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💭 From Rage to Reimagination

Let’s dive in…

It’s been one heck of a week. I’m heartbroken at the bloodshed and loss of innocent human life that has taken place as a result of the war. That said, I can understand the rage and insecurity both sides feel because rage is human. It’s one of our seven basic emotions. So it’s been hard to fathom what would authentically and sustainably be the catalyst for a ceasefire and ultimately peace. How do you restore security to a household that’s been bombed, whose loved ones have been kidnapped, or who has had to go without clean water, food, or shelter for the past 10+ days because there’s no way out? How could peace be nurtured in a place where rage is constant, fear is in the water and lack thereof, and grief is the shelter that feels most comforting?

I went to TED Women last week and was awestruck by the talk given by sociologist and Princeton professor Ruha Benjamin. Her profound provocation: “Remember to imagine and craft the worlds you cannot live without, just as you dismantle the ones you cannot live within.”

I’ve been reflecting deeply on this idea over the past several days, leading me to ask: Are wars merely fights for attention? A fight to be seen and respected? What does it take for us to redefine power? What does it take for us to truly see one another?

When I read the stories of Israelis and Palestinians, I think about their shared humanity: the desire to thrive, flourish, laugh, and be with loved ones, to love and be loved, to care and be cared for. It may be naïve, but perhaps the pathway to peace is by truly seeing our humanity, rage included.

This week, we tapped into the All-In Summit 2023 conversation with Ray Dalio on the rise and fall of nations. He offers historical context, present risks, and potential paths forward to keep the U.S. from falling. Given the nature of today’s geo-political and national climate, I hope we all take the time and space to imagine a world where we live together, thriving, and in peace.

💚 Amy & Bryan

P.S. I also loved Aisha Nyandoro’s TED Talk: What does “wealth” mean to you? Do yourself a favor and listen to it.

P.P.S. The winner of our Money 20/20 raffle is announced below. Congratulations!!

Zoom out: All-in Summit 2023

The (polarizing) self-proclaimed “Besties”: Chamath Palihapitiya, Jason Calacanis, David Sacks & David Friedberg, for the second year, have brought their podcast to life in a 3-day summit. From September 10-12th, along with speakers like Bill Gurley, General Partner at Benchmark, the famous Youtuber, Mr. Beast, and Tobi Lutke, CEO of Shopify, the Besties went “All-In on technology, markets, economy, science, politics, and society.”

All-In Summit 2023 was Hosted in LA and included nightly parties, VIP dinners, and poker games. VIP passes went for $7,500, Gen Admission was $1,500, and they offered scholarship passes.

Conference-goers remark on the diversity of speaking topics, viewpoints, and industries as what makes the conference worthwhile.

Zoom in: The Rise and Fall of Nations with Ray Dalio

Ray Dalio, Wall Street trader turned founder of Bridgewater, which became the largest hedge fund in the world in 2013 and today manages over $100B in assets, took the stage at the All-In Summit to share his perspectives and analysis on the geo-political and national landscape. He honed in on where America falls in the empire cycle.

His talk will help you…

1. Understand the historical cycle of empires

2. Consider the risks currently impacting the United States

3. Consider a proposed way forward and the alternatives

The Avoidable Conflict 

Ray is the author of Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail, and by the end of his talk, became All-In’s podcast and summit host’s presidential nominee.

The Genesis

Ray witnessed the sharp rise of gold in 1974 while clerking on the floor of the New York Stock Exchange after Nixon publically defaulted on the promise to deliver gold for money because they didn't have enough actual money. Ray was fascinated. He wondered if this had happened before in the past, which it had in the 30’s with Roosevelt. This was one of his main catalysts.

Much later, he was mobilized by 5 other phenomenons:

1. The first is the amount of debt and money creation.

2. The amount of internal political conflict, in particular, populism of the left and populism of the right which culminated in the January 6th attack on the capital.

3. The Great Power Conflict: the rise of a comparable economic and military power in the form of China competing with the United States.

4. Acts of nature, in particular droughts, floods, and pandemics, which historically have killed more people, toppled more empires and changed more world orders.

5. Technological changes and how they have evolved.

The Rise and Fall Cycle

To start, patterns and cycles are one thing, but Ray became most interested in understanding the cause and effect of these cycles. His studies led him to analyze the ten most powerful empires over the last 500 years, and the last three reserve currencies. For the sake of clarity, he hones in on the top 4:

1. Dutch Empire and the Guilder

2. British Empire and the Pound

3. The rise and early decline in the United States Empire and the Dollar

4. The decline and rise of the Chinese Empire and its currencies

Then, to standardize the metrics, he determined that the power of a nation is defined by 8 categories:

1. Quality of Education

2. Inventiveness and technology development

3. Competitiveness in global markets

4. Economic output

5. Share of world trade

6. Military strength

7. The power of the financial center for capital markets

8. The strength of the currency as a reserve currency.

Phase 1 – The Rise: The big cycle typically begins after a major conflict (often a war) establishes the new leading power and the new world order. Peace and prosperity typically follow and people increasingly bet on it continuing.

Phase 2 – The Big Bet: These bets require people to borrow money. This eventually leads to a financial bubble. Share of trade grows, most transactions are conducted in the new empire’s currency and it ultimately becomes a reserve currency, which leads to even more money.

Phase 3 – The Bubble: A financial bubble is popped when wealth is unevenly distributed and the wealth gap grows between the “rich haves and the poor have-nots.” Bubble bursts = print more money.

Phase 4 – Infighting: Internal conflicts over the wealth gap lead to calls for reform. This could either be peaceful or result in war, but ultimately there is a strong demand for a “revolution to redistribute wealth.”

Phase 5 – A New Empire Rises: Ongoing internal conflict = space for a new power to take over. The distracted in-fighting diminishes the empire’s power relative to external rival powers on the rise. This usually leads to wars and then a new world order is created with the winners. And the cycle begins again

The Conflicts of the US

Yes, China is a big power that we need to be aware of and prepared to contend with. However, what was clearest from Ray, is that the best way to be defensible against rising powers like China and potentially India is to focus on the internal conflicts currently weakening America’s power.

• Capitalism: “ It has to be taken on full, looked at, reformed, in order to pull this thing off, we have to do it together.”

  • The risk of capitalism is when you have the wealth gap clash and the opportunity gap clash. That produces a risk for democracy.

  • The profit system alone does not direct resources adequately. There has to be structural change and reform.

  • For Example: “Look at the gaps in education. The current system is that the state government controls education. Then you get to the town, and at the town level, it's the town that controls the education, and how much it costs. If schools can charge what they will for quality education, then you create wealth gaps with rich people being able to take care of their kids in a way that other people can't take care of their kids. And that creates an opportunity gap. That's a structural problem.”

• Debt: The wealth gap begets more and more debt.

  • As described in the Rise and Fall cycle, when nations rise, more debt services are created to allow for more investment in the empire. However, at a certain point, actual cash runs out requiring The Central Bank to print more and more cash. This is ultimately unsustainable.

  • When consumption is down, the government will take on the debt and it'll send out money. So the mechanics of that are: “There are more checks and more money sent than there is a loss of income by a lot. So a lot of money goes out, and as a result of that, the financial conditions of the household sector improve, generally speaking, while the financial conditions of the government sector get into a lot more debt.”

  • This is a classic occurrence at the end of the Rise and Fall cycle because there's an imbalance between the demand and purchases of bonds. Buyers of bonds buy them because there is an attractive return on them; but what happens when there is no longer an attractive return? They are sold, and used-to-be bond owners turn to own more tangible things like equities and gold. The debt and the imbalance ultimately lead to more inflation.

• Values: There is a widening gap as it relates to how we think about values. So, if we don’t fight over money, then we will fight over values: education, LGBTQ rights, etc. “And let's say we don't fight. Let's pray we don't fight. You're still gonna have to deal with how you redistribute not only money but how you redistribute opportunities. And that's gonna take figuring it out, right? And there's gonna be an argument over how they do that.”

A Proposed Solution

The hosts asked Ray to share his thoughts on a path forward. In essence, how do we avoid the decline? He believes…

1. A strong middle to bring the country together rather than fighting. Because if we continue the way we are, we're going to have a conflict.

2. There needs to be a good, bipartisan engineering exercise that's going to take control of the extremes because neither side's going to win a great reformation. Much like the Manhattan Project, this bipartisan group would engineer important changes that need to be made. “They have to be structural. We will not agree with each other, ever. We're going to kill each other fighting over these things. So structural changes have to be made, and you need to have the country as a whole do those things.”

The Warning for the “Declinist” View

One of the Besties didn’t agree that the country could meet in the middle and that instead, one side would in fact win. While Ray agreed, he did offer a warning:

“We're going to have an interesting two years. Between where we are now, and let's say early, 2025. And not just interesting because we're going to have unbelievable elections. But we're going to have an interesting few years because of where China U. S. relations are. It’s going to be interesting financially. And we're going to have radical technology changes, plus climate's going to be an issue. As the debt builds up, as the wealth gaps build up, and the values gaps build up, there's a difference in reactions to controls. You're going to see radical disorder.”

And the winner is…

We are excited to announce the winner of our Money 20/20 conference pass. And the winner is… Annie D. Email us today at [email protected] to claim your ticket!

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