The big cycle is the period from one era of great change and turbulence, in which various systems or orders are transformed, typically through fighting, to the next. Then, through that evolutionary process, we arrive at yet another period of breakdown. The last big cycle began in 1945 at the end of World War II.
» This will lead to dramatic changes. «
Within
that world order, there are shorter-term cycles, like the economic and
political cycles. The economic cycles have lasted for about six years
from one recession to the next, and they unfold in a way where the
economy is weak.
» In considering
which spending to cut, when one looks at the possibilities, one quickly
notices that about 70% of the non-
interest spending is considered
“mandatory”—i.e., it is either contractually required or politically
nearly impossible to cut. «
Central banks put a lot of money and credit into it. That causes markets to go up. There's a lot of spending; it gets too hot; inflation rises. They tighten monetary policy, and that causes the economy to go down into recession. Since 1945, there have been twelve and a half of those.
» It appears clear that, as the gaps in people’s productivity, wealth, and values grow along with levels of dissatisfaction about how their democracies are working, it leads to more populist conflict
and more policies that are like those in the 1905-14 and the 1933-38 periods. «
We sometimes don't pay as much attention to the big cycle when it reaches excesses, such as debt excesses. This is because debts rise relative to incomes. If you look at a chart of most countries, their debts keep rising relative to their incomes, but the incomes are needed to pay the debts. So, when you get to a point where the debts are high relative to the incomes, and debt service is very expensive and starts to crowd out other spending, and investors do not want to hold the debt as much because the debt does not provide them good returns and they start to sell that debt, you begin to have a change in that big debt cycle.
» For the United States, the big cycles look mostly unfavorable.
«
That big debt cycle typically corresponds with the big domestic political and social cycle because wealth and well-being matter to people. When there's disruption to people's wealth and well-being, then you have political disruption, such as what we are experiencing now. Consequently, there's more fighting over wealth and power, and so on. These things come together, which then creates the new conflicts, the new big conflicts: the changes and breaking down of the old orders, the old monetary orders, the old domestic political order, the geopolitical order, and such things to cause seismic shifts. These are periods of great risk for the markets and great risk for society. It's very important that they're understood.
Quoted from:
Ray Dalio (May 28, 2025) - The Big Cycle Explained in 3 Minutes. (video)
Countries are allowing their reserves or assets to decline while acquiring gold. Central banks bought more gold in 2025 than in any year in history. They are not telling the public why, but their actions speak volumes.
See also:
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