How Countries Go Broke: The Big Cycle

In his 2025 book How Countries Go Broke, Ray Dalio examines the mechanics of the Big Debt Cycle and its role in driving major historical shifts. He identifies five interrelated forces—including debt, internal conflict, and technological change—that combine to create the Overall Big Cycle of global order and disorder. By analyzing historical precedents like the Great Depression and modern cases like Japan and China, Dalio illustrates how excessive borrowing eventually leads to currency devaluations or debt restructurings. The text emphasizes that the United States currently faces significant long-term risks due to high indebtedness and social polarization. Ultimately, Dalio argues that while artificial intelligence offers unprecedented productivity potential, it may not be enough to overcome the compounding pressures of economic instability and geopolitical rivalry. He concludes by providing a risk dashboard to help investors and policymakers navigate these turbulent financial transitions.