for all these states. Most documents don't survive, and then you also have to deal with the "fiction in the archives," how the authors wrote the records to fulfil specific individual, political, social, and economic agendas. The establishment of modern bureaucracies that can provide somewhat accurate records didn't appear in the world until the 18th or 19th centuries. His analysis is pure make-believe.
That sounds plausible. Reading his book, I got the feeling there are many more problems than just the China analysis. I might have a more in depth look at the entire framework in the future.
I think I had this Dalio's video show up after watching one of Money and Macro videos. Tried to watch it but for some reason something was off, the video felt like some kind of one of those conspiracy videos. Video was very questionable trying to push his narratives.
Yes, I would add that, with much respect to the Dutch maritime and trade prowess, they were still orders of magnitude less powerful than the British at their respective peaks. Not sure they compare really, even qualitatively.
Who do you think will be the global superpower in say, 2060?
I was wondering the same while I was watching the big cycle theory as explained in this video: it's obvious that those problems apply to U.S. however, it didn't seem that obvious that they applied to the previous super powers nor that there were enough data to claim that.
I think it's important to remember that Ray Dalio has historically been one of the largest investors and loudest supporters of China among American investors since 1984. At the peak of Bridgewaters investments in China, the hedge-fund held about 5 billion worth of assets (Ca 2% of their total business) (According to Bloomberg), but as recently as August this year they only had about 1,5 billion worth of assets in China (About 1% of their total business) (According to Reuters). That doesn't really send a message of confidence. Another aspect to consider is that Ray is quite popular among the Chinese public, his book "Principles: Life and Work" was 2018 a bestseller in china (Not that booksales play a significant role in Ray's fortunes). I do agree with his analysis that the US is currently facing nation-breaking challenges at the moment which should not be underestimated, but so is China.
I don't think Ray Dalio changed their allocation to China. Chinese assets simply fell more than 50% in value. Also, keep in mind that if you are looking at NYSE listed assets, he moved most of his chinese assets to the hong kong market to avoid delisting fears.
The fact that somebody did a lot in a certain area and has a lot of knowledge of it doesn't mean he is right.
tl;dr The man has a financial interest in telling people that investing in a authoritarian uniparty state that doesn't operate under the rule of law is somehow a good idea.
Yah, Dalio is drinking weird Kool Aid and its sponsored by fhe CCP, hes one of their best plants
@@danaphanous And hong kong is at the same risk as China as their auditing is just as opaque & human rights abuses just as prolific & the CCP reigns just as supreme.
Good to see someone finally point this out. I have a degree in War Studies and worked for a macro hedge fund. Most finance people in general do terrible geopolitical analysis bc they don't really understand politics or IR at all, and rely on personal prejudice, trend extrapolation or the prevailing view among their peers.
Good to know!
To be honest, IR people can also be terrible at judging geopolitics and more importantly the key to international economic prosperity if they bank on realism too much due to its fixation on likening the world to a zero-sum power game.
If you are an IR expert you would know that there are tons of subjective lenses one can use for analyzing a given geopolitical conflict, so they are much more prone to predictive mistakes.
YES. That part. As someone that is invested in geopolitics and geoeconomics, this was a glaring issue that immediately jumped out at me.
@@lemuhuru Actually not necessarily, just because you are a big player doesn't mean you're always right.
... and self interest.
This is hands down the best economics channel on youtube. Thanks for all the work and research you put into your videos bro!
Economics Explained wants to know your address...
Well done! I read his book and noticed the same thing, he had graphs galore for US, but the equivalent data was suspiciously missing for China. And knowing they are "leveraged to the tits" I had a feeling Dalio was full of it.
He's just trying to push us to buy the dip
Well… he’s got bills to pay and can also share the things he knows. I appreciate that for what it is. He may have not known then that BRICS would form and be a serious contender to a new Reserve Currency. China is an essential part of BRICS, so he wasn’t all wrong.
@@rubenthomasms it isn't just reserve currency
We are all going . . . down. No more cheap oil. declining global industrial production, deglobalization. An impossible debt will never be PAID.
The lenders go bust and the zombies have to die. Not enough oil to repeat this cycle.
@@ShubhamMishrabro Elaborate?
I've been waiting for months for some economist to step up to look at Ray Dalio's analysis. Thanks Joeri!
Thanks! I think the problem is that economists don't take Dalio seriously. In my opinion, anyone who influences the public debate by this much should to be taken seriously and their ideas scrutinized.
@@MoneyMacro Indeed Joeri and your analysis to the point. Keep up the good work. I truly appreciate it.
@@MoneyMacro We shall see if you or Ray proves more accurate though. The fall of china has been predicted EVERY YEAR for decades now, by economists with more credentials than you. Perhaps one day you will be right, but to have so many videos calling for it by this year or within any timeframe, that's just embarrassing clickbait that appeals only to the ignorant that you claim follow Ray
@@goldsilvervscrisiscollapse4320 you realise that argued against the China collapse narrative, right?
@@MoneyMacro From economic points, yes ,he predictions is not as good as you thinks.But the rules does not fall from sky. If we could see the world from class point of view .considering the whole world as one Rome empire.then China is the Egypt and Syria who grow food and America is the Rome who rule the world and tax the world by its position of strength.europe and japan would like Greece province who provide some good stuffs .Then right now ,China is normal working class, Europe is the middle class of doctors and technician ,well Anglo American is the World government.the world government by its military power has a monopoly on rule making and printing paper money thus to buy goods from the working class or middle class like China and Europe and other oecd countries.thus the working class countries can not became rich by working hard and sell stuffs to the world government. The more you sell the more you produce ,the stronger the world government became.And the government can tax the people by changing the dollars interests rate or by violencely destroy any Un submitted individual countries like USA has destroyed 50+ countries and replace their democratic selected leader with us backed dictatorship.whether China’s economy will be good or bad depending on the position in the world class society. If China’s military and political power surpassed USA. Then China would act more like the figure of government like todays USA ,who buy more stuff and sell more money and debts and provide orders and making the law for the world.
The monarchy in UK come from France ,and they do not grow potatoes but hold the power,therefor the kings and queens are richer and elegant than the Englisch or Scottish peasants .Economy is depends on the class or each country. Not the other way around.
Thank you so much for explaining one of the biggest mysteries for anyone investing in China. No one seems to have the confidence to publicly argue against Ray Dalio's shaky stance.
DLam : You don't need to look far. Just watch the activities of bankers. Bankers are scaling back in the West and increase their presence in the East. That tell you the full story.
@@elliekwong3180 Look like western fund manager are diversifying out of China. There are losing big money in 2022.
@@elliekwong3180I would love some data that supports this…
Those who are against Dalio’s view, will be quite happy that Dalio is still in the market and that he isn’t running away faster . Because if the investors are pulling out of china, they would still need “pro-china” buyers, right?
I never thought much of Dalio's theory. The UK and the Dutch were tiny states thst punched way above their weight for a time, securing but never truly integrating or fully developing large colonial empires. Tiny Britain could only hold India for so long. The US, in contrast has very few overseas territories and is still the 3rd largest country in the world by land area and population. It is more self reliant in terms of food and raw materials than either the UK or the Dutch were (or the Chinese for that matter) it can source almost everything it does not produce from Canada or Mexico, neither of which pose a remote challenge whereas both the UK and the Dutch had to contend with France and then Germany. China has to contend with decaying but still nuclear armed Russia and rising power India and the world's 2nd most powerful navy in Japan. The US just is not the the UK or Netherlands. They are too different on a fundamental level for meaningful comparisons.
Yeah, I've always thought the "USA collapsing" theories were overhyped. Sure, we probably won't be #1 forever. But we're #3 by population and land mass. Even if China and India were both able to match us in GDP per Capita, we'd still be comfortably #3.
I don't see Russia or Canada growing their population enough to take advantage of their larger physical size, even if global warming does make their land more usable.
And between their aging population, undersized agricultural sector, and authoritarian government, I don't think China will be able to match our GDP per capita within the next generation. India has more potential, but it will need serious economic reforms to realize it.
Huge props to this man. Always feeds my appetite for understanding broad macro economics. Keep up the good work man.
He's lying to you, like all economists do.
It’s been interesting watching all the negative comments about this video. I suspect most of the comments come from Chinese troll farms.
@@philtrubey7480 I've met 'James May' in comments sections before. I think you assessed him accurately.
@@jamesmay918 Generic name and critic with no fang, want to expand?
@@jamesmay918 its become pretty obvious these days that China wasn't anywhere close to the power they tried to portray themselves as and if there ever was a chance for them to overtake America it's gone.
The idea that history cycles like that is absurd. When people say "The US is falling like the Roman Empire" I always ask "Which fall?"
TY for taking this apart
There are parallels to be observed at this time to period approaching the end of the Roman republic, not the Roman Empire. But I think there is something to be said to the self-fulfilling prophesy of people believing they are in decline leading to an increase to their decline as much as structural, economic, political, moral and social effects.
Honestly the US have much more in common with the British Empire compare to the Romans. Put just say Rome because it gets more eyes.
@@ProfTricky3168 The parallels being drawn to the period at the end of the Roman Republic are more oblique when comparing to the later stages of the British Empire. Those are the ones being drawn in Ray Dalio’s thesis of China being a rising power similar to Germany in the late stage British Empire. In many other ways however the American Empire is its own unique brand of imperialism, neither incorporating direct control of territory as in the Roman or British cases, but still maintaining wide-spread military power projection as a major government expenditure to achieve the strategic ends of its political and economic elites.
The US is more like the Achaemenid Empire. Diverse, cosmopolitan, high degree of local autonomy, and etc.
Cycles aren’t understood in that entire states falling, but rather new ideologies and “groups” taking over. Within this framework we can see that this has happened numerous times within the us. Examples like Slavery and industrialization, the rise of and fall of Keynesian economics, the rise and current fall of Reganomics or supply-side economics and this is only in the economy. It’s not necessarily armageddon, but rises and falls are inevitable.
Some people couldn't find the data I used for the graphs. So, I added it to the description (and this comment).
Private Debt to GDP USA: fred.stlouisfed.org/series/QUSPAM770A
Private Debt to GDP China: fred.stlouisfed.org/series/QCNPAM770A
Inequality USA & China: data.worldbank.org/indicator/SI.DST.10TH.10
Broad money / GDP: data.worldbank.org/indicator/FM.LBL.BMNY.GD.ZS
I love this. I always had a feeling that Dalio was out of his element with his grand theory. Thank you for subjecting his theory to more rigor
I bought this book and I knew I was going to need someone with more economic expertise to help me round out my understanding, and this video does just that. Thanks!
Get a refund buddy.
Wait wait. You think the Money & Macro guy has more economic understanding than the most successful hedge fund manager in history? It looks like you already had a negative opinion of China and this video confirms your pre-established opinion. This guy runs a youtube channel which anyone can do. Ray Dalio has lifetimes more knowledge and experience, it's not even a comparison. But sure, believe the dude that's looking to get views instead of the guy that has consistently beaten the market for 30 years.
There are differences between US debt and China debt, China has a real economy with supporting infrastructures, US economy are mostly stock market and speculation
@@austinyang7474 I thought the book was free. Dalio also have a free app too right
@@earlygrey1923 Some hv no idea how brainwashed they are! Only know what have been fed to them. Shame!
Thank God someone writes about this like I cannot under Ray Dalio's choice to be so Bullish on China like I get that he has a lot of business interests and he is one of the first Hedgefunds that is in China but yet again I don't know what's in his mind
very simple, it is trendy to criticize USA because it's a free country hence free speech, if u say anything other than praise of China you have to be ready to also stop doing business there.
He's probably just pumping his own bags like most financial prediction people on CZcams do
@@saintgermain1716 yeah like I am not sure when he opened his offices in China I think maybe 2019 but to be first means have a big advantage from making money off Chinese investors he will probably milk this cow as long as he can and then ditch it
I think if a billionaire has a good chunk of his investment in China, that's a GOOD indicator that his money is where his mouth is. If he's wrong he'll lose hundreds of millions
I think it's more about people lacking personal meaning in their lives. So they experience foreign to them cultures as mystical and it hypnotizes their mind. So rather than China just being another country and culture. It's an "other" in his mind that pulls him to it.
Considering the differences of balance of trade for China and USA, comparing their money supply/GDP with each other is wrong. By just looking at that, you cannot say they are on the same path.
China has positive and increasing trade surplus for more than 20 years, meanwhile in USA it is opposite. Printing money carries different meanings and also based on different aspects for China and USA.
Especially in last 20 years, Chinese economy is based on production, solid production, solid human activity. But for US it is different, USA is not the leading economic power in the world because of its production capacity, as it once before. Today it is mainly able to keep its position because of high-tech capability and dominating status. And as you also mentioned, this dominating status is in decline. Dominating status is really for USA important because it provides credibility. And credibility can be though as the main factor which enables USA to still continue to be powerful despite of its HUGE debt, which is breaking new records every moment.
But Chinese domination today, is not based on optimistic credibility. It is based on realistic production.
Of course it is easy to say Dalio is right, but as I said, printing money and creating more money supply is not the same thing for an economy based on production and another economy based on consumption, debt and credibility. One of these economies has positive trade balance for last 20 years while the other one has negative trade balance for last 20 years.
Thank you very much for this video. I saw Dalio's video and was somehow intrigued about his analyses. I thought that important parameters were not taken into account, like the demographic development, the fact that state-owned economy never perform as well as a private one etc. Now, your video gave me the arguments I needed to aknowledge that my feelings were correct. Great job!
It's important to note that Ray Dalio stands to make money by convincing others that what he says is correct. He runs a hedge fund. His goal is to make money off of price inconsistencies in the market. If he can create those inconsistencies with a book and youtube videos, he can potentially make more money.
Classic example of an investor talking his book. Clear conflict of interest.
@@mensrea1251 I've mentioned this several times in comments sections about this, but your point is view is just flat out illogical. Think from a moment form Dalio's point of view. He literally makes money by being right about how the worlds financial markets operate and will operate in the future. If he truly believes that China is the next big thing, the only sensible thing for him to do is put money in China, which you call a 'conflict of interest'. It's anything but, it's a confirmation that he is willing to put real money on the line for his theory. Dalio is betting billions on his view of finance being right. How much are you willing to bet on yours?
@@theWebWizrd You are basically saying someone who sincerely believes in something cannot then be biased. Think about that. Confirmation bias is an actual thing. You’ve clearly never actually made non-employment money nor dealt with people who have a stake in something. When the stakes are highest that is precisely when the biases come out. Why do you think people are forced to disclose their financial interests before being confirmed into office or positions of power? Dalio’s bets on China were made years ago. He has every reason, consciously or otherwise, to now trumpet its bright future - billions of dollars are riding on it, you admit that yourself. Have you even read his book? Dalio misses very important, systemic problems that China faces. He either glosses over them or misses them entirely. Why do you think he would do that? The methodology he applies to both the US and China are also flawed, and very sophomorically so. But there’s no way someone of Dalio’s smarts and resources could be that dumb. There’s something more going on. I can give specific examples from his book at a later time if you wish to continue this debate.
Exactly. The problem for Dalio is that he's now overleveraged in China just as it's economy and social cohesion are tanking. Imagine having the bulk of your assets in Japan in the early 90s just as everything began to go south? That's where Dalio is and instead of accepting his losses and bailing out, he's using his wealth and influence to will China out of its funk. It's sunk cost fallacy on full display, billionaire style.
Terrible analysis on ur part.
As a Chinese emigrate I would say this is pretty accurate. It's mostly the income-to-housing price ratio that drives me from getting out of China rather than other reasons. People would have to take an absurd level of mortgage to afford a home in cities with decent quality employment. This just makes things hopeless for many of the younger generation. The most obvious evidence is that the fertility ratio drops so quickly in recent years due to the unaffordability of marriage and children.
Would've preferred you saying that what drove you out of China was the idea that they are a repressive and controlling regime which doesn't allow any form of questioning let alone criticism. During the Soviet era, immigrants who managed to escape (it was so good they had to force you to stay) mostly left to escape the suffocating political environment... the BS brainwashing, etc. Unfortunately these days I don't see many Chinese immigrants being as vocal about the scumbags running China (the PRC) as there were Soviet era immigrants denigrating the scumbag communists that controlled those countries back then. Even these days the Russians fleeing Russia are vocal in their disgust for Putin's mafioso regime. Where are the outraged Chinese immigrants? I would love to hear you guys speaking up rather than proudly pointing at how impressive China has become. The West is more than Capitalism, it's the ultimate balancing act between the idea of personal freedom and that of the collective good. Do your people proud and call out the PRC regime for the scumbags they are and start the ball rolling to really making progress for China.
Recent years? The one child policy has been in place for decades. And there is no indication China will handle its demographic decline well. Think consumer to producer ratio. With old people it never gets better.
Thank you for the insight
in china housing is mostly for investing not for living; house is where the rich to store their wealth beacuase the stock market in china is crap. anywhere in the world investing is for the rich. the fertility ratio problem is everywhere when a society getting rich. In the west, white population keeps droping, in asia, developed countries like singapore, south korea, Japan, taiwan fertility ratio is even worse. And puting the high housing price problem and the low fertility ratio problem together, you can find these two problems hedge each other. the housing price increases partly because of the increasing population. By the way, when talking about China's debt, dont forget the debt are building infrustructure not consuming, and you know the difference, right?
Working class countries suffers more from world government printing money.the house price is price for exporting to USA and accepting the US dollar. Only the working class countries like China hold more military power and political power and replace the old world government aka USA .then can this problem be solved.
From economic points, yes ,dalios predictions is not as good as you thinks.But the rules does not fall from sky. If we could see the world from class . Then right now ,China is normal working class, Europe is the middle class of doctors and technician ,well Anglo American is the World government.the world government by its military power has a monopoly on rule making and printing paper money thus to buy goods from the working class or middle class like China and Europe and other oecd countries.thus the working class countries can not became rich by working hard and sell stuffs to the world government. The more you sell the more you produce ,the stronger the world government became.And the government can tax the people by changing the dollars interests rate or by violencely destroy any Un submitted individual countries like USA has destroyed 50+ countries and replace their democratic selected leader with us backed dictatorship.whether China’s economy will be good or bad depending on the position in the world class society. If China’s military and political power surpassed USA. Then China would act more like the figure of government like todays USA ,who buy more stuff and sell more money and debts and provide orders and making the law for the world.
The monarchy in UK come from France ,and they do not grow potatoes but hold the power,therefor the kings and queens are richer and elegant than the Englisch or Scottish peasants .Economy is depends on the class or each country. Not the other way around.
This is an incredible video. I did a piece on this same topic but didn't cover it in NEARLY the detail you did. But yes, this video is spot on! Great work!
Just watched your video. Been in China a loooong time. Most accurate take I've ever watched (including "The China Show," "Lei's whatever," "China Insights," etc.).
I sold a couple properties in 2020 and I'm waiting for a house crash to happen so I buy cheap. In the meanwhile, I've been looking at stocks as an alt., any idea if it's a good time to buy? I hear people say it's a madhouse and a dead cat bounce right now but on the other hand, I still see and read articles of people pulling over $225k by the weeks in trades, how come?
Excellent analysis. I feel like Dalio may be subject to some of Charlie Munger's warnings on the "Psychology of Misjudgement", in particular investment bias. Dalio is heavily financially invested in China, and that biases and shapes his worldview and analysis.
Massive Thank You for making this video! Having read the book I expected something much more sophisticated than the meaningless history lesson and comparing China to the US in the 1880s is just bonkers. He quite clearly wrote the book because it literally supports his investment thesis and because he has become disenchanted with democracy in the 21st century because its hurting his returns. He would prefer some authoritarian Dictator because then he would have more certainty for his investments and make more money. Literally making hopium about China to pump his book. Have now decided to research some of these "famous" hedge fund managers before trusting their views. Great video Jouri!
Hey, could you let me know where can I learn macroeconomics? I'm doing well with microeconomics but macro stuff just confuses tf outta me when I, for example, read some article online.
These guys are just delusional if he was in China he can't freely use his money no matter how much profit he makes
@@rookiej5587 ahh macroeconomics is very tricky to "learn" compared to micro, simple reason being that there is still huge disagreements about the basic things like inflation, deficits and how money really works. Honestly I would recommend Jouri's channel, Economics explained and when you are accustomed to the "lingo" listen to Blockworks Macro channel which are brilliant. I'm a visual learner to I much prefer the video format than articles and books!
@@mungoblakey1494 micro can be calculated, not macro, since you won't ever have all the data needed.
@@rookiej5587 truly learning macro is complicated. It is one of the most math heavy undergrad degrees. For a casual understanding, best bet to watch this channel and others like it.
It’s really hard to find rather convincing CZcams content that inverts theories of Giants like Ray Dalio. Thank you very much for your work!
This certainly aged well.
Ray Dalio is a great investor, but that doesn't mean he is right about everything. Great video, love your channel!
Thanks Ruud!
Did he keep his investments in China? I heard that he's pulled out some now.
how do we define great?...his hedge fund has not beaten an index fund most years in recent history...this year his flagship fund is up 32%...a video analyzing how he has done that in this market would be interesting...but his other fund is down 27%...its like jim cramer even a broken clock is right once a day...as ususal in america it is more about access to networks of influence...access to networks of human capital and financial capital...being the smartest, working the hardest means absolutely nothing without that access...ex/ you cant participate in most actual "investing" in america without being a SEC certified "accredited investor"...86% of americans dont meet the threshold for that certification...most equities are in fact derivatives by definition, and are not real " investing" , but merely "speculation"
Then there is Princeton University economist Burton Malkiel's "efficient markets theory." In his 1973 book, "A Random Walk Down Wall Street," Mr. Malkiel argued that if the market is truly efficient and a share price reflects all factors immediately as soon as they're made public, a blindfolded monkey throwing darts at a newspaper stock listing should do as well as any investment professional...this has been tested and proven with blindfolded monkeys...supposedly MIT did tests scaring a chicken with a broom to land on and clutch index cards...the chicken beat 70% of fund managers 7/10 years
What people don’t seem to realize is that global power isn’t a zero-sum game; just because the US is declining does not necessarily imply that our rivals (Russia and China) are getting stronger. They are, in fact, much closer to the brink of total collapse because their current regimes are built on newer, untested foundations, while America has been through *way* worse than this and still come out fine.
The soft power that the US weilds on other countries is 100 times what Russia or China can ever wield...
USA is a hair away from full fascism or civil war.
What are you talking about? Those two countries are significantly older than america and have been through way worse not even a 100 years ago.
@@mattllaves Both countries are less than 100 hundred years old… Age of government is far more important of a metric than when people started living in the area. Their governments are very young and unstable, and prone to violent change by comparison to the US, which has had one violent unsuccessful revolution in almost 300 years. How many have Russia and China have? 10? Many of which were successful…
@@NickSteffen yes, and that's exactly my point, Russia literally collapsed in the 90s and it is a threat yet again, while America is yet to be tested. Russia and China have been cycling through authoritarian governments for millennia now while America has been growing non-stop for the past 250 years. The future will tell how America will handle a true threat to its current state.
So glad I found this channel!
I enjoy when people challenge established ideas, it usually leads us closer to the truth.
What I got from this is china was a candle that burned 4x brighter than the US and missed the opportunity to over take the US.
Too kind! He is clearly using data selectively to push his point rather than analysing it objectively
I am not an economist. But it seems like this Dalio was comparing two sports teams and saying one is scoring more often than the other without mentioning one is a basketball team and the other play football.
My suspicion is that Dalio already invested significantly in China -- perhaps more than the U.S. -- that require him to sing this particular tune.
Legend has it his own limited partners took issue with his unhealthy obsession with China, making him sell his stake in the firm and eventually ousting him out of the exact same firm he'd started.
You're being very kind to Dalio. You are completely ignoring China's demographic situation. Everywhere else, people are pessimistic because of this but even if greyification is worse in China people barely mention it when talking about it. I think this means China is going to be more of a story like Japan. It'll be a significant player and regional power that could inflict pain on the world but could by no means dominate it.
The American culture is its primary export.
No-one wants CCP culture.
All one-party states are prone to epic errors.
Said errors are what history books are written of.
People don’t realize it but countries like Japan, Italy, South Korea, Taiwan, Russia and Germany have worst demographics than China. In Western countries women go to school and get married in their late twenties or thirties. If they have children it’s only one or two. China still has 650 million in its rural areas. Even though Western countries don’t have a one child policy they in reality do. Check the statistics to see if I am right or wrong.
@@Bk6346 All of the countries you mentioned except for Taiwan and South Korea have higher fertility rates than the PRC. And you're actually proving my point. Germany's economy is pretty stale compared to the US. Italy and especially South Korea and Russia are clearly dying nations. The PRC has a fertility rate of 1.0 which means it's population will halve by the end of the century. Because of its xenophobic culture and unattractive ideology it also can't fix it with immigration. Compare that to the US which is almost at replacement rate with 1.8 and which is still capable of attracting the best and brightest from all over the world.
@@SomeoneCalledJoshua You are right about the USA fertility rate but wrong about China. China has 1.7 fertility rate. The USA has 32.5% of population 24 years old and younger. China has 29.5% of population 24 years old and younger which is about the same as UK. Germany only 23% of the population is 24 years old and younger. Many of the poor countries around the world have higher fertility rates and most of their population is very young. A simple Google search says China fertility rate is 1.7
@@Bk6346 how can it be 1.7 with years of one child policy?
It is difficult to get a man to understand something, when his salary depends on his not understanding it
Excellent job pointing out the inconsistencies. Unfortunately this is a common practice by many in the media industry, as well as the business world.
What matter is the geopolitics and geopolitics is driven today by technological power. China lags the West in only two tech fields, one of which is of minor import. Clownworld America is in decline, led by Dementia Biden and Kneepads Harris.
Dalio has been a cheerleader for the Chinese for a long time, and with good reason since he had a lot of money invested in China. But that doesn't make him a geopolitical Nostradamus, he is more like a celebrity financial advisor with "conflict of interest" written all over his forehead. I am actually surprised so many people fell for that nonsense he was writing about.
The whole China-rising/US-declining theme is more of a weird myth that is circling in mainly the economist circle since the 2000s, endorsed by people that already want to hear it (political Sinophiles or economic determinists). Some conspiracists took one step forward by justifying their obsession with chaos and disasters with a few words from the economists.
In the US Macroeconomics is just a bizarre secular theology and those youtube historians and economists don't help. Even Mr. Beat and Extra Credits, CZcamsrs with HIgh qualities, failed to point out its absurdity when they talked about the US leaving the gold standard.
The US is doomed to fail once other countries abandon the dollar standard.
Some are due to Chinese nationalism, some are yellow peril type xenophobia racism, some are political motivate aka the justifications for huge military spending and/or political scapegoating, and lastly some are just stupid.
@@PutXi_Whipped 5 dimes are too little. You should ask the Chinese government to pay you more after posting your BS
You mean like how we never were able to be fully on the Gold Standard, due to gold production being exceeded by population growth?
This is literally why around the 1900s, people were pushing to back the money by Silver as well.
Extra credits, high quality? Everything I hear about that channel is negative lmao
The thing is that, yes, history often repeats itself. But one thing that also repeats is that people think they have the world figured out when they don't.
This video is worth watching because the author seems sincere in trying to find truth. Some flaws that I find relevant:
1. Total debt USA is about 27.000 bn USD, while China's is about 10.000 bn USD. So while the US economy is about 30% larger than China's, its debt is about 180% larger
2. To say "there's doubt in the Chinese GDP numbers" isn't "using data" but simply speculation. Sure, there may be a few % up or down error, in both the US and China, systematic fraud is unlikely, if we look at the de facto changes in China
3. The political discontent cannot be measured the same way in China and the US, I agree. But we do know the CPC was internally very split e.g. 1976 or 1989. That is currently not the case, and popularity of the CPC leadership as a whole is a whopping 90%
4. A major point of Dalio is to point to the de-industrialization because investment in financial speculation pays off far more than in real economy. That's not the case in China, where the stock market for decadeds has been quite flat and growing slower than the real economy, except for some spikes with following drops.
5. The investment in improving education in China is real and massive, more and more experts return from prestigious US universities to build up facilities in China. The US doesn't seem to have a plan to rebuild the basic education for the broad population.
These are some thought from my side. Happy to hear arguments.
I don't know anything about money management, graphs, or economics, but I love to hear smart people like you talk. You just earned yourself a new subscriber...from Guam, USA 🇺🇸
Great, great video. Thank you - I thought I was almost alone in my critique of Dalio's "love" for China. He's very self-invested in this subject.
I've been with you in my critique of Dalio. Dalio knows how to maximize his gains/benefits by sucking up to the Chinese Gov... He had made fortunes from it. Dalio is the ultimate China shill (although now that he's semi-retired he's starting to change his tune and be a little more honest).
@@chopsticksandtrains I'm just glad I'm not alone in seeing how much of a CCP shill that Dalio is.
Yes, he's a clever guy. Yes, he's wealthy.
But he bought into the "infinite, endless growth" myth that the CCP put out there which turned out to be a complete lie.
China's economy would not and cannot exist without the purchasing power of the West.
Dalio left that bit out.
How are things going in China?
Can't complain.
Really, that good?
No, I literally can't complain.
Thank you for making this. I remember they showed Ray Dalio's analysis in my school and backed it up as entirely correct even though it was obviously bs. It's maddening just how many people actually believe this.
Dalio’s goals:
- Sell more books to make more money.
- Make China likes him more so he can make more money
I think he probably achieved them 🤣
He's in bed with Chinese government. The most Simplest explanation for his pro China bias.
I saw it from a mile away when I see him trying to explain how China will dominate.
Yeah, you're right. He is a sell-out.
the guy is worth 10+ billion..an additional dollar has literally 0 marginal utility for him at this point, especially from selling books.
@@mihailrangelov8343 His hedge fund deals that he secured in China sure do though. And his books sales wouldn't be an "additional dollar". You do realize the size of the Chinese population? His book became a bestseller over there. You apparently know very little about this man. I have a complete expose coming on his soon - so I'll enlighten you.
Ray Dalio is trying to protect and recover from his bad-performing positions and limit his losses while turning his listeners into the next bagholders.
One big difference between China and USA debt is where they are used. In USA, most of the money go on into financial mkt. While in China, most money gone into infrastructure building.
Love your comments at the end. Since this video was released the conflict stage was reached in China. Actually, there have always been protests, but they were generally about local issues. I have even seen videos showing tanks stationed in front of some of the smaller banks that were experiencing. As for the US and conflict, this has gone on since the beginning of the Republic.
hey Joeri, thanks for the great video! i was looking for an alternative view on the analysis in Dalio's book. It did seem to bend or omit certain facts to suit the narrative, both in regards to history and contemporary statistics
When I read the book several months ago that was before the Chinese real estate debacle. Back then my big concern was that he did not factor the demographic variable in his long-term analysis, but that's exactly where issues like inverted age pyramids and precariously low fertility rates could change things very dramatically as the ultra slow "demographic bomb" (or call it demographic drought) unfolds. This affects China and Japan and Korea and Europe in ways that doesn't seem to affect north or south America or other parts of Asia like India or the Arab world or the parts of Africa where AIDS is not rampant.
Basically the difference of industrialized and non-industrialized nations.
@Nassim Abed: Have you heard of immigration? Do you know some Chinese came from Southeast Asian countries. Do you know some Chinese look like Eurasians. They are Eurasians , but identify themselves as Chinese.
@@elliekwong3180 yes I'm also familiar with mammeluks and the slave trade across the Atlantic and the demographic chess that Stalin used to play, not to mention the north African influx into Europe in more recent decades. Immigration is how the demographic bomb explodes. Look at the middle east and Israel or ask any native American; they know better how it works.
@@elliekwong3180 So? What's your point?
Its the same reason all the so called experts claims about Russia’s strength turned out to be hilariously incorrect this spring.
Russia is probably the only major military power with demographics even worse than China.
Much like China, Russia’s latest aggressive moves aren’t confident assertion, but desperate flailing against a depressing future.
Very interesting video. I was skeptical in reading the book that he has such a small sample of empires. He mentions a few more old empires but has data for only three: Britain, Dutch and US. Really only two that can display a full cycle and the Dutch was small and short. Recently he said China has problems but he knows the people there and they are pragmatic. He hasn’t read much Chinese 20th history or Kevin Rudd’s recent article in Foreign Affairs on the return of Red China and Xi the ideologue.
I sort of reject the idea that empires have clear 'rises' and 'falls.' I think that sort of model betrays a very modern and Eurocentric sort of view. Historical empires tend to have many periods of rising influence and declining influence and these actually tend to happen in quick succession. Rome and Persia both tended to follow this model. The problem is that Dalio uses the European Empires of the post-Age of Sail world as his model. All of those empires tended to have the same weakness - their economic prosperity was based on things outside of their imperial core territories. The US is not like them because much of its wealth and prosperity resides in its own borders. That certainly doesn't make the US immune to decline but it also means there's no 'aha' moment where a crucial piece of the economic puzzle is clawed away by a revolution or an imperial competitor.
I think people like simple worlds where there's one guy on top leading the show. The world that's coming probably won't have anything like that at all, if I had to guess.
US is closer to a traditional expansion in all aspects besides population, since it depends on immigration.
@@lolasdm6959 Immigration is a function of economic opportunity. When US economic opportunity dries up, immigration reverses.
To that extent you could even wonder wether the full decline of Europe is even a real thing or a just a pivot towards a more domestic focused economy.
@@PutXi_Whipped Yeah and when is that going to happen? It's still pretty good compared to the global average.
You took the words out of my mouth. If we apply this to human history it reaally doesnt make sense. I think the only lesson from the humanities would be that empires rise and fall. Book done. This type of comparison is doomed to be extremely western biased as the disciplines were talking about, were mostly developed in a colonialist time. This type of grand theory will aways degenrate into some weird pissing match between empires
Joshua Goldsteins book on Long Cycles and Prosperity is a great read on how many different ways you could analyze a cycle and get differing answers. Long cycles and business cycles are extremely difficult to isolate and analyze, let alone predict.
What is the source of your data on chinese private debt to GDP ratio?
I acknowledge Ray Dalio's work a lot, such that it's quite satisfying to see counter opinions. Helps keep my “belief perseverance” in check.
Thanks Joeri, please do you use Twitter? I'd love to connect there.
Whenever I think about China's future development as a global power I can't help but think about its demographics and those really don't look good, while the US looks pretty good compared to most developed countries.
if u know china was world 2nd poorest country per capita in 1950s when communist came to power in china
then u would realize china is continuously rising back to the prime time
Yeah, USA look pretty good, full of homeless people sleeping in the road, full of skidrow, many Americans sleeping in the car, some sleeping in the tent,many shoplifters, you call this beautiful country, ha-ha ha-ha 😅😅😂😅 0:01
12:58 I don’t have data on Chinese people’s discontent, but I had lived in China for about 15+ years and in America for 6+ years. I can tell a very clear difference in attitude towards the government.
The Chinese were much more supportive of the government and tolerant of its mistakes. Many may grunt about mistakes of a local official but all show almost unanimous support for the central government.
The mortgage protest, for example, the people shown in the video were chanting something along the line of “daddy Xi, catch that corrupt official. Bank, give back money”
Yep, that's true, in China, people place the blame on the local government and CAN and DO protest against it, the central government is very competent and the people also avoid protesting against them because they want stability
Yo, I've seen you on millennium 7 video comment sections.
@@HTV-2_Hypersonic_Glide_Vehicle ;)
There actually IS data about the Chinese people's attitude towards their govt. Look up the 'Understanding CCP Resilience' report. It's by Harvard, so hardly a source of Chinese propaganda lol (more likely the reverse in fact). And it found huge support for the central govt., with lower (but still high) levels of support for local govt. And given that the current financial problems are concentrated in local govt. accounts (with them using land to raise money to keep afloat), that trend is likely just more pronounced.
@@ArawnOfAnnwn Harvard/Ash Center
Time will talk the real story. Please wait 50 years to know this truth. No mean to argue so much.😅
Really nice chart how you make those?
This was a really good video! Thanks for making it.
I'd love to see more of your analyses on the book too, if that's something you'd be interested in doing
Great video! Its like a compressed version of a peer review in terms that a layman like myself can understand. Keep up the good work.
I love the innocent editing contrasting "still bright" China and selling of the assets by Bridgewater. ;)
These videos are so important ❤
Fantastic counterpoint. Data driven analysis. Keep up the great work!
It's not
I read the book and the book works on the time horizon of decades to centuries, this video doesn't take that into account and paints an inaccurate representation of the book's thesis
You are being too kind. Great analysis. 👍👏🔥
The main problem is that his concept is far too simplistic empires do not have a nice simple arc and neither do economic. By his logic the British Empire should have started it's decline in 1720 after the South Seas Bubble.
This video is for first-year economics students at the university to watch. It clearly explains how even, pass me the term, "a guy on the web" can with data challenge the reasoning of the owner of the world's largest hedge fund. This is the science I love: it doesn't matter who you are, it's your arguments that count.
People prefer to spend money on liabilities,Rather than investing in assets and be very profitable.
You're so correct! Save, invest and spend for necessities and a few luxuries relatives to on's total assets ratio
This must be an investment with Mrs Maureen K carr
I invested in both stock and Cry ptő but I'm doing much better on Cry ptő with the favourable market price.
You're absolutely correct, Dalio's book is not to be taken seriously. A incredible source on this exact topic is Peter Zeihan's book "The End of the World is Just the Beginning: Mapping the Collapse of Globalization".
Absolutely bonkers. Might as well read coming collapse of China by Gordon Chang. Who has been talking about collapse of China since 2000s.
@@ASK-ko9qx I personally think Peter zeihan is a bit bias, But everything is backed up with evidence and is hard to debate.
Excellent analysis, Joeri. Thank you!
"This episode brought to you by RAIDALIO: Shadow Banking Legends" 😂😂
When reading the book, and watching his video about "changing world order", China being on the way up always felt a bit off to me, so I'm glad to see someone made a video about this.
I think China will never become great innovators as long as they have an authoritarian regime that shuts down any ways of thinking that challenge the status quo.
Relationship builders and bureaucrats/people good at taking/executing orders are the types of people that succeed in the Chinese system. Critics and starters/builders are punished and cast out of society for challenging the status-quo way of thinking.
The US is actually the less globalized nation of the G20 by trade of percentage to gdp. We rely less on trade than most people, particularly imports. We can always shift production domestically if we ever decide to deglobalize. Likewise our neighbors are in positions of strength which only helps fortify one another on the continent of North America.
Asking public sector banks to lend to financially stressed property developers is not same as printing money. When a bank lends , it is lending existing money / wealth already in its custody as deposits. When US federal reserve does quantitative easing, its making new money out of thin air (using its credibility to repay after the maturity period) by issuing treasury bills and notes. This is the reason why China's inflation is lower than that of the U.S.
No: www.bankofengland.co.uk/explainers/how-is-money-created
The vast majority of the money supply is created by private banks
I won't argue about the book but as somebody that is very familiar with China and other East Asian nations, their culture, history, work ethic and mentality, I'm pretty confident that long term China has a bright future. The reason Dalio has such high confidence in China is because he invested a lot of time learning about the country, visited many times, got acquainted with key people making decisions. The more you know, the better you understand and the less you fear. Others, with limited knowledge of the country, can only make vague assumptions.
You were way too kind. Dalio is just trying to sell books by saying something provocative while at the same time pretending long term investments in China isn't a foolish endeavor.
After reading the book I was wondering maybe China is not the rising power, maybe it’s India? It would be very cool if you could apply the principles described in the book to India and make a video on it!
As an Indian who is super interested in economics, I can tell you, India is certainly rising, but I doubt we will replace the US as the largest economy anytime soon. At our current growth rate, we will still only be slightly better than China is today by 2050. But yes, massive structural improvements have happened.
@@person1858 You are right. The United States cannot always remain the first. Under the general trend of technology diffusion, the size of the population ultimately determines the strength of a country. China has broken through the technical bottleneck in an all-round way, and India also has the basis for technological breakthrough, while the United States does not have the conditions for rapid population growth. If South American immigrants are relied on, will it still be the United States?
@@mengxu9104 Thing is, I'm not sure China has broken through the technology barrier. Take chip manufacturing for example, China can only really make low end chips, even with the rest of the world helping it. Chinese pharmaceuticals still aren't quite as good as things like mrna. Chinese weapon systems are more or less modern but not quite as cutting edge as western ones. Chinese agriculture is still much more primitive than commercial scale western agriculture. The Chinese are most of the way there, like 70-80 percent, but not quite. And India is even further behind. India hasn't even industrialised yet. I think both India and China will eventually be massive, but it will definitely take decades. I'd estimate 2060's atleast before India and China rival the US. We also need to account for US growth.
@@person1858 To 2060 is only a moment in history, and I think it will be much faster.
@@mengxu9104 True
High debt is potentially more problematic for the US as it is a debtor country with low saving rate of its GDP unlike China and Japan
👍
A rational and fair analysis. Applaudible! Many thanks!
The ground news page from the description says "error 404".
Thanks. I'm trying to get them to fix the link.
First of all, THANK YOU for taking on this topic. As a long-time China watcher, I have strong opinions on the topic. I'll try to keep them as grounded in reality as possible.
The entire analysis seems flawed from the start. When, in human history, has any nation dominated the planet quite like the USA did after WWII? The British Empire arguably counts, but I think the scale was still quite different. What happened after WWII seems more than just unprecedented, it seems like a situation that is unlikely to ever be repeated. There was only one industrialized nation left functioning and competition was extremely limited.
What about the USA, then? The concept of "decline" in comparison to complete hegemony seems obvious, essential, and quite welcome. As the rest of the world caught up the relative strength of the US had to decline, and this is only a good thing. Now that we have completed a long wave post-war phase, it seems only natural to look at how the USA has done through this phase. In comparison to itself, it's only improved in terms of standard of living, etc - although not as rapidly. The challenge for the USA is how it can re-invent itself as the global regime matures and takes on a different form. This process has only started, and is in a very destructive phase. I have many reasons why I think this will go well, but we can all have opinions on the future. The fact, however, is that the USA has the capacity to re-invent itself and has done so many times in the past.
What about China, then? I also agree with Dalio that the people of China cannot be kept down forever. But I always joke that if you fear China you should love the CCP, as they are the only thing keeping that nation down. It did re-invent itself starting in the 1980s, but now is on a path quite backwards from that. I don't see how they will get to the next level without casting aside the top-down, authoritarian rule. This isn't just a "Communism always fails!" analysis, but an examination of the post-war world. Many nations have caught up quite quickly. The industrial systems that it took the UK 13 generations to implement and the US 7 took Japan only 3, more or less. China took 1. How? Because the path was well known and there were advantages to a top-down model. Discipline counts. The problem with this approach, as we saw in Japan, is that once you have caught up you have an inflexible system that cannot keep up with the latest innovation and needs to be destroyed.
The CCP will not give up its top-down approach, and in fact is clearly centralizing further. That is, they are doing this now, but to change the direction will require civil war and strife like we have not seen since 1949. The long term is probably quite rosy, but they have a lot to get through first.
Where does this leave us? We're in a crucial time. Debt burdens have chained nearly all industrial nations to the past and limit their potential terribly. If you take an Irving Fisher approach, the immediate future does not look good for anyone. I take it that this is your conclusion, and I do agree. It's a question as to how the industrialized nations re-invent themselves, and on that score I cannot have more faith in any nation more than the USA. Of course, we will see, but this isn't something we can calculate our way out of.
The reality is that there is considerably more equity in the world than there has ever been before, and there is not in reality one hegemon that can possibly control everything. This is good, and it is likely to continue for a long time. The relative strength of one nation versus another will come down to the skills of their people and the ability to realize their ambition. This could indeed change, but at the moment the USA has a distinct advantage if everyone stops shouting at each other and gets down to business. China, on the other hand, has the skills but no way to unleash them without severely limiting the power that not only got them to where they are but has shown itself unwilling to give up control.
Which nation would you really bet on? Right now, the USD is still the global reserve currency and still the safe harbor. That buys the USA time. China has nothing by comparison. Even Dalio has had to acknowledge this.
China will offer an alternative to the usd. They have a labor force that is highly educated and innovative. Why would you change your system if your life gets better every 5 years?
Yes, that has been the bargain the CCP made with the people when Deng Xiaoping led the nation circa 1978. What happens when the CCP fails to uphold its end of this? What, indeed, happens when the fruits of 9/9/6 turn out to be very small? This is what we are about to find out. Again, catching up to the top nations is very different from passing them.
@@ErikHare what happens when another Trump comes to power? What happens when a puppet like Biden stays too long in power and is been told what to say. When someone countries are doing a good job, they should be praised and not crushed because their lives and live expectancy increases compare to the USA. Btw, if you need a surgery in the USA, 9/9/6 won't be enough to cover the bills.
You should check out this channel called the mo freedom foundation, his analysis is basically the same as yours.
@@ErikHare Don't forget that technology diffusion is a historical necessity, and the population size under the same technology level determines the national strength. What I see is that China's technological capacity has rapidly approached the United States, and the population size of the United States is hardly half that of China. As for the calculation of GDP and financial strength, it is just a game rule based on national strength.
It's going to be hilarious and terrifying when all the China hype ends up producing another 90's Japan.
Ions needed for raining?
Good analysis, I think you were kind to China, their use of capital (as a state tool) is not accurately reported and is higher than your estimate.
History is far too complex to behave according to neat models and cycles. Not to mention the fact that different factors apply today than in the past and it makes predictions like the one Dalio is toying at very strenuous at best.
Brilliant video. I was wondering if any quantitative gauge for China is even accurately measurable.. great video.
the state of discontent in China is currently tremendous...
I’d realized his analysis was off the instant he said china’s currency was gaining popularity as a reserve currency. Thank you for showing that the failures extended even further.
Having read his previous book, Dalio has a soft spot for china and I believe he might’ve forced them into the rising power role upon seeing the decline in American international power.
i think u dont know the word "popularity"
China and Saudi are literally in talks to sell oil directly in Yuan. This would mean an end to the Petrodollar. Many countries around the world are also explicitly expressing an interest in de-dollarization. If it doesn't make sense to you, then you simply haven't been paying attention.
@@itssteve6018 There has pretty much always been someone talking about dropping USD for oil transactions for the last 50 years. Whether or not it's viable depends entirely on if the Saudi's think they Chinese won't screw with the Yuan to screw with them (historically they have been known for currency manipulation). The idea that countries starting to use their own currencies for oil transactions will somehow lead to the end of the USD as reserve currency is ridiculous. In addition, the US benefits more from being something like half the planets tradable equities markets than we do from being other countries reserve currency. The idea that other countries looking to further insulate themselves from the Fed's influence is somehow bad for the US economy is equally absurd. Less severe network effects in finical markets are good for everyone.
@@Ravie1 the thing is US and suadia relationship had common goals but now we see that those goals are geting separated. the bigges importer of suadia oil is china. and if china offer lucrative deals than saudia may as well switch to it. and we see all this by king salman treatment of joe. these things are symbolic and hold a lot of meaning. i for sure now the future now lies with china and india.
@@itssteve6018 A single country willing to accept transactions in Chinese currency is not any real indication of a rise in threat to US dollars status as a reserve currency. There are many structural issues with the Chinese currency that make it a much worse option than the US dollar, it’s why the only countries even considering a change in reserves are problematic countries with small economies. The USD is on one side of 88% of all foreign currency transactions and accounts for ~25x more foreign reserves than the Chinese yuan. Even the Euro accounts for 10x more foreign reserves, the yuan is more in line with the Canadian Dollar. There is absolutely no reason to believe that the USD is going to be replaced by the Renminbi anytime soon.
I like how it was said in the end "he might even be right and China might be the next superpower". In my country there's a saying which can be translated as "One eyed is the king among the blind." Which might be the case here :)
Great video, thank you!
Hello, what do you think about the other book of Ray Dalio , 'How the economic machine works?'
good job! just subscribed!
Dalio's assertion on this subject seems to almost be fuled by pure emotion at this point.
Uh no, it’s also fueled but his past experience of success and his skin in the game.
Can you do a video on India?
The saddest part is that this video only got 1% view of Ray Dalio's original video.
15:00 You are kind to Ray Dalio. I left a comment on his CZcams channel, asking him how his video would look if he replaced China with the Soviet Union and played it right after the sputnik moment.