# Ray Dalio: I Predicted The 2008 Crash, I Know What Comes Next

- **Show:** The Diary Of A CEO with Steven Bartlett
- **Published:** 30 Jul 2026
- **Source:** https://pdst.fm/e/pscrb.fm/rss/p/mgln.ai/e/1390/claritaspod.com/measure/p.podderapp.com/2544644999/mgln.ai/e/1651/episode.flightcast.com/01KYMPGERGFRM4QSQ38CEA48EH.mp3
- **Transcript:** https://podcasts.opennash.com/shows/diary-of-a-ceo/ray-dalio-i-predicted-the-2008-crash-i-know-what-comes-next-28af0f/
- **Provider:** OpenNash Podcasts (machine-generated)

## In brief

Ray Dalio argues that the AI boom shows the classic signs of a financial bubble. Prices rise on borrowed money and new stock supply, and the bubble pops when people must sell wealth to raise cash, usually after interest rates rise. He says this bubble sits inside a larger 'big cycle' of debt, inequality and great-power conflict that he believes has already reached its decline stage in the US and UK.

The central tension is that AI is both a lasting technological advance and a possible financial bubble. Dalio says the technology keeps advancing whatever happens to prices, but a crash, heavy debt and wealth gaps can still cause unemployment and political fights. His practical advice is to diversify, keep some gold, stay adaptable, and not rely on cash or on guessing the future.

## Key insights

1. **Bubbles burst when people must sell wealth** Dalio says wealth cannot be spent, so owners must sell assets to get money, often after interest rates rise or taxes change. Falling prices then shrink collateral and spending, and the downturn feeds on itself.
2. **Cash is the riskiest long-term store** He says cash deposits lose to inflation, which he put at about 3.5-4%, and interest is taxed too. He recommends spreading money across stocks, bonds, gold, property and possibly Bitcoin rather than keeping it in one asset.
3. **Gold beats Bitcoin for Dalio's hard money** He holds about 1% of his portfolio in Bitcoin but prefers gold. Gold cannot be hacked, is nobody else's liability, and is held by central banks, while governments could monitor or tax digital currencies.
4. **AI shifts income from workers to owners** Dalio says the share of revenue going to workers is falling and the share going to business owners is rising. He cites the stock ownership figures raised by the host, which show ownership is concentrated at the top, and the harder job market for college graduates.
5. **Debt and polarization drive the 80-year cycle** He describes a roughly 80-year cycle of rising debt, wealth gaps, political conflict and shifts in global power, last reset around 1945. He argues that the US and UK are late in it, and that the UK's repeated prime ministers and money shortage illustrate the pattern.

## Questions this episode answers

### Is the AI boom really a bubble that could crash the economy?

Dalio says Jeremy Grantham is right that AI shows classic bubble signs, but he says bubbles come in degrees rather than being a yes-or-no. He argues a crash would hurt ordinary people through falling markets, lost collateral, less spending and rising unemployment.

### Why does Dalio say keeping savings in cash is risky?

He says cash earns little interest, inflation of about 3.5-4% eats its value, and you still pay tax on the interest. He calls it the worst investment over a very long period.

### What does it mean that a bubble 'pops' because people need money?

Dalio explains that someone who owns stock worth a lot on paper must sell it to get cash for debts or taxes. When many people sell at once, prices fall, their borrowing power shrinks and they spend less.

### What should someone with little money or a new career do about AI?

Dalio says your main asset is yourself, so earn a good income by selling a skill where it is valued highly. He also advises learning to use AI tools, staying adaptable and choosing work that fits your nature.

### What is Dalio's 'big cycle' and where does he say we are in it?

It is his name for a roughly 80-year pattern of growing debt, wealth gaps, domestic political conflict and rising rivalry between powers, which ends in a major reset. He says the US, UK and several other countries are now in the later 'decline' phase.

## Facts

- **Steven Bartlett** [0:02:56]: "you founded Bridgewater Associates in a two-bedroom apartment in 1975, and you grew it to the world's largest hedge fund."
- **Ray Dalio** [0:03:26]: "We produced, uh, about a 12% return with no s never any significant losses, and it was uncorrelated with other investments."
- **Steven Bartlett** [0:03:39]: "positive returns of 9.5% in 2008, while the S& P 500 plunged by almost 40%"
- **Jeremy Grantham** [0:04:07]: "This is, I think, the biggest investment bubble in American history."
- **Ray Dalio** [0:07:40]: "the profits don't live up to the price, then that causes this other dynamic, and it produced the Great Depression."
- **Ray Dalio** [0:09:48]: "let's say you raise $50 million, and you value the company at $1 billion. Only $50 million was actually spent on that company."
- **Ray Dalio** [0:11:40]: "The UK has had, I think, 6 out of the last 7 years, there's been a new prime minister."
- **Ray Dalio** [0:20:01]: "three and a half or 4%, um, uh, happens to be about where it is now."
- **Ray Dalio** [0:22:46]: "this was money, not until, um, 1971, and it's still the second largest reserve currency, central banks hold reserve currencies."
- **Ray Dalio** [0:29:08]: "I have about 1% of my portfolio in Bitcoin because there's different kinds of money that and the money that you can't print, that's one kind."
- **Ray Dalio** [0:29:39]: "make sure that I have some hard money, which for most people should be between 5 and 15% of their portfolio."
- **Ray Dalio** [0:30:29]: "Think about how different it would be for Russia. Okay, they confiscated these kind of other assets, um, they didn't get these."
- **Steven Bartlett** [0:38:22]: "I think 20 years from now, you can imagine that those 9 million will be 20 million, uh, AVs, maybe."
- **Ray Dalio** [0:40:15]: "Uh, we went through that, uh, the last time, 1945."
- **Ray Dalio** [0:42:45]: "on average, has lasted about 6 years, uh, uh, give or take about 3."
- **Steven Bartlett** [0:46:25]: "The top 10% of households hold almost 90% of the stock."
- **Ray Dalio** [0:58:11]: "22% of the high school students have either dropped out of high school or are failing with absentee rates of greater than 25%."
- **Ray Dalio** [1:08:05]: "and in these cycles, uh, quite often, they put in capital controls because they think people are leaving"
- **Ray Dalio** [1:24:47]: "chips come out of Taiwan. We could imagine what would happen if they blockaded chips leaving Taiwan."
- **Ray Dalio** [1:31:10]: "how the economic machine works, it's I think it's thirty minutes, and it's been watched by 140 million people"

## Transcript

**[0:00:00] Steven Bartlett:** As a founder building a business when I was in my early 20s, I think I always had a deep sense of imposter syndrome because there was something that I wasn't good at, and that thing was finances. Finance and understanding your financial position as a small business is the great enabler of all of your dreams. I was running from it until I discovered a platform called Zero. Zero is an accounting and financial management platform specifically for small businesses, and it brings accounting, payments, payroll, and analytics all into one place, even for people that don't love doing finances.

**[0:00:31] Steven Bartlett:** Zero wants to do the financial work for you, but its core ambition is to go beyond keeping the financial record because Zero wants to help you understand what's happening in your business and increasingly, and this is maybe the most important thing, is help you make decisions. Finally, we have a partner who can enable us in a simple way for those people that are both left brain or right brain and enable our dreams. You can learn more about Zero by going to zero dot com.

**[0:00:56] Steven Bartlett:** Thank you to Zero, thank you for sponsoring this podcast, but also thank you for helping me to scale my business. As somebody that, quite frankly, has never loved finances that much, are you seeing signs that we're in an AI bubble and therefore a economic collapse?

**[0:01:09] Ray Dalio:** The classic signs of, and that has implications for the economy, and it's bad for the society, and everybody loses money. But we also have some other things that are going on that happen around the same time, and I can go through these if you want.

**[0:01:24] Steven Bartlett:** Please?

**[0:01:25] Ray Dalio:** So what I'm saying is clear because I'm a global macro investor.

**[0:01:30] Steven Bartlett:** And he was one of the few managers to foresee the great financial crisis.

**[0:01:33] Ray Dalio:** Yes, and so right now we're very excited about AI, and we should be very excited because it's gonna be revolutionary changes, but it's creeping into almost everything. The way I look at it is I look at the human body, and I see like, it's replacing the body, and so on, and then it replaces some aspects of the mind, levels of thinking and reasoning. But at the same time, we have another problem that's existing, geopolitics. I mean, that China is a larger trading partner with most countries and the United States is.

**[0:02:06] Steven Bartlett:** And that's a changing of the world order.

**[0:02:07] Ray Dalio:** That is one of the ingredients, right? And then also you've got large wealth gaps, the government don't have enough money. And so when you have the downturn, then you have people at each other's throats.

**[0:02:19] Steven Bartlett:** So a lot of people, they're thinking about how to sort of secure their future. How do they all prepare?

**[0:02:23] Ray Dalio:** Let me say that history has shown that it's not the most intelligent people that are the most successful, but the key thing to keep in mind is

**[0:02:34] Steven Bartlett:** Guys, I've got a favor to ask before this episode begins. The algorithm, if you follow a show, will deliver you the best episodes from that show very prominently in your feed. So when we have our best episodes on this show, the most shared episodes, the most rated episodes, I would love you to know. And the simple way for you to know that is to hit that follow button. But also, it's the simple, easy, free thing that you can do to help us make this show better.

**[0:02:56] Steven Bartlett:** And I would be hugely grateful if you could take a minute on the app you're listening to this on right now and hit that follow button. Thank you so, so, so much. Ray, for people that might not know who you are, you founded Bridgewater Associates in a two-bedroom apartment in 1975, and you grew it to the world's largest hedge fund. What was the the total amount of cumulative net gains that you delivered for those investors over that period?

**[0:03:26] Ray Dalio:** I think it was something like 53 billion. We produced, uh, about a 12% return with no s never any significant losses, and it was uncorrelated with other investments.

**[0:03:39] Steven Bartlett:** And he was one of the few managers to foresee the great financial crisis, which allowed Bridgewater to post positive returns of 9.5% in 2008, while the S& P 500 plunged by almost 40%. Let me start with the thing that I'm most curious about because I sat here with an investor called Jeremy Grantham, who you might know. He told me that we're staring in the face of an AI bubble and therefore a economic collapse potentially.

**[0:04:07] Jeremy Grantham:** If you look at the data, it would be compatible with history for the peak to be very soon. Everything is in line. This is, I think, the biggest investment bubble in American history.

**[0:04:20] Steven Bartlett:** What's your perspective on that?

**[0:04:21] Ray Dalio:** he's right. I don't want to jump to conclusions as much as I want to explain reasonings that lead up to conclusions. I'm at a stage in my life that I want to help people understand cause effect relationships. What they call a bubble is when the price goes up, uh, a lot and companies do very well, and then it collapses. And that has implications for the economy, that has implications for the markets, like 1929 bubble, okay, or the 2000 bubble, okay, which is the dot-com bubble.

**[0:04:54] Steven Bartlett:** Does it impact real people as well? Cause you said the economy,

**[0:04:57] Ray Dalio:** And, uh, did 1929 bubble bursting impact real people? Yes, the Great Depression followed. Because what happens is there's a new technology that comes along that's revolutionary, the dot-com bubble, which was 2000, all the stuff that we have, that's wonderful new technology. People get into that technology, they say, That's miraculous. I can bet on that, I'm I'm sure it's gonna be successful, and then they bet on it. And sometimes they borrow money to bet on it, and they lose sight that the price of it matters.

**[0:05:29] Ray Dalio:** So it goes up and up and it's everybody's thing, you know? It's like, right now, we're very excited about AI, and we should be very excited because it's gonna be revolutionary changes. And it bit at the same time. So I want to buy some of that, and everybody wants to invest in some of that. And what they do is they don't pay attention to the price, and there's a certain mechanics. People will borrow money. Wealth is not the same as money.

**[0:05:55] Ray Dalio:** So you see a lot of people getting wealthy, but you can't spend the wealth. You have to sell the wealth to get money, cause you can only spend money, right? So what happens is when they need money for one reason or another, taxes change or interest rates go up, and so they have to pay their debt service and so on. There is a pricking of the bubble, so that what happens is it falls, okay? And when that happens, people lose money, and as they start to lose money, the process works in reverse.

**[0:06:28] Ray Dalio:** Because, uh, when they made a lot of money, they have a lot of collateral, right? They can go borrow money cause they're worth a lot, and that compounds on its way up. And then when it comes down the other way, it works the other way. Okay, now you gotta pay your debt and so on, then you have to start to sell assets, and then there's less demand for things, right? So there's less demands because if you're losing money cause you put some money in the stock market and that company and so on, you're gonna spend less.

**[0:06:58] Ray Dalio:** And as you spend less, then somebody else's income goes down, right? You don't go to the restaurants. The economic downturns that typically follow a bubble, uh, like the Great Depression, the late 20s was fantastic. If you talk about changes and and experiencing cha- this was the first time there was electricity in houses, so it was the first time you would have refrigeration and you would have lighting in houses. This was the first time that you had, um, cars popular that you could get first time airplanes, first time you had radio, and so everybody knew that they were gonna be great in the future, and they were great in the future.

**[0:07:40] Ray Dalio:** But at the same time, what happens is as they buy them and they but stocks go up and they borrow money to buy them and so on, um, and the profits don't live up to the price, then that causes this other dynamic, and it produced the Great Depression.

**[0:07:56] Steven Bartlett:** so let's say that I buy this, and this is a unit of artificial intelligence. So let's say I buy one share in one of the big AI companies right now. Because investors are so excited about AI, they value this at $100, this unit that I have here, they say it's worth $100. So my net worth is now $100. I go to the bank because I have this net worth, this paperwork for $100, and I ask the bank for a 50% loan on this right thing that I own.

**[0:08:25] Steven Bartlett:** They give me $50, now I have $50. And then something happens in the economy, which means that the investors who've invested in this and investors generally now need money to pay off their other debts that they have. So this could be a war, it could be some kind of event that takes place, and suddenly everybody rushes to sell their assets like this one. And so when I go to sell this, the f- price of it has now plummeted to say maybe $25, but I took a loan at the bank for $50, so I own the bank $50.

**[0:09:00] Steven Bartlett:** But now this thing that I have that was worth $100 a couple of months ago is now worth $25, and I'm $25 in a hole. So I have to quickly sell. And then, with everybody selling, all the price of assets drops, people stop spending money at the restaurants, like you say, there's less money around, and then the bubble has burst, and we're in this sort of declining,

**[0:09:16] Ray Dalio:** you got it?

**[0:09:17] Steven Bartlett:** Okay, good, all right, fine.

**[0:09:18] Ray Dalio:** And it happens because it must happen. I mean, meaning in these, uh, tremendous tr- uh, changes, uh, there's very little that's known. So anybody who's in the business of making AI, uh, can't be precise. They don't know exactly how much money is gonna come in, right? So there's either one of two things. You either don't invest enough and then the competition runs away, or you bet, and, uh, invest a huge amount, and you can't be precise, okay?

**[0:09:48] Ray Dalio:** And so when that dynamic happens, it's a problem. So, yes, you said it very well, so I'm gonna repeat one other thing to emphasize. What's quite common now is, um, you can issue stock for, uh, let's say you raise $50 million, and you value the company at $1 billion. Only $50 million was actually spent on that company. But now, if you raise that, you're a billionaire, okay, because the accounting value of that, what do you own?

**[0:10:21] Ray Dalio:** You own stock that is valued at $1 billion. Nobody paid $1 billion or whatever it is, right? And now you own that stock, but that stock, um, you can't spend, cause you can't spend wealth. In order to spend it, you have to sell some of that stock to get money, right? And quite often, there's an interest rate rise because that, you know, let's say if there's a fever and there's an inflation, then the central bank wants to try to put the brakes on that a bit, okay?

**[0:10:52] Ray Dalio:** What does that mean? It means people who have debt, in a sense, have to come up with more money cause when you own the debt, hold the debt, you have to come up with money to pay the debt. So it just And that dynamic compounds. works between us, we've said it, uh, clearly, I think we understand the dynamic. So they they have to exist. Now we have another problem that's existing, okay? So we're talking about the bubble, okay?

**[0:11:15] Ray Dalio:** But we also have some other things that are going on that happen around the same time, a big gap between the rich and the poor, and which also means the left and the right, the politics of it, right? Just as we have now. When you have the downturn, um, then you have people at each other's throats. So if we take politics, what you see is this that they don't have enough money, that the governments don't have enough money.

**[0:11:40] Ray Dalio:** We have big budget deficits. Okay, where do you get the money from in order to pay those bills? The UK has had, I think, 6 out of the last 7 years, there's been a new prime minister. And because there's not enough money for the government and so what you start to see is people come in with their claims, but there's this how do we get the money? And then people run who have money, they say, I don't want to be in this uh, tax zone that's gonna be, and then they leave.

**[0:12:06] Ray Dalio:** And so there's a domestic political problem that is not people compromising the same way they used to compromise, right? So now you have the politics, which compounds this, and and then you have a world. This is what I call the big cycle. You have a world in which also the geopolitics changes, my geopolitics, I mean, country to country, okay? There's a system under normal circumstances, when there's a more dominant power, they impose their order, and that becomes more peaceful.

**[0:12:39] Ray Dalio:** But when you have, um, uh, arguments of how things should go, those arguments start to turn into conflicts, right? And so those things tend to happen together. That's why I refer to that as the big cycle, that dynamic now, that a is the confluence of the money, the internal conflict politically, and the external conflict, which is what we're going through. And and the problem is, I think, that people don't know the cycle. So every day we go to our sources of information, and you see this latest news, but they don't connect the dots in in understanding that cycle.

**[0:13:21] Steven Bartlett:** closing off on this point of the bubbles, what is it that makes bubbles pop? So if we are in an AI bubble at the moment and it is gonna pop at some point, what is the like? They call it a black swan event.

**[0:13:30] Ray Dalio:** There are a few of them. There are bubbles, and then the things that prick the bubbles, okay? The things that prick the bubbles, typically in the beginning, are something that means that I have to sell some wealth to get money, and that's usually a rise in interest rates. It could be something like wealth taxes, something that means I, uh, very wealthy, but typically the tightness of money. Because during that spot, there's inflation pressures, and central banks decide that they want to tighten monetary policy and so on.

**[0:14:02] Ray Dalio:** It becomes that the, um, amount of money that I can get by owning that debt at the higher interest rates is greater than the amount of money I could get on my equity investments. That's part of it. Also, what you see is a lot more production of stock, and what I mean by that issuance of stock, think of the the supply and the demand. There's there's demand, right? And we've been talking about the demand that makes stocks go up, you know, uh, how we create this wealth, but there's also, um, supply.

**[0:14:35] Ray Dalio:** So you can issue stock, it's very issue. There there's almost nothing that's easier to produce than stock.

**[0:14:41] Steven Bartlett:** So if I own a company, I can just, uh, print more equity.

**[0:14:45] Ray Dalio:** Yes, today, you could probably go out and say, I'm gonna make a company and I'm gonna take it, uh, public. And you go to your audience and your crowd, and you can say, I'm gonna make stock, okay? So it becomes when there's a when there's a market that wants stock, there's a production of stock, And is that okay, and that supply of stock, together with the other that I'm mentioning, the the need for getting money and so on, um, causes the, um, the the bubble to pop.

**[0:15:15] Steven Bartlett:** are you seeing signs that we're in a bubble

**[0:15:17] Ray Dalio:** Yeah, yeah, yeah, the classic signs that we're in a and the bubble, I should emphasize, it's not a, um, you're in a bubble or you're not in a bubble, it's a degree thing, okay? There is also that it's in weak hands. I can look at now who is in these companies, right? And is it in strong hands or weak hands? Classic strong hands is that when weak investors, not knowledgeable investors, then put a lot of money into it, particularly if that's in a leveraged way, and uh,

**[0:15:48] Steven Bartlett:** a way with debt?

**[0:15:50] Ray Dalio:** with debt. Or they can buy an op- a a a leveraged version of, like, the like, there are ETFs now that are leveraged versions of the stock market, and they and so on. And so they get into that, it's more like they're crapshooting, okay? And then that's a sign of a bubble. So I me I've listed a few of those signs, um, those are the major signs of those bubbles. And so that when it goes down, then you get the fear, then you get the need I to raise cash, and you that dynam- dynamic works its way out in the form of then the reverse happening.

**[0:16:27] Ray Dalio:** In other words, everything becomes cheap and everybody has, um, the spending and the things you mentioned,

**[0:16:32] Steven Bartlett:** If we are in an AI bubble and it is gonna burst, you know, I had a friend of mine contact me and he said, Steven, I think we're in this, uh, an AI bubble, and he's running an AI company. So he's, he said to me, I'm gonna raise lots of money now so that when the the markets come down and investors are fearful, they don't wanna invest in companies. People stop spending as much, they start thinking about their subscriptions and start canceling subscriptions.

**[0:16:51] Steven Bartlett:** We're gonna be good, and we're gonna be able to buy up some of our competitors who are gonna be struggling. So he's just raised, um, hundreds and hundreds of millions of dollars for his AI company.

**[0:17:01] Ray Dalio:** right? And it's probably like that easy,

**[0:17:04] Steven Bartlett:** Yeah, it was easy now. The question here is like, what should at different levels? So, like, the the average Joe on the street, up to entrepreneurs that are running companies, how does how do they all prepare for an economic bubble that might burst?

**[0:17:16] Ray Dalio:** He's such a good example, and what that does, and j- just following it through on what we were saying a minute ago, is that increases the supply of AI stock.

**[0:17:24] Steven Bartlett:** Okay, yeah, cause you sold Uh, because stock for the he's gonna sell high valuation. more, Yeah,

**[0:17:28] Ray Dalio:** right? And so a as he and others do that, more this greater supply of stock comes in, and and so he wants to get ahead of it in that dynamic, and then, you know, that contributes to the bubble. But um, uh, how do they prepare?

**[0:17:45] Steven Bartlett:** how does the average person

**[0:17:45] Ray Dalio:** Well, look, I, I would also say something. The future is very unknown, and people should not be timing. Sophisticated investors have a real challenge even in timing a bubble. So on, uh, the important thing always is to diversify. Now we're gonna go back to money, the basics of money management. And I I, by the way, I personally have gone through the cycle cause I didn't have any money, and then I did, then I had a lot of money, and I remember, uh, the cycle very well.

**[0:18:18] Ray Dalio:** What happens is as you start off, um, I used to count how many months I would be okay, uh, a certain amount of money, how much mo- uh, I would be okay if no more money came in. If I lost my job or whatever I w- did, I'd mostly never I worked 2 years for somebody, but in other words, if money didn't come in and it would be months and then years and so on to build that security, cause I take care of my family and so on.

**[0:18:47] Ray Dalio:** And so what it um, as we're looking at these things, these are the choices that you have in order to be able to say, Do I buy my house or apartment? Do I put my money into cash? And what happens? A money is you have to put it into something because, um, they'll pay you interest on it, okay? So that's your cash deposit and so on, and people think that that's the safest. It's not, it's the worst investment over a long, long period of time because inflation will eat it away.

**[0:19:20] Steven Bartlett:** you mean putting it in a bank, just leaving That's it in a bank?

**[0:19:22] Ray Dalio:** right. I in whatever form, a money market, fund, a whatever it is, that is that short term of deposit, and it'll give me an interest rate. Okay, and that's what they think about is cash. You know, nobody leaves it literally in cash, because if it's literally in cash, it doesn't earn interest, so why shouldn't I put it there and get some interest on it? And so that's cash, and people think that that's the safest and has the lowest return, guaranteed, almost to have the worst return over the longer period of time.

**[0:19:52] Steven Bartlett:** people keep cash because it feels safer.

**[0:19:55] Ray Dalio:** That's right, and I'm saying it's not safer because of inflation.

**[0:20:00] Steven Bartlett:** Explain that to me in simple terms.

**[0:20:01] Ray Dalio:** Okay, well, if I got no interest rate, um, then what I would do is I'd lose to to the inflation rate. And what's the inflation And well, three and a half or 4%, um, uh, happens to be about where it is now.

**[0:20:15] Steven Bartlett:** a year? Yeah, a year, So that divide at least $3.50 a year that's right, if I just leave it in cash.

**[0:20:20] Ray Dalio:** that's right, okay. Now I'll get an interest rate on it if I put it someplace, and it'll give me maybe, uh, an interest rate that's somewhere in that vicinity similar to that. three, four, And, uh,

**[0:20:33] Steven Bartlett:** five, 4%.

**[0:20:33] Ray Dalio:** and then I have to pay taxes on it.

**[0:20:36] Steven Bartlett:** Oh, you have to pay taxes on the gain.

**[0:20:37] Ray Dalio:** You're, yeah, you d right.

**[0:20:39] Steven Bartlett:** Okay, fine.

**[0:20:39] Ray Dalio:** Even though you really didn't gain relative to inflation, you still have to pay the taxes on whatever you've earned or something. Anyway, over the long term, it's a lousy return. Because also think about returns also come from productivity, and over a period of time, people learn how to do things better and so on. So then you can invest in, let's call this stocks, okay? That we'll call that the stock market, this is cash, and then you think on the stocks, and then the stocks can go up or down.

**[0:21:09] Ray Dalio:** Um, and then they have this dynamic that we're talking about that creates these big cycles and the busts, and those cycles, when they go down, um, go down, um, 60 70%, okay, that that's what a bear market looks like. Whoo, what a what a dive, okay? This is gold, I, that's gold, and they these are bonds, and this is your house, and that's, uh, Bitcoin, okay? So these are the choices they each, um, change for certain reasons.

**[0:21:45] Ray Dalio:** I'll digress into that in a minute, but what happens is they go like this. When gold goes up, uh, tends to be that the bonds will go down, uh, b- in value, or your house, and these change in a certain way. And so the best thing to do is to have a di- diversified portfolio of that. When you have that, rather than any one, you, uh, won't reduce your return, but you will reduce your risk,

**[0:22:13] Steven Bartlett:** And diversified means having a little bit of each.

**[0:22:15] Ray Dalio:** right? A certain amount, and you have to know how to balance them because of their volatility. This one stocks is more, uh, volatile than this one, and my own recommendations are you start, first of all, with what you need. Should I, uh, buy a place, or should I use that money? And I could travel more and so on. One of the advantages of the house, the apartment, and whatever is it's your environment. Your environment is important.

**[0:22:46] Ray Dalio:** It produces forced savings, sometimes that forced savings is good. It is, uh, it typically is taxed better, it's a b- it's a better vehicle for tax over a period of time. But I'm not arguing for this alone, but I'm saying when I'm looking at this, then I think this one gold is, um, very interesting because when all of these tend to do badly, this tends to do well. Okay, so it's a very effective diversifying because this was money, not until, um, 1971, and it's still the second largest reserve currency, central banks hold reserve currencies.

**[0:23:27] Ray Dalio:** So it has qualities that are different from this, and this has qualities like when the value of money goes down because of inflation, this Bonds, and okay,

**[0:23:39] Steven Bartlett:** bonds are basically lending the government money.

**[0:23:41] Ray Dalio:** that that's right. If you lend the money at a certain interest rate and then inflation and interest rates rise, you're kinda locked into that interest rate, and so it has its own problems. The more important thing, I would say, is, you know, you save up, and you say, How many years can I live if money doesn't come in? Okay? And then you take that and you say, How could I be secure? So I don't want to put it into one thing that can go down 70%, so how do I diversify that?

**[0:24:16] Ray Dalio:** That's my main headline.

**[0:24:18] Steven Bartlett:** A lot of people, i in the comments of our last episode, um, they were asking this, like, how does this apply for someone who doesn't have much money, maybe doesn't have any assets? Say they're 30 years old, they, um, have, I don't know, $100 disposable income, and they're thinking about how to sort of secure their future. What is the advice for someone in that situation?

**[0:24:40] Ray Dalio:** Your only asset is yourself, and I guess what you're gonna get from the government. How do you sell yourself at at getting a better income, or how much how are you getting money from the government? You selling yourself is the main thing. This is one of the big problems now with artificial intelligence and other machines, uh, replacing people and and different types of jobs, it becomes more difficult. It produces that big wealth gap while you're having more productivity.

**[0:25:11] Ray Dalio:** Everybody wants more productivity because it means how do you produce things more efficiently? But that's, um, contributes to the income gap because your productivity equals your income for a large extent, and then you have the, you know, the political dynamic. It's tough to get yourself out of this position that you mentioned. You know, I'm imagining that person, okay, it's not easy. There is this giant polarity. If you're in the top 10% of talent, let's say the world's your oyster.

**[0:25:44] Ray Dalio:** But nowadays, in order to be there, okay, that's that's difficult. Find something that, uh, gives you the ability to sell your time for good money. Is that gonna be that you're driving an Uber? Is that gonna be that you have the talent and you're being gonna be able to understand AI and contribute that understanding to a company that values that, or what is your skill? You found this, okay, and and you found the way, okay, but you need money, uh, okay, and the the thing that you wanna do, what you're doing, and I'm lucky enough to do, is to make your work and your passion the same thing, and don't forget about the money part.

**[0:26:27] Steven Bartlett:** hm, yeah, I I am. I. One of the things that I I think I didn't realize earlier in my career is that whatever skills you have will be valued differently in different contexts or industries, should I say. So, for example, say that my skill here and I'm not trying to flatter myself, but say my s skill here

**[0:26:45] Ray Dalio:** Is working.

**[0:26:45] Steven Bartlett:** is having conversations, right? Let's say that's what it is. There's lots of places I could have conversations, and those places would value my ability to have conversations wildly differently per hour. So I of often think this and speak to my friends about this. When they they tell me their skills, I say, let's look at the different industries and how they would value the skills you currently have differently. A good example again, you know, you could be an Uber driver or you could chauffeur Ray Dalio.

**[0:27:14] Steven Bartlett:** Now I imagine those 2 things pay wildly differently, but the same skill of driving a car, broadly speaking.

**[0:27:21] Ray Dalio:** I agree with all that.

**[0:27:22] Steven Bartlett:** And so I think that's one way to just, you know, uh, the other way is you go ask your current boss for a promotion. But again, they're gonna value you in the context of their other employees, the market in that industry, et cetera. So it's you might get 10%, but you're not gonna see a step change necessarily. So that's something that I always say to people is

**[0:27:39] Ray Dalio:** right. And another, uh, law of something, and I think it's, uh, almost a law of everything, it's a law of you, um, buy almost anything. Is those at the top, whatever the thing you're buying, if you're buying a painting, a piece of furniture, a piece of clothing, a t a a person's time, or whatever, command premiums that are many multiples of the average. It's almost like if you could invest 10% more of your time, your effort, your skill to go up, okay, you will get twice as much for 10% better, something like that.

**[0:28:25] Ray Dalio:** Okay? So that's part of the formula of life and a formula of employment, and it's so if I think if you keep what you brought up and what I'm bringing up in mind, that helps you position yourself and know what to do.

**[0:28:37] Steven Bartlett:** hm. There should be a button just down below here, and if it says Subscribed, you're already subscribed. If it says Subscribe bar, that means you're not yet. And if you're not subscribed, please could you do us a favor and hit that button? It helps the show more than you know, and according to the algorithm, you're someone that watches our show, but you haven't yet hit that button. Thank you so much. We didn't mention this thing here, actually, so I probably should talk about it cause people are talking about it a lot right now, which is, uh, Bitcoin.

**[0:29:02] Steven Bartlett:** Or Bitcoin. What's your perspective on Bitcoin? I know the market in Bitcoin is down at the moment.

**[0:29:08] Ray Dalio:** I have about 1% of my portfolio in Bitcoin because there's different kinds of money that and the money that you can't print, that's one kind. This is the other kind of money that you can't print. Gold. Yeah, you cannot crack it with technology. You can hold it, you own it. It's there's a saying that it's the only, um, financial asset that is not somebody else's liability. Somebody has to give you something for it. It it has that.

**[0:29:39] Ray Dalio:** So in my category of wanting, let's say, make sure that I have some hard money, which for most people should be between 5 and 15% of their portfolio. I prefer that. I'm pointing to, uh, the gold bars here, uh, rather than, um, the Bitcoin.

**[0:29:58] Steven Bartlett:** I is it still, in your view, a a gold-like asset?

**[0:30:03] Ray Dalio:** Yes, it's it's a type of money that can't be printed, but there are technologies that can, um, hurt it. In other words, if there's quantum computing, and it can be monitored by, uh, governments and so on, it could be taxed, and digital currencies are somewhat similar.

**[0:30:25] Steven Bartlett:** But you don't like Bitcoin as much as gold because of privacy reasons as well.

**[0:30:29] Ray Dalio:** And when the governments say I don't want it, they have the power, therefore, to do whatever they want with it. And central banks will not own any significant amount of that because of the reason I said they they want their transactions to be private and in their control. Think about how different it would be for Russia. Okay, they confiscated these kind of other assets, um, they didn't get these. Gold. Okay, gold. And so, um, what you're seeing, even, particularly in this time of conflict, is, um, that there's a sense that if I'm holding this, others won't get it.

**[0:31:10] Steven Bartlett:** You mentioned a second ago the impact that you think AI is gonna have on the economy broadly, but also again to real people's lives. There's lots of debate. I mean, there's been a debate over the last 10, 10, 10 years or so within the world of AI. You had the big AI CEOs originally saying that AI would cause job disruption, and that, you know, you've even had some of the CEOs more recently saying work will become optional in a world of superintelligence.

**[0:31:34] Steven Bartlett:** At the same time, we have robotics coming over the horizon. So you've got this sort of convergence of intelligence, and then I don't know, you could think of it like muscles, like physical muscles or ability at the same time. Um, we're seeing AI accelerate in its capabilities. What does this mean for the average person and their job, and who's gonna benefit from this AI revolution, in your point of view?

**[0:31:56] Ray Dalio:** it means that you will either be cutting edge and capable and among that top fraction of a percent down to 10% of the population who is, um, cutting edge and using it and accelerating. Or, uh, you will, if you're in a thinking job, uh, be at risk of being, uh, replaced. We're coming into a world where we can automate everything. The evolution of man was we had the agricultural era and there was no real inventiveness, and then man invented the machine, and that the machine did is it replaced man's physical necessity.

**[0:32:45] Ray Dalio:** So men used to be like oxen in the agricultural field and so on, and they were replaced by tractors, and then there was we entered the industrial age. First, you had the printing press that allowed people to learn, and then you had these inventions, the industrial revolution, the first industrial revolution, and what you had is the e- m replacing the physical that that man would do in factories then and so on. And so the way I look at it is I look at the human body, and I see like, it's replacing the body, and so on, and it's coming up, uh, higher and higher, and then it replaces some aspects of the mind that you can computerize, and it's coming

**[0:33:34] Ray Dalio:** up and up, and it's replacing higher and higher levels of thinking and reasoning. Okay, so that path is part of the evolutionary path that is happening, okay? So then you start to say, What do I have to offer? And so, in answer to who benefits from it, those who benefit from it are those who are, um, the capitalists with the ideas that replace, uh, the workers. And so if you look at there's revenue for businesses when you buy something in a store, there's revenue, okay?

**[0:34:14] Ray Dalio:** And if you look at the share that is going to workers, you see that share going down. And if you look at the share that's going to those who own that business, that share is going up. That's, you know, how do they share that revenue in terms of the cost? And you see that that's rising. And so, um, this is an evolutionary process, and it's true that what happens is you get more, uh, free time, okay?

**[0:34:42] Ray Dalio:** So now the so society has to think, how do I deal with this? So, for example, the workweek, which used to be, you know, a 60 or 70 hour workweek, goes down to less than a 40 hour workweek, and there's more time. But there needs to be, uh, you know, how do you create a bottom? And so we're going through this phase in which there is this upper end that is making incredible amounts of wealth, as we describe, and then this lower end that is, um, then having these challenges.

**[0:35:17] Ray Dalio:** We've have a relatively good economy, and the, um, difficulty of college graduates to, uh, get employment has increased significantly. And I can tell you that in in many businesses, it becomes more of a pain in the neck to have a college graduate. Uh, let's say do it. They you have to train them, you have to, and and many of those tasks, many of that thing can be done, uh, very quickly with the AI and with computerization, and as you get into robotics,

**[0:35:48] Steven Bartlett:** As a founder building a business when I was in my early 20s, I think I always had a deep sense of imposter syndrome because there was something that I wasn't good at, and that thing was finances. Finance and understanding your financial position as a small business is the great enabler of all of your dreams. I was running from it until I discovered a platform called Zero. Zero is an accounting and financial management platform specifically for small businesses, and it brings accounting, payments, payroll, and analytics all into one place, even for people that don't love doing finances.

**[0:36:19] Steven Bartlett:** Zero wants to do the financial work for you, but its core ambition is to go beyond keeping the financial record because Zero wants to help you understand what's happening in your business and increasingly, and this is maybe the most important thing, is help you make decisions. Finally, we have a partner who can enable us in a simple way for those people that are both left brain or right brain and enable our dreams. You can learn more about Zero by going to zero dot com.

**[0:36:45] Steven Bartlett:** Thank you to Zero, thank you for sponsoring this podcast, but also thank you for helping me to scale my business. As somebody that, quite frankly, has never loved finances that much,

**[0:36:53] Ray Dalio:** you're gonna have that hap- happen, right?

**[0:36:57] Steven Bartlett:** the speed of the disruption that we're seeing because of the amount of capital that's flowing into these AI frontier models like the CL- Anthropics and OpenAI, et cetera, et cetera, is is quite different from anything else, sort of the historical precedents, as we've seen through the Industrial Revolution, where it took time to build the tractors. And

**[0:37:13] Ray Dalio:** There's an element of speed. What happens usually is the bubble bursts, and now you have the cyclical dynamic of that. While the technology, you know, evolves, but the the supply, demand, and the debt problem that we just talked about then come in. And so unemployment is due to, y- typically, um, some sort of a combination of a financial crisis that, like we talked about, the debt, and stocks going down, and people not having collateral, and then therefore not buying, uh, assets, and that dynamic that causes the unemployment rate.

**[0:37:51] Ray Dalio:** That factor,

**[0:37:52] Steven Bartlett:** that's the sort of economic reasons. But in terms of the AI agents, robotics being able to replace you, I sat with Dara from Uber, and Dara said that he imagines in the future, the 9 million riders that they have around the world doing deliveries will be replaced by autonomous vehicles, autonomous robots. Those 9 million drivers careers that you have will be out of work. C- conceivably, in the, you know, talking about being honest about the situation, Yeah, I think a again, it goes to physical AI as well, right?

**[0:38:22] Steven Bartlett:** So I think 20 years from now, you can imagine that those 9 million will be 20 million, uh, AVs, maybe. But we have time between now and then, partially because we don't operate in the virtual world, right? We operate in the physical world. You have to get the regulations up, you have to build the cars, you have to build the sensor stacks, the the models have to get there. So there is time between now and then, but you can imagine the majority of our trips being fulfilled by robots of some kind.

**[0:38:54] Ray Dalio:** the unemployment rate gets very influenced by the bubble bursting and the economy going down. You see that spike, you certainly have the evolutionary change that you're referring to,

**[0:39:09] Steven Bartlett:** Okay, so it's both.

**[0:39:10] Ray Dalio:** okay? In other words, there's this evolutionary thing in which they, uh, like, he says, um, you know, the tractor replaces the labor, or the assembly line worker as technology is replaced. And that is an evolutionary thing that goes continuously for, you know, many years, and in the way that you're describing, because you asked about the unemployment rate, I just want to emphasize that the unemployment rate is very heavily affected by that bubble bursting.

**[0:39:40] Steven Bartlett:** So, okay, you've got 2 forces at once. Then you've got, uh, when the bubble bursts, everybody, as we said, needs cash, so they start cutting their costs. So that's when they start laying people off, and they start looking around their company and go, forget growth, we just need to survive. So we're gonna lay off that team and that team and that team. And then you see unemployment going up, and then you've got this sort of underlying shift happening at the same time, which is workers are replacing their team members with AI agents or robotics, or in the factories, they're now using robots to do factory work, et cetera.

**[0:40:13] Steven Bartlett:** And that's the sort of current slow march forward.

**[0:40:15] Ray Dalio:** uh, right, so I have this chart, okay? What this represents, this line is the, um, evolution of technologies. In other words, we have greater and greater learning and doing things better, and that's the evolution that we're talking about. That also machines replace people or replace their tags over that period of time. Then you have this big cycle, which is typically lasts for about a lifetime, on average, about 80 years. Uh, we went through that, uh, the last time, 1945.

**[0:40:52] Ray Dalio:** There are orders, there's a monetary order, there's a domestic political order, there's a geopolitical order. Okay, you have the bubble bursting, okay, you have this, this is what we're talking about, um, that dive. And then when you go through that, you break down these orders, and when they break down, then, um, you would get rid of the debt burden. So you get rid of the monetary system as you're used to it. You, um, may get rid of the domestic order.

**[0:41:24] Ray Dalio:** M many countries' orders, their systems end. I mean, they all end at some point, and so they can break down quite often in a time of great internal conflict. Does the system last? And that happens at that time, and so that's that big breakdown. But still, what you're talking about is and and I and I agree with you. This keeps going up, okay, because learning you don't unlearn what you've learned. So as this, uh, goes up, and and you're, uh, uh, you you still keep this thing going up, okay?

**[0:41:59] Ray Dalio:** But you have the big cycle, the debt, the conflict type of movement, and these little cycles are the cycles that we see in this roughly on average, let's call it an 80 year period. But, um, uh, you see the, um, you see the recession, and, h- oh, recession has higher unemployment and so on. Then they stimulate monetary policy, they make money looser, then the economy goes up, and you have prosperity. Then you go into a bubble, okay, that, and you run lower on capacity, cause you're using up the capacity, inflation rises, they tighten monetary policy, and then you have the re the recession that follows.

**[0:42:45] Ray Dalio:** So these movements from one recession to the next recession, that cycle that I've just described, on average, has lasted about 6 years, uh, uh, give or take about 3. So that's the way it looks.

**[0:43:01] Steven Bartlett:** So I'll play this back to you to make sure I understand it. There is a sort of bigger macro bubble, which is over 80 years, which is the changing of the world order,

**[0:43:11] Ray Dalio:** Yep, you get deeper and deeper and deeper in debt over a lifetime. To to, let's say, your debt capacity, you have a certain amount. So the government's debt capacity, for example, it can borrow. When you wipe it out here, then you can build it up and build it up until it starts to squeeze, debt service starts to squeeze out.

**[0:43:31] Steven Bartlett:** and that's a changing of the world order.

**[0:43:32] Ray Dalio:** That is one of the ingredients, right? So, okay, we have too much debt. At the same time, what you're building up is you're building up great wealth gaps. Because capitalism and I love capitalism, but it it's it here's the reality. It creates big differences in income and wealth, and when it does that, that also creates differences in people's opportunities. Because the rich people can educate their children well, and they can give them all the benefits. I mean, education is a big benefit, and that's why there should be broad-based, excellent education.

**[0:44:10] Ray Dalio:** But all of that happens, and so you see wealth gaps build up. So, like, the industrial revolution leads into the Gilded Age, okay, the Gilded Age looks a lot like now, you know, people buying expensive things and looking very gilded, and then it le- leads to the robber barons. And the robber barons are people who are considered, you know, the, uh, um, that they're, uh, taking advantage, the billionaire class, and it becomes that cycle. So that's the way it works.

**[0:44:43] Steven Bartlett:** So you've got this 80 year sort of, you know, boom, and then there's a collapse, which sort of ends in conflict, uh, and a changing of the new world order. And then within there, you have these little, um, bubbles, which are really economic bubbles that go up and down. Recession, people get very excited, they they they contract, they get excited, they contract. And then you have the the straight line here, which is the sort of m technica- technological improvement, uh, across the spectrum of ideas and technologies and all these things,

**[0:45:11] Ray Dalio:** And it keeps going.

**[0:45:12] Steven Bartlett:** and it keeps going regardless of this boom and bust. Because, as you say, people never forget. Um, I so a couple of questions on this, then. I don't even know which one to dive into first, but let's go for, I guess, just closing off on the last point that I was I was getting at is there's this narrative that there'll be new jobs created because of AI and robotics, and everyone will be fine. A lot of this narrative comes from Silicon Valley,

**[0:45:34] Ray Dalio:** Who is producing the technology that doesn't want to be attacked because they're, uh,

**[0:45:39] Steven Bartlett:** making a lot of money.

**[0:45:40] Ray Dalio:** they may have an ac-

**[0:45:41] Steven Bartlett:** Yeah, and they're in the covid

**[0:45:42] Ray Dalio:** But they have a desire age. Yeah, to have a certain perspective. And I think objective, um, people, uh, in Silicon Valley, and and there are a number of them, would say it's, uh, going to have a big employment, but you, you, you can see it, um, in the wealth, who owns stocks and who doesn't own stocks. Okay, now, if you own stocks, um, um, y- you're very happy now, okay? And if you don't own stocks, you're not getting that benefit of owning stocks.

**[0:46:13] Ray Dalio:** So that, in and of itself, creates a greater greater wealth, even aside from employment. Okay, so there are these forces to create the greater, uh, wealth gaps, right?

**[0:46:25] Steven Bartlett:** roughly, so 61% of US. adults own stock in some form, and most of them hold it indirectly through their retirement plan. Only 20% of Americans directly own individual stocks or shares through a brokerage account, while over half of Americans own stocks, ownership is heavily co- concentrated. The top 10% of households hold almost 90% of the stock. How do you feel about this narrative coming from predominantly Silicon Valley that there'll be new jobs created that we can't yet forecast and everyone will be fine?

**[0:46:58] Steven Bartlett:** They point to the Industrial Revolution. They say, Look, when the tractors came, we thought everyone was finished. When factories came, we thought everyone was finished, but look, we figured some other stuff out.

**[0:47:07] Ray Dalio:** Because if you look at that, this is this, um, thing I'm saying that as your body is more and more replaced with your mind, then you can do that. But when your mind is replaced and your body is replaced, uh, what is it that you have to sell?

**[0:47:26] Steven Bartlett:** What is it that we have to sell as humans once our body and our minds are replaced?

**[0:47:32] Ray Dalio:** What man has, um, is emotions and has, um, intuitions. There are certain things that artificial intelligence doesn't have. And so if you have to get down to what those things are, um, you know, does the, um, robot give a good massage? Does, uh, you know, what is it that is left? And so we will wrestle with what it is that is left, okay? But I think that for the foreseeable future, those who can work very well where they have an exceptional human intelligence and work in partnership with the artificial intelligence, that they are going to be at the cutting edge of all of this.

**[0:48:25] Steven Bartlett:** I've got 60 seconds, and I'm gonna show you how much I can get done because of our sponsor called WhisperFlow. And for those of you that don't know what it is, it's a business I invested in that turns your speech into text in any app or device. I'm gonna post into our Slack channel, which rewards whichever team member conducted the most experiments this week. Hi everyone, here is this week's experimenter of the week. Congratulations to the Diary Of A CEO trailer team, which is Ant Liv, Dom, and Cam.

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**[0:50:01] Steven Bartlett:** And I think in part, that's because she really cares about those cognitive benefits, as I do, as John Jones does, and as I think most of my listeners probably will. So if you haven't tried these yet, all you have to do is go to Ketone.com/Steven, and you'll also get 30% off your first subscription order. You'll get exclusive Ketone IQ merch, and, of course, cognitive benefits that might just change your life. So if you had, uh, kids that were 16 years old now, Ray, and they said, Dad, what what do you think?

**[0:50:28] Steven Bartlett:** Based on everything you know about the future, what should I be doing?

**[0:50:32] Ray Dalio:** First of all, there's the question of what, what, what matters most in your lifestyle? The, uh, uh, so I'm gonna get philosophical, not, uh, assuming that the highest income is the best. Okay, um, because happiness, uh, y- you want happiness and health. And so, in answering your question, there's very little correlation between the amount of money you have and the level of happiness that you have past a basic level. And so I could be answer your question first, which the obvious way is to say, to earn the most amount of money.

**[0:51:08] Ray Dalio:** And I want to start off in saying that, um, you know, my experiences and so on is, um, like, uh, I love being in nature, and it doesn't cost me hardly anything. I mean, it depends where your pull is, and so don't lose sight of your pull and what it's about. What you want to do is you want to get above the level that you, uh, don't have to panic. We just earlier discussed how many months can I live?

**[0:51:37] Ray Dalio:** And to be able to secure that and to be excited and have that passion, or that whatever it is, the life that I want to have. So I just want to emphasize, keep in mind of that. But then also, you know, my principle is make your work and your passion the same thing, and don't forget about the money part, right? So know your nature. Uh, um, this is what I tell my grandkids, okay? Yeah, you have a field, and you also have a nature.

**[0:52:07] Ray Dalio:** It's not just your preferences. People think differently. Some are, uh, more adventurous, some are less adventurous, some are more conceptual or artistic and can think with imagination, and they love doing that. Some people don't like that. Some people want to they may life should be more concrete and more certain and so on. That's your nature. You're partially you're a lot born with that nature, and you also d learn it in your earlier years. We know this of h- how neuroplasticity works and so on.

**[0:52:42] Ray Dalio:** So we are all on a journey to, um, find the match between our nature and our path, and you find, though, that path. But you can't forget about this money part So, on that when you're pursuing that path.

**[0:52:57] Steven Bartlett:** point, don't forget about the money. So if your, you know, grandkids came to you and they said, Uh, I wanna become a lawyer, would you say, Listen, that's forgetting about the money, because I think AI might take that job? Or would you say, yes, would you? If they said, I wanna be

**[0:53:11] Ray Dalio:** I think you, uh, uh,

**[0:53:12] Steven Bartlett:** I wanna do a thinking job?

**[0:53:13] Ray Dalio:** let me say that. History has shown that it's not the most intelligent people or the most intelligent species that are the most successful, and it's not no necessarily those that work the hardest, although these things are very important. It is the those who, uh, species and and people who are also most adaptable. And and so there's gonna be great change in your lifetime, okay? And so, yes, today it's artificial intelligence, but if you went back, um, not long ago, we didn't even know artificial intelligence would exist the way that artificial intelligence today exists, and the future will be like that.

**[0:54:02] Ray Dalio:** So when you're nailing it down, you know, it used to be make sure that, uh, you know how to, um, code. And then C- Claude Code comes along, and all of those who are coding, um, are worried about their jobs. Okay, so what is it that matters? Okay, it is, um, it is the approach to life in a sense that produces that, um, you know, the the general understanding and also the adaptability. I think a lot has to do with knowing yourself.

**[0:54:34] Ray Dalio:** That's why in Building Bridgewater, uh, the personalities of the person were very important in what suited their jobs. And then I, uh, built this, um, a a personality profile test. Then I made it online for anybody to go take. It's about 30 minutes, it's free online. It's called Principles You. That'll tell you a lot about your nature, okay? But your goal is to find that nature and what it what are the paths, and there are several paths, and they're constantly changing to find that nature.

**[0:55:08] Ray Dalio:** Okay, you experiment, you learn, okay, but, y- you know, you probably, uh, were pulled into this job by your nature, right? And so and you and you made it work, and here it is, it works in all of those dimensions, and it's like that for everybody.

**[0:55:25] Steven Bartlett:** Yeah, I it's it's, uh, it's interesting cause you look forward to the future, and I I I think if I was a young person at this stage and I was trying to set out where to aim my career, I would be more confused now than ever before, especially cause they're also contending with this, uh, unemployability crisis amongst entry levels.

**[0:55:40] Ray Dalio:** but if you're talking about, you'd be confused because you can't anticipate the future. That's right. That's just the way it is, right? And and if you say, what is it that I need, given that reality? Okay, I need to I need to learn. I need to know how to maximize the use of tools like AI to be able to in increase what I know and how do I use that to the best of my ability to be as useful as possible doing things that fulfill me.

**[0:56:19] Ray Dalio:** Okay, so that's what you need to do. You're asking what you need to do. Uh, just get over the fact that you don't know what the future is gonna be like. So if you're looking for an answer, is it gonna be a computer programmer, is it gonna be this or that? No, just be maximize, uh, your ability to know, which is so easy to do nowadays, right? So maximize that and then maxim- use that to maximize your usefulness and and jobs that make you happy, and that's the thing that that's the best I can give you in terms of more my s sixteen-year-old.

**[0:56:56] Ray Dalio:** That's the best I I can give them because I I don't wanna mislead them that it's the thing, that it's the particular job. Okay, that'll mislead them.

**[0:57:07] Steven Bartlett:** You talked about this eighty-year cycle, which results in this new world order, and it sounded like you were saying that near the end of the cycle, you see wealth inequality, and you see the Gilded Age where some people have lots of nice things and other people at the other end are struggling, and this is a function of capitalism.

**[0:57:25] Ray Dalio:** First of all, um, it's a reality that it's not only just a, um, a w- a a wealth gap difference, and if the majority system is not working for the majority well, you're gonna have a problem. And yes, it is, um, it's contributed to these things where one wants to create more opportunity through education and through other basics, that there's a certain level at a floor that nobody should go underneath because it's bad for them and it's bad for the society, and just to embellish on that point, my wife and I live in Connecticut.

**[0:58:11] Ray Dalio:** It's the on a per capita income basis, I think it's the second richest state, but 22% of the high school students have either dropped out of high school or are failing with absentee rates of greater than 25%. And as a result, a lot of it is gangs, shootings, drugs, and so on that leads to a lot of incarcerations, and the bill for incarcerations has become, uh, larger than the education budget. When you have that kind of cycle and so on, the system has to work for most of the people, and and so on.

**[0:58:50] Ray Dalio:** So you, um, you, you have that, um, dynamic, but it all comes down to productivity. And so, um, the way I look at it is the government run by almost anybody can't make these things run well. I mean, governments do not make things run well. So what is it like to give them the money and expect that they're gonna make things work well? And so you look at this set of circumstances and you say, who is gonna make it work well?

**[0:59:19] Ray Dalio:** And and I don't know the answer, and there's a budget considerations and so on. You have to prioritize the things that make it work well, and and you know what that is? That is, uh, educating people to be productive and civil. We don't talk enough about civility, you know, how you work together to be able to achieve a p- a a productive result. And the way these cycles go, it's more likely that they're gonna have a big fight, and we're gonna have, you know, a debt problem and those kinds of things, than w- how we're going to come together and work out how to achieve this environment which takes care of wonderful education and productivity of people and all of

**[1:00:01] Ray Dalio:** that to make the society work better, uh, for most people. And that's the way it looks, and that's what's happened.

**[1:00:10] Steven Bartlett:** Capitalism leads to inequality, it seems. Yeah, that So

**[1:00:14] Ray Dalio:** doesn't have to. There are some societies, um, like i in Singapore, some of the Scandinavian countries, some some societies, there is a a a floor that everybody a a can have, um, good education, adequate housing, and adequate healthcare, the foundations, okay? Because if you go below those levels, uh, the society will pay terribly for it because those people will become liabilities, not assets of the society. They'll be disruptive.

**[1:00:53] Steven Bartlett:** so what about wealth taxes? Cause this is the big debate now. The, uh, the big debate in the UK at the moment is tax the rich. It's been all over our news over the last couple of weeks. The big debate in New York and LA is wealth taxes and tax the rich. Good idea, bad idea?

**[1:01:06] Ray Dalio:** It's a very difficult i idea in the following ways. I'm just talking about the mechanics. They have to sell the wealth and and that contributes to get the money to pay the taxes. That's one of those things that can cause the bubble to burst, as we're talking about. And then, um, operationally, it's very difficult, unlike if they did it as, um, stepped up tax basis. In other words, um, right now, when you die, your capital gains gets put aside, and you don't have to pay capital gains taxes, you pay inheritance taxes.

**[1:01:45] Ray Dalio:** And there are ways that you can raise taxes and not hurt the economy. But we do have to realize that it will lessen investment because what wealth is mostly used for is to put it into investment. So you have to do this with a at the same time, the improvements in those that are going to improve productivity like education and so on. If you're just making transfer payments, wealth payments, and you undermine the productivity of the society by doing that.

**[1:02:20] Ray Dalio:** In other words, you're just giving it for consumption and so on, and the money's going from what was capital expenditures and those kinds of investments that make, uh, a better, more productive society to go to, in a sense, consumption and so on that doesn't produce that prod- productivity. That's gonna be a problem. So you have to think, how do you make people productive and how do you make your society productive for most people? Or you're going to have to find a way where you say that other group of people who is not productive, um, the overall society can have a higher level of productivity, but we're going to still establish this bottom that I'm talking about, the bottom in education,

**[1:03:08] Ray Dalio:** the bottom in conditions. And then you have to say, who is capable of doing it? Building a s uh, a society that will be productive?

**[1:03:18] Steven Bartlett:** And who is that?

**[1:03:19] Ray Dalio:** Well, y- as I say, you have this dynamic problem that, um, um, typically, a privately owned, capitalist-owned business will do better than their government counterpart.

**[1:03:35] Steven Bartlett:** Okay, so business is more productive typically than a government entity.

**[1:03:39] Ray Dalio:** That's s system. So entrepreneurship, you need Uh, yeah, entrepreneurship. and capitalists. In other words, people who are capable of making the thing they're responsible for productive. Okay, run efficiently, run efficiently. You know So you need those, uh, indisputably. And if you're doing that in government, you need that in government in order to be able to do it, and government has its own, eh, uh, it first of all, it doesn't attract many of those people, and then it also has, by its nature, knowing many people have gone into it, it it is almost dysfunctional as it, uh, causes all of this arguing and problem.

**[1:04:19] Ray Dalio:** So those who wanna be most productive tend not to go there, and also, um, it doesn't, uh, distribute well. These people do not n- they're not on the ground. They don't have the direct contact. They don't know what it's like. And as I'm describing, I see this politicians. who the, uh, yeah, the politician who says, I'm, uh, I'm going to, you know. So you still have to come back to the question, who's gonna make it run efficiently?

**[1:04:47] Steven Bartlett:** This is something that I've made for you. I've realized that the Diary Of A CEO audience are strivers, whether it's in business or health. We all have big goals that we want to accomplish. And one of the things I've learned is that when you aim at the big, big, big goal, it can feel incredibly psychologically uncomfortable because it's kinda like being stood at the foot of Mount Everest and looking upwards. The way to accomplish your goals is by breaking them down into tiny, small steps, and we call this in our team the 1%.

**[1:05:15] Steven Bartlett:** And actually, this philosophy is highly responsible for much of our success here. So, what we've done so that you at home can accomplish any big goal that you have is we've made these 1% diaries, and we released these last year, and they all sold out. So I asked my team over and over again to bring the diaries back, but also to introduce some new colors and to make some minor tweaks to the diary. So now we have a better range for you.

**[1:05:40] Steven Bartlett:** So, if you have a big goal in mind and you need a framework and a process and some motivation, then I highly recommend you get one of these diaries before they all sell out once again. And you can get yours at the diary dot com. And if you want the link, the link is in the description below. What is the UK currently a cautionary tale of?

**[1:05:59] Ray Dalio:** It's the classic cycle. They have gotten over indebted, underproductive, and they've run out of choices. In other words, there's not enough money, okay? And because there's not enough money, um, to to do all the things, then they've gotten this internal political conflict going. And you've had, uh, six out of the last seven years, you've had a a new pri- prime minister because somebody else comes in and they got their promise, and and the promise doesn't pan out, and it doesn't take long to be that that I don't believe your promise anymore.

**[1:06:44] Ray Dalio:** So you bring the people in, and then you throw them out. So

**[1:06:48] Steven Bartlett:** We we just had a prim- new prime minister yesterday.

**[1:06:50] Ray Dalio:** Yeah, I know, I'm I'm it's all part of this cycle. And so what happens is they don't have the financial, and the people move. It's just logical, right? It's just when you're heavily indebted and you're not as productive and you've got large wealth gaps, what are you gonna do? It's politics. Um, y- you're gonna say, I can't raise taxes because if I raise taxes, besides having great in conflict, um, people are gonna leave. Uh, okay, so I can't I can't cut benefits because those who are receiving whatever those benefits are are the ones that are suffering.

**[1:07:28] Ray Dalio:** I mean, what am I gonna do? Cut those benefits? So now, uh, okay, uh, but wait a second, I'm running a big deficit, or or I don't have enough money. So where does the money come from? How do I get out of not getting more in debt? And then what does that mean for the person who's lending to you? They don't wanna lend to you, right? So you're not gonna get the money to finance the deficits.

**[1:07:53] Ray Dalio:** It's mechanics.

**[1:07:54] Steven Bartlett:** So what is it they have to do to get out of that situation?

**[1:07:57] Ray Dalio:** They're gonna have to have a, you know, a major restructuring. You're gonna have to, um,

**[1:08:04] Steven Bartlett:** Go bankrupt.

**[1:08:05] Ray Dalio:** write down Yeah, well, well, the the way the central banks work now is they do a mixture of printing money, which produces inflation, and then restructuring the debt in some way, like maybe changing the maturity. Well, uh, and and in these cycles, uh, quite often, they put in capital controls because they think people are leaving, so they don't want them to leave and take their money with them. So they put in capital controls that says you can't leave with your money, okay?

**[1:08:38] Ray Dalio:** And they'll have exit taxes, and that's the type of thing that happens until, you know, there's a period of great turbulence, then you, um, through a combination of restructuring the debt, restructuring the debt means, like, quite often, you lengthen the maturity of the debt. I think what's needed is a strong middle

**[1:08:59] Steven Bartlett:** What does that mean?

**[1:09:00] Ray Dalio:** that right now, there's a left and right, and they're extreme. And as long as they're at war with each other, that's gonna make things worse. If you can find that middle course so that those, uh, most extreme, um, are more alienated than those who s say, you know, we're gonna have to figure this out together. And then what I would do that leadership, that core, I would have, um, something like a bipartisan commission in which smart people, meaning who understand how economics and these things work, of both parties work together to, uh, come up with a small a s and difficult plan.

**[1:09:49] Ray Dalio:** In other words, you're going to have to make difficult changes in order to make that, um, work well. But if you can achieve that, you know, like sometimes in history, great leaders of opposing sides have been able to come up with a plan. I mean, that's how the Constitution was made. You come up with a plan for operating that way, and then you impose those difficult changes. And that when I say this, I I say that that's very difficult and very long shot.

**[1:10:22] Ray Dalio:** But, um, unless you have bipartisan support, unless you do it in a way where the pain is shared, um, and there's a sense that there is a, um, we're doing the right thing, as well as not a sense, just a reality of doing the right thing, to make most people productive, that is the best path forward.

**[1:10:49] Steven Bartlett:** If you were a young entrepreneur, you know, t twenty-one years old, would you build a company in the UK now if you had a choice? And if not, why not? And if so, why?

**[1:11:02] Ray Dalio:** I would, uh, exist without and try to exist without borders.

**[1:11:06] Steven Bartlett:** What does that mean practically?

**[1:11:07] Ray Dalio:** Uh, in other words, put aside all of these things that we're talking about to a large extent and say, where are the places in the world that are that have the vibrancy, that have the capital, that have, uh, the elements that are needed? There are bright spots in the world, and I'd wanna be, uh, around the most intelligence, doing the most cutting-edge, terrific things and be global. In other words, don't be just stuck in a provincial place.

**[1:11:39] Ray Dalio:** Go to these places that are what I might call almost Renaissance states that are ha- good things are happening and these qualities exist that not only a good education, the civility, the vibrancy, be in those places, but be able not just in one. There's a Chinese ex- uh, s uh, not a Chinese Hong Kong expression. I think that a smart rabbit has three holes, and what it means is, like, if the one place that you go to, uh, it may not be the place that, um, remains the best place.

**[1:12:13] Ray Dalio:** They're riskier places. The riskier places are those that don't have the elements I mentioned, the education, the civility, the productivity, all of those things.

**[1:12:22] Steven Bartlett:** So, would you would one of those places for you be the United Kingdom? Cause me and my friends talk about this sometimes. You know, I've got I've invested in lots of companies there, and the founders come to me and ask me these kinds of questions, which is is based on everything that's going on with this turmoil and the big cycle, um, what's gonna happen if I continue to build my company here in the United I think Kingdom?

**[1:12:40] Ray Dalio:** that, um, I think the United Kingdom, as it goes through these difficulties, is as a whole a more difficult place. And then there are pockets of it that when they're operating are in their pockets, very stimulative, um, having, uh, those elements. Just like in the United States, there are places and pockets that have those, however, they're within a system and a place that is, um, not, um, not healthy.

**[1:13:14] Steven Bartlett:** The real dominant narrative we're seeing, as I said this week, is that, uh, because there's this problem, you said there's not enough money. The the most popular n- narrative, which I think is supported by about 70% of people, is that people over 10 million net worth, uh, this this is something proposed by one of my former guests, Gary Stevens, in he did a documentary last week, should have 2% wealth tax.

**[1:13:38] Ray Dalio:** My preferred way is to stop people from hoarding enormous amounts of wealth for enormous amounts of time. That's my that's basically my preferred method. There's also the wealth tax method. There's also capital gains as a method. There's a lot of different ways to. There's a lot of different ways to, but you have to deal with the problem of if you do not do not tax very wealthy individuals and very wealthy families, their share of the pie will obviously grow over time, and they will and they are, as we are watching, squeezing out ordinary families.

**[1:14:04] Steven Bartlett:** And this is kind of it would raise I think it was I think they said $20 billion or something like that, but it would raise some money. Um, so the the big debate in the country at the moment is, yeah, do we one way to raise money would be this wealth tax? Proponents of that, or I should say, um, people that are against that say people will leave.

**[1:14:21] Ray Dalio:** If you took all of the money of people in the in the top not, in other words, taxed at 100%, you're not gonna come up with enough money because it's a such a small percentage of the population and, uh, but and that but it in addition, yes, the people will leave. Then you change the laws so that you make them retroactive. In other in other words, you say the law means you're gonna be taxed as of a past date, so that if you leave, um, we're gonna get your money.

**[1:15:00] Ray Dalio:** Or then you put in capital controls. All of this has happened before. Wealth taxes would be new. Wealth taxes are administratively difficult because how do you value all this wealth that is not easily valued in such things? But yes, what you've just said is, um, well recognized.

**[1:15:19] Steven Bartlett:** You mentioned earlier that this big cycle takes place, this one here on the front of your book, The Changing World Order, happens roughly every every eighty years.

**[1:15:28] Ray Dalio:** Yes, it it's like health. What I mean is it varies on average, let's say, what is the l- life expectancy of a person? But life expectancies are how long people live vary. I wouldn't, uh, uh, emphasize too much, uh, the amount of time exactly as much as I would, uh, look at your condition.

**[1:15:53] Steven Bartlett:** Where are we in this, um, at the moment, w- in terms of the symptoms or markers of the next big Well, we're crisis?

**[1:16:00] Ray Dalio:** over in this vicinity over here, um, you know, uh, we're on the um, when we say that, um, the US, the UK, number of other countries are, um, later in that cycle, when there's the loss of the things that we've been talking about, uh, over indebtedness, more over indebtedness, the loss of power,

**[1:16:24] Steven Bartlett:** So we're in the collapse period of the yeah, the decline, decline.

**[1:16:27] Ray Dalio:** I'll call that the the decline.

**[1:16:29] Steven Bartlett:** And you've studied this for how long in terms Well, five of

**[1:16:32] Ray Dalio:** hundred years, uh, the cycles for 500 years, and in a number of countries, it's in that book. These are objective measures. This is not subjectivity. You can measure these things. You can measure the level of indebtedness, you can measure the, uh, education levels and the competitiveness. You can measure all these things in clearly measurable numbers that show the health, just, um, like a physical exam.

**[1:17:00] Steven Bartlett:** when there's a new world order because of this decline through history over the last 500 years, has there ever been two superpowers that emerge as the dominant superpowers, or is it just tends to be one?

**[1:17:11] Ray Dalio:** In the past, prior to World War I, there was no W- World War I happened, and then World War II happened because the world came together and there was one world, essentially. Before that, there were regions, and they would have the different powers, and you could have a powerful China or India could be very powerful at the same time as the UK or, uh, the Dutch and whatever would be powerful. And they weren't in that one world.

**[1:17:45] Ray Dalio:** And the basic issue is when you have one world and you have disagreements, you're always gonna have disagreements. How do you resolve those disagreements? War, okay? It, do maybe it's not physical war, maybe it's whatever it is, but there's a disagreement. Where does the border line? Where does this okay? The rules-based order is a theoretical, um, conception of the United States, uh, coming out of World War II because there's the idea of how do you govern, and you have representatives, and you have them in the United Nations, and so on.

**[1:18:25] Ray Dalio:** And that, you know, that's a nice theory, but the reality is when that comes in, is inconsistent with power, which wins, power or that rule-based system. So, by nature, to answer your question, it means tends to be a dominant power. We will see. China and I think the United States, I think, um, the most likely beneficial outcome is that it becomes more regional. Okay, China has no desire to occupy, control other countries for for various cultural reasons and things that I can go into.

**[1:19:06] Ray Dalio:** And and they their basic objective is to not be cut off, not be harmed, and then also be as good as they can be and and be competitive following their approach to a system, which is very much a top-down controlled system, that's an extension of Confucianism, which is like the family, and that's what they wanna do. You can possibly have this region thing, but you're not gonna have the dominant world power. If that's the case, you have some chance that there's a great conflict.

**[1:19:38] Ray Dalio:** But I think that, um, there's enough wisdom, in a sense, to, um, not wanna go there.

**[1:19:45] Steven Bartlett:** So there's always there's pretty much always been a superpower through different cycles, there's been one dominant power through these historical cycles. You're saying that you believe in the next decline, there won't be one dominant power, which has been the US for the last eighty odd years, there will be two, because you you can't foresee there being a conflict at the scale that would result in one dominant power.

**[1:20:08] Ray Dalio:** The strength of each country will be how they take care of themselves. Uh, are they going to be strong or are they going to be weak based on how they educate their population, how they spend their money, how they manage themselves? Those will determine the relative powers of those countries, right? And so that'll be true, certainly for the United States and China. And so as we go forward, how will those systems deal with those issues in the best possible way?

**[1:20:40] Ray Dalio:** And that I I would say, as long as the United States remains a power, but it's in it has a risk of, uh, of having a very bad set of circumstances through debt and conflict and these things that erode it. It'll be from within that those things, um, particularly, uh, could change that relative balance of power. And similarly, if China managed itself badly, it that could change that. Given that th- if they both remain powerful entities, then what you're going to see is, um, I believe, more the recognition that there are regions, okay?

**[1:21:21] Ray Dalio:** Just like there's there's the Americas, okay? And that becomes heavily much more the region and where that spills over. And then there's the region, um, around China, the, um, APA- uh, APAC countries, um, and though that region, and that there would be the development within those regions. And I do believe the avoidance of the big war, that would be very, uh, detrimental. There are issues like the Taiwan issue, but the Taiwan issue will be handled by, I in my opinion, most likely not militarily, in the sense that, um, there will be a great war between the United States and China over it, but in the pressures that are going to be created so that there is a reunification of China.

**[1:22:17] Steven Bartlett:** You mentioned conflict there, the United States are at war with Iran, and it seems to be a war that they can't seem to get out of. This is gonna have an impact, presumably, on a lot of things you've described here, but also the feelings of people at home. As, you know, we we face the prospect of the United States sending troops on the ground into Iran, because this the Strait of Hormuz is gonna become this ch- choke point to global energy, and they're gonna, you know, and what does Trump do about that?

**[1:22:42] Steven Bartlett:** He can't it's like Vietnam, he can't leave, or else he is gonna look bad. Um, he if he stays, he looks bad. Midterms coming up. What's your thoughts on this war in Iran? Do you think it was a bad idea? Do you think it was a good idea? Do you think it was do you think it's does it play a role in all of this stuff here, the US helping out?

**[1:23:01] Ray Dalio:** um, thi- this war in Iran, I think it here's what's happening. Internationally, I I I think it you have to speak to world leaders and and so on, and and particularly, uh, in Asia. There's, um, a recognition that, um, the United States, uh, doesn't want to, uh, fight a war. So the the litmus test is, uh, do you c- who controls the Strait of Hormuz? And that the United States, um, becau- the population in the United States is worried about, uh, gas prices and losing people, and s and they want it to be be all over fast that, uh, you can't fight a war that way.

**[1:23:48] Ray Dalio:** And so what you have is the United States will not show up in Asia.

**[1:23:54] Steven Bartlett:** What does that mean? Show up in Asia?

**[1:23:56] Ray Dalio:** In Asia, there are all these countries who believe that the United States was gonna play an important role as a counterbalancing influence for power in the region because China's the dominant power and the others are much less power, and so the United States being in there was going to balance those power, and because they have a military presence, the idea of having bases in their countries was believed to be that will help that happen. Okay, now there's a recognition that not only might they show up, but maybe these bases can become liabilities and that the, uh, Chinese have a lot of influence and power, eh, under that set of circumstances.

**[1:24:47] Ray Dalio:** For example, uh, chips come out of Taiwan. We could imagine what would happen if they blockaded chips leaving Taiwan. Okay, you'd see the world stock markets crash. You would see terrible, t terrible things. That represents a non-military power, just even the ability to threaten that. Say the Chinese say, for five days, we're not gonna have it. What will the United States literally do? Or if you go to, um, countries like, uh, the Philippines, which has a treaty with the United States, that's like a NATO treaty.

**[1:25:20] Ray Dalio:** Well, how would the American public react that we're going to send, um, military, you know, a a aircraft carriers and so on into the Philippines to stop the Filipinos f- from being picked on by the Chinese? I mean, so what you're seeing is a change that is very similar to the British Empire in terms of, um, uh uh, being, uh, weaker. I remember a time not long ago that, um, the United States would just have to almost hint to a country that we would like this thing it it to be this way, or you would like it to do that that, and they would do it because of the American power, not just military power, but economic power and so

**[1:26:06] Ray Dalio:** on. Well, as you're seeing that power being eroded, for example, China is a larger trading partner with most countries than, uh, the United States is, or capital turning up. So, uh, these things matter. So you're e- you're seeing that kind of a shift in power. I'm a global macro investor, and my goal is to be as accurate as I possibly can. I can't let biases stand in my way of doing that. So I look at statistics and measures and indicators and so on.

**[1:26:40] Ray Dalio:** So what I'm saying is clear. It is, y- you know, it's apparent. It's mechanics.

**[1:26:48] Steven Bartlett:** So what does that mean for the Iran situation then? Does it mean that Well, it it

**[1:26:51] Ray Dalio:** means that it's a very, very difficult situation. What what is, uh, all through history, and the Chinese know this very well because their way of mo- having a war is conveyed in the Art of War and also the tribute system, as they call it. You cannot easily go in and control a country for a long period of time occupying. There are, you know, 90 million Iranians, and they will be there, uh, no matter what happens. Now the question is, do you have what it takes to, um, take control of the Strait of Hormuz by way of example and allow in other words, do you allow that to be in the hands of the Iranians or do you not?

**[1:27:39] Ray Dalio:** And are you willing to pay the price to be able to, um, put yourself in the position, which means take a lot of pain and then, um, enforce that for the I don't know, forever and ever future, because it's not just take control today. It means, okay, how is that going to go on, and what does that mean in these other locations? Does the United States they're gonna do the same thing with the Chinese in Asia?

**[1:28:09] Ray Dalio:** They're gonna do the same thing all around? Probably. Okay, so what does that mean? Okay, a change in the world order.

**[1:28:17] Steven Bartlett:** it sounds like a big mistake?

**[1:28:19] Ray Dalio:** Oh, yeah, it it was a big mistake, and also what it did is it shown a light on the vulnerability. Before it didn't, it wasn't apparent. Vulnerability of The United States in being able to enforce, you know, when there's always the threat, we'll come in there, uh, the the Strait is open, we're not dealing this with this, and there's always the threat that the United States will, uh, remain control. And that would be true in Asia and other places.

**[1:28:54] Ray Dalio:** Now a light bulb goes off. In other words, the, uh, like the British and, uh, the the Suez Canal, we didn't realize. Now we realize

**[1:29:04] Steven Bartlett:** that threats no longer work?

**[1:29:06] Ray Dalio:** that that power no longer exists.

**[1:29:09] Steven Bartlett:** I guess we shall see. Ray, thank you so much for, uh, committing this season of your life to being more of a public educator. Because your books here that have been read by millions, millions, and millions of people, and the videos that you've produced that have been watched by tens and tens, hundreds of millions of people, um, have been so formative for so many of us, understanding the world in simplified ways. And what I love about the work that you do is you explain the world through principles versus tactics and strategies, which are a little bit more ephemeral than understanding the underlying principles.

**[1:29:37] Steven Bartlett:** And I think it does two things. It helps us understand the world in ways that are allow us to see past the current short-term moment that we're in, but it also helps us think generally, um, from a more macro perspective about how all these things connect together. And I think that's broadly applicable. The idea of, like, principled thinking is broadly applicable to all areas of life, whether it's your relationships or your business or your health or whatever it might be.

**[1:29:57] Steven Bartlett:** Um, you've writ really written the definitive books on this subject matter. I've got all of them here. Um, I mean, Principles is the first one that I ever read, but then I watched all of your your videos on your YouTube channel, which, uh, explain it in animated ways. Those are absolutely stunning videos, they're unbelievably stunning videos. And I it's funny cause, you know, I've watched a lot of videos, YouTube videos in my life, but there's some that I have just never forgotten.

**[1:30:19] Steven Bartlett:** And your book and your video are about the book on your YouTube channel, which I'll link to below, are a video on YouTube that I've just never forgotten. Cause it suddenly helped me understand the bigger picture in a way that I don't think I would've ever understood otherwise. There's no I didn't go to I didn't go to my history classes in school. Um, I'm never gonna read history books necessarily. So, um, that video you made, but also the book itself really helped me understand there's always a bigger picture.

**[1:30:45] Steven Bartlett:** And, funnily enough, I go looking for the bigger picture and the cycles, shall I say, in all other facets of life and psychology, because when you're dealing with humans, you are dealing with cycles. I that's what what I've I've come to realize. And you can find them and spot them everywhere and then prepare for them accordingly. So thank you for the wonderful work that you do in this regard. I'll link all of these books below. Highly recommend reading them.

**[1:31:04] Steven Bartlett:** And they're not for buffins or super smart people. They're for everybody, and, uh, they're written in such a way. So I appreciate that.

**[1:31:10] Ray Dalio:** thank you for saying that. I find the videos are very digestible. One, how the economic machine works, it's I think it's thirty minutes, and it's been watched by 140 million people, Crazy. and and people get it. So I think it's my responsibility to try to communicate also in a clear, simple, digestible way. So I like to take a a concept that's in a book and make it into a thirty which is to try to pass along what might be helpful to people.

**[1:31:41] Ray Dalio:** So thank you.

**[1:31:42] Steven Bartlett:** Thank you for committing your your the season of your life to that. I really appreciate it, and so do many millions of my listeners, so thank you.

**[1:32:11] Ad read:** This episode is sponsored by Asana.

**[1:32:13] Steven Bartlett:** Let me, uh, admit something to you. I'm a little bit messy. I have got ADHD, and sometimes I forget things. I'll put something in Google Drive, I'll put something on my desktop. It's all over the shop, and I can't imagine how much that is costing me as an entrepreneur or as a creative. I never thought of this as a project management problem. I just thought of it as a me problem. So let me give you a window into my fiancee Melanie and how she operates.

**[1:32:34] Steven Bartlett:** She's running a business, and she doesn't rely on remembering everything. She creates systems that means she doesn't have to. And one system she's made for her business is that when people attend her retreats and they get automated itineraries and they get packs sent to them automatically after the retreat, all thanks to Asana. So if you're someone who constantly feels like you need to be better, more organized, maybe ask yourself a different question. Is it actually you that needs to change, or is it the way that you're working?

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**[1:33:26] Steven Bartlett:** As a founder building a business when I was in my early twenties, I think I always had a deep sense of imposter syndrome because there was something that I wasn't good at, and that thing was finances. Finance and understanding your financial position as a small business is the great enabler of all of your dreams. I was running from it until I discovered a platform called Zero. Zero is an accounting and financial management platform specifically for small businesses, and it brings accounting, payments, payroll, and analytics all into one place, even for people that don't love doing finances.

**[1:33:57] Steven Bartlett:** Zero wants to do the financial work for you, but its core ambition is to go beyond keeping the financial record because Zero wants to help you understand what's happening in your business and increasingly, and this is maybe the most important thing, is help you make decisions. Finally, we have a partner who can enable us in a simple way for those people that are both left brain or right brain and enable our dreams. You can learn more about Zero by going to zero dot com.

**[1:34:23] Steven Bartlett:** Thank you to Zero. Thank you for sponsoring this podcast, but also thank you for helping me to scale my business as somebody that quite frankly has never loved finances that much.