Ray Dalio: How far are we from total collapse

Photo by Ray Dalio

Original: Deep tide TechFlow

A legend investor, Ray Dalio (Ri Dario), in connection with his "big cycle" theory, issued a strong warning of the current global turmoil. He deciphers in detail how society has moved from "Phase V" of unequal distribution of wealth and fiscal bankruptcy to "Phase VI" of conflict. This is not only a summary of historical patterns, but also an in-depth diagnosis of the current political and economic landscape of the United States and the world. By contrast with the collapse of 1930-1945, Dario pointed to dangerous signals of the failure of the current rules, the intensification of polarization and the loss of truth。

For me, observing what is happening now is like watching a movie that I have seen many times in history. I'm a global macro investor, and I'm betting on the future by learning the lessons of history to understand the bottom-up mechanisms of how things work. I find that what is happening now has happened repeatedly for the same reasons, and understanding the causality is very helpful to me。

I am now at a stage in my life where I would like to share what has helped me more than to preserve that experience for personal gain. For this reason, I have described in my book The Principles for Responding to a Changing World Order (Principles for Dealing with the Changing World Orders) the typical sequence of events leading to the decline of the monetary order, the domestic political order and the international geopolitical order. I refer to this series of events as Big Cycle because it's huge and long and usually lasts about 80 years (i.e. about one person's lifetime)。

The last time these orders collapsed was in the 1930-1945 period, which led to the beginning of the post-1945 monetary, domestic political and international geopolitical order, which is exactly what we are seeing now. My book contains a comprehensive description of the symptoms that can be used to identify the stage at which we are in a "big cycle" and the forces that drive a "big cycle". Most importantly, I have elaborated on the processes and sequences of events that usually lead to the breakdown of the monetary order, the internal political order and the international geopolitical order, so that one can compare the actual sequence of events with that set out in the template。

For readers who have read the book, it should be clear now that we are on the verge of moving from phase 5 (on the eve of the collapse of the existing order) to phase 6 (on the collapse of the existing order)。

The original purpose of my book was to: (a) help policymakers understand the process that led to the collapse and prevent it from happening; and (b) help people protect themselves from these collapses. In doing so, I realized that my interpretation might not have a substantive impact on the trajectory. Nor is it。

Nevertheless, since we are clearly on the verge of moving from phase 5 (pre-crash) to phase 6, and the choices made may have a significant impact on the outcome, I think it is necessary to reiterate what I think lies behind the current state of affairs, and to clarify which options lead to better or worse results。

In order to illustrate this point here, I will now briefly share the most relevant parts of the status quo that I have written in the Principles for a Changing World Order, particularly with regard to how phase 5 (pre-closure period) led to phase 6 (breakdown period). This will allow you to compare the status quo with my "big cycle" template. It needs to be made clear that, although there is little chance of restoring the monetary order through the financial discipline required to achieve financial health, and the return of the rule-based domestic political and international geopolitical order, which is essential for the peaceful resolution of differences and the functioning of democracy, is doubtful, these improvements are still possible, as we have not yet fully crossed the threshold from phase 5 to phase 6。

The following is an extract from the book depicting this picture. After sharing, I will explain how what I wrote five years ago applies to the current situation (see below, “where we are now”)。

Phase 5: When the financial situation is bad and the conflict is intense

'cause i'm covering that cycle in chapters 3 and 4, i'm not going to explain it in detail here. however, to understand phase 5, you need to know that it follows phase 3 (peace and prosperity, good debt and credit conditions) and phase 4 (excessive and derelict conditions begin to worsen). this process peaked at the most difficult and painful stage — phase 6 — when state funds were exhausted and there were often terrible conflicts in the form of revolutions or civil wars. phase 5 was the culmination of interclass tensions that accompanied the deterioration of the financial situation. the manner in which different leaders, policymakers and populations deal with conflicts has a significant impact on whether the state can make the necessary changes peacefully or violently. i don't know

Classic combination of toxicity

"The classic toxic combination of forces leading to major internal conflicts consists of the following factors: 1) the state and its people (or states, municipalities) are in a bad financial state (e.g. having huge debt and non-debt obligations), 2) the large income, wealth and value gap within the entity and 3) the severe negative economic impact. "This encounter usually leads to chaos, conflict and sometimes even civil war. I don't know

"in order to have peace and prosperity, society must have productivity that benefits the majority。

The average is not as important as the proportion of people suffering and their strength. In other words, when there is no widespread productivity and prosperity, risks rise。

A key element of success is that the debt and currency created are used to generate productivity gains and favourable returns on investment, rather than being distributed directly without productivity and income growth. If these gains are simply distributed and not generated, the currency will be depreciated to the point where the Government or anyone else has lost purchasing power。

History has shown that the use of loans and expenditures for projects that generate a wide range of productivity gains and investment returns (with returns exceeding the cost of borrowing) leads to rising living standards and debt servicing, and these are therefore good policies. I don't know

"History has shown and logically proved that good investment at all levels of education (including vocational training), infrastructure and research that produces productive discoveries is very effective. For example, large-scale education and infrastructure programmes are almost always rewarded (for example, in Tang Dynasty and many other Chinese dynasty, the Roman Empire, the Komaya ICO, the Mughal Empire of India, the Myungshi Wai Shin of Japan, and China's educational development plans over the past decades), despite their long life cycles. Indeed, improvements in education and infrastructure, even those financed through debt, are essential elements of the rise of almost all empires, and the decline in the quality of these investments is almost always an element of imperial decline. If done well, these interventions can offset the classic combination of toxicity. This will not happen in Phase 5。

All of this makes the economy more vulnerable to economic shocks. “Economic shocks can occur for a variety of reasons, including the collapse of financial bubbles, natural disasters (such as epidemics, droughts and floods) and wars. It created a stress test. The financial position at the time of the stress test (measured in terms of income versus expenditure, assets versus liabilities) is the shock. The size of the income, wealth and value gap is the best indicator of systemic vulnerability. I don't know

"When financial problems arise, they usually hit the private sector first, followed by the public sector. Since the Government would never let the financial problems of the private sector slow down the system, the financial situation of the Government was of the utmost importance. When Governments lose purchasing power, they collapse. But there will be a great deal of struggle for money and political power on the road to collapse. I don't know

“it is clear from a study of more than 50 civil wars and revolutions that the single most reliable lead indicator for a civil war or revolution is the huge gap between rich and poor in the combination of government fiscal bankruptcy. this is because, when governments lack the financial power, they cannot financially save private entities that they need to save in order to keep the system running (as most governments, led by the united states, did at the end of 2008), they cannot buy what they need, or pay for what they need to do. it lost power. i don't know

“A classic sign in phase 5 – one of the leading indicators of the loss of borrowing and spending capacity – is that the government has huge deficits that create more debt than buyers outside the government’s own central bank are willing to buy. This lead indicator is activated when Governments that cannot print money have to raise taxes and cut spending, or when Governments that can print money print large amounts of money and buy large amounts of government debt. More specifically, when Governments spend their resources (through large deficits, large debt and lack of access to adequate credit), their options are limited. It could either increase taxes and cut spending significantly or print large amounts of money, which could devalue it. Governments with the power to print money always do so, because it is a much less painful road, but it leads investors to flee the currency and debt that are being printed. Governments that cannot print banknotes have to raise taxes and cut spending, which can lead rich people to flee the country (or state, city), as it is intolerable to pay more taxes and lose service. If these non-printable entities have a huge wealth gap among their constituents, these moves usually lead to some form of civil war/revolution. I don't know

"Where there is the greatest wealth gap, the greatest debt and the most severe income decline, those places (city, state and country) are most likely to experience the most violent conflicts. Interestingly, in the United States, the states and cities with the highest levels of per capita income and wealth are often also those with the greatest debt burden and the greatest wealth gap — such as San Francisco, Chicago and New York City, as well as the states of Connecticut, Illinois, Massachusetts, New York and New Jersey. I don't know

“in the face of these conditions, expenditures must be reduced or additional funds must be raised in some way. the question then becomes: who will pay for these problems, the "haves" or the "have-nots"? obviously, it can't be a productive person. as spending cuts are the most unbearable for the poorest, more taxes must be levied on those who are able to pay more, which can increase the risk of some form of civil war or revolution. but when the producers realize that they will be taxed to service their debts and reduce their deficits, they usually choose to leave, leading to a "hollowing-out" process. this is why people are now moving between states in the united states. if the economic situation deteriorated, that would speed up the process. these conditions have largely driven the tax cycle. i don't know

“History has shown that raising taxes and cutting expenditures in the face of huge wealth gaps and adverse economic conditions can be more a leading indicator of some type of civil war or revolution than any other factor. I don't know

populism and extremism

"in the midst of chaos and discontent, there will be leaders who are strong, who are opposed to the elite and who claim to fight for ordinary people. they are called populists. populism is a political and social phenomenon that attracts ordinary people who feel that their claims have not received the attention of the elite. it usually develops when there is a wealth and opportunity gap, a perceived cultural threat from different values within and outside the country, and a high-ranking “establishment elite” who does not work effectively for the majority. the populists will come to power when these conditions provoke anger among the general population and prompt them to fight for them by fighters who want political power。

populists can be right or left, they are far more extreme than moderates and tend to resort to the emotions of ordinary people. they are usually confrontational rather than collaborative and exclusive rather than inclusive. this led to a fierce struggle between left-wing populists and right-wing populists over irreconcilable differences. the extremes of the revolution under their leadership vary. in the 1930s, for example, left-wing populism took the form of communism, right-wing fascism, and the united states and britain had undergone non-violent revolutionary changes. in addition, four democracies have become authoritarian states。

Recently, in the United States, Donald Trump ' s election in 2016 was a shift towards right-wing populism, while the popularity of Bernie Sanders, Elizabeth Warren and Alexandria Ocasio-Cortez reflects the prevalence of left-wing populism. In many countries, there has been an increase in the political movement towards populism. I don't know

"observation of populism and polarization" is a sign. the higher populism and polarization, the further a country goes in phase 5, the closer it is to civil war and revolution. in phase 5, moderates became minorities. in phase 6, they will no longer exist. i don't know

Class struggle

"class warfare will intensify in phase 5. this is because, as a rule, in times of increased hardship and conflict, there is a growing tendency to view others as members of one or more classes of people in a stereotyped perspective (stereotypic wayss) and as enemies or allies. this became more evident in phase 5. in phase 6, this will become dangerous. i don't know

"a classic sign of phase 5 and aggravated by phase 6 is the demonization of other classes of people, which usually results in one or more scapegoat classes, which are generally considered to be the source of the problem. this has led to the driving force of their exclusion, imprisonment or destruction, which occurred in phase 6. national, ethnic and socio-economic groups are often demonized. the most classic and horrific example of that came from the nazi treatment of jews, who had been accused and persecuted for almost all the difficulties in germany。

Chinese minorities living in non-China countries were also demonized and used as scapegoats in times of economic and social pressure. In the United Kingdom, Catholics have also been demonized and used as scapegoats during many periods of pressure, such as the Gloric Revolution and the British Capital Revolution. Rich capitalists are often demonized, especially those perceived as making money at the expense of the poor. Demonization and the search for scapegoats are typical symptoms and problems that we must pay close attention to. I don't know

"The Loss of Truth in the Public Field."

"as people become more polarized, emotional and politically motivated, there will be an increase in ignorance of what is true because of media distortions and propaganda (propaganda). i don't know

"in phase 5, those involved in the struggle usually work with the media to manipulate people ' s emotions to gain support and destroy opponents. in other words, left-wing mediamen joined the left-wing camp and right-wing mediamen joined the right-wing camp in this dirty battle. the media have become as crazy as the vigilantes: people are often attacked in the media and are in essence tried and convicted, destroying their lives without judges and a jury。

A common move by left-wing (communist) and right-wing (fascist) populists in the 1930s was to control the media and set up "ministers of propaganda" to guide them. The media they produce are clearly aimed at raising public opposition to groups perceived as “enemys of the State”. The democratic British Government established the Ministry of Information during the First and Second World Wars to spread government propaganda, and major newspaper publishers will be promoted by the government if they cooperate with the government to win the propaganda war, otherwise they will be discredited and punished。

The revolutionaries have also distorted the truth in various publications. During the French Revolution, the revolutionary-run newspapers promoted anti-patriarchy and anti-religious sentiment, but when the revolutionaries gained power, they shut down dissident newspapers during the “Reign of Terror”. At a time when the gap between rich and poor and populism prevails, stories against elites tend to be popular and profitable, especially those against left-hand elites in right-hand media and right-hand elites in left-hand media. History shows that the significant increase in these activities is typical of phase 5, and when combined with the ability to impose other penalties, the media becomes a powerful weapon. I don't know

"The rules are subdued, the original battle begins."

"When people's passion for something is more important to them than the decision-making system, the system is in danger. Rules and laws are only effective if they are very clear and are sufficiently valued by the majority and willing to compromise among them in order to make them work well. I don't know

"If neither is ideal, the legal system is in jeopardy. If the competing parties do not want to try to maintain reason and pursue their overall well-being in a civilized manner — which requires them to give up something they want and may win in battle — there will be a civil war that will test the relative power of each party. At this stage, winning at all costs is the rule of the game, and means are the norm. In the late stages of phase 5, reason was replaced by passion. I don't know

"when victory becomes the only important thing, immoral fighting becomes stronger and stronger. the system is on the brink of civil war or revolution when everyone has the cause to fight for it and no one can reach consensus. i don't know

"This usually happens in a number of ways: at the end of phase 5, the legal and police systems are usually used as political weapons by those who can control them. In addition, a private police system can be formed — for example, thugs who beat others and took their assets, and bodyguards who protect people from such incidents. For example, the Nazi party established paramilitary groups (paramilitary wing) before it took power, which became official forces after the party took power. The British Union of Fascists, which existed for a short time in the 1930s, and the Ku Klux Klan of the United States, are also in fact paramilitary groups. Such cases are normal, so please consider their development as a sign to the next stage. I don't know

“In the latter part of the fifth phase, protests are increasing and becoming more violent. Since there is not always a clear line between healthy protests and the beginning of the revolution, those in power often struggle with the freedom of the system of resistance that allows protests while not giving the population a sense of resistance. Leaders must address these situations properly. A classic dilemma arises when demonstrations begin to cross the revolution. Allowing freedom of protest and suppressing protest is a risky path for leaders, as any path can lead to revolutionary forces being strong enough to overthrow the system。

there is no system that allows people to overturn the system - in most systems, such attempts are treason (treason), usually punishable by death. nevertheless, the revolutionaries' work was to overthrow the system, so that the government and revolutionaries would test each other's bottom lines. when widespread discontent erupts and those in power allow it to grow, it may boil to a certain extent, so that when they try to cover it, it explodes. conflict in the later stages of phase 5 usually accumulates to the climax, triggering violent fighting, marking the beginning of a formal civil war stamped by historians, which i defined as phase 6 in the `big cycle'. i don't know

“The death toll in the fighting is a mark that almost certainly marks the next stage of a more violent civil war, which will continue until the victory is clear. I don't know

"This leads me to my next principle: when in doubt, get out -- if you don't want to get involved in civil war or war, you should leave when things are going well. "This usually happens later in Phase 5. History shows that when things get worse, people want to move to places that are not so bad or better, and for those who want to leave, the doors are usually closed. The same is true for investment and money, when the State introduces capital controls and other measures. I don't know

"From stage 5 (a very poor financial situation and a high level of internal and external conflict) to phase 6 (civil war) occurs when the system for resolving differences moves from operation to non-operation. In other words, it happens when the system collapses to the point where it cannot be repaired, when people violence each other and the leadership loses control. I don't know

"when a person is in phase 5 (as is now the united states), the biggest question is how much bend the system can withstand before it collapses. "democracy allows people to do almost anything they decide, which creates more bends, because people can change leadership and blame themselves. democracy has also proved to collapse in times of great conflict. democracy requires consensual decision-making and compromise, which requires good cooperation within the system among a large number of people with opposing views. this ensures that political parties with an important electoral base can be represented, but the decision-making system is not efficient, as is the case with all large committees with widely differing views (and possibly aversion to each other). i don't know

More than 2000 years ago, Plato’s “The Republic” described very well how democracy collapsed; it could be used as a commentary on what is happening now, so it is not new。

“the greatest risk to democracy is that the decisions they generate are so fragmented and confrontational that they are so inefficient that they lead to a bad outcome, leading to a revolution led by populist autocrats, who represent a large number of people who wish to have a strong and capable leader to control chaos and allow the state to function well for them. i don't know

“it is also interesting to note that history shows that, in times of great conflict, federal democracies (such as the united states) usually clash with the central government over their relative powers. this is a noteworthy mark, which has not yet appeared in large numbers in the united states; if it does, it will mark a continuous evolution towards phase vi. obviously, by 2026, this was happening and could intensify。

"Stage 5 is a fork in the road, one path can lead to civil war or revolution, and another path can lead to peaceful and, ideally, prosperous coexistence. Clearly, the path of peace and prosperity is the ideal path, but it is also the most difficult path to achieve. This path requires a strong leader who has the capacity to motivate the majority to “not divide them” and to do the hard things to correct the problems and re-emerge the country. These leaders, known by Plato as " benevolent depots " , will gather opposing parties to do the difficult work necessary to reshape order so that it can operate in a manner that is perceived by most as fair (i.e. in a way that benefits the majority in high productivity). History has seen very few such cases. The second type is "strong fighter," who leads the country through the hell of civil war or revolution. I don't know

Phase 6: Civil War

"A civil war is inevitable, so instead of assuming that it will not happen here, That is the assumption that people in most countries will have after a long period without civil war — rather than being vigilant and looking for signs of how close they are. I don't know

"although there are countless examples that can be used to understand how they work, i have chosen 29 examples that i think are the most important, as shown in the table below. i divided this group of cases into those that led to major changes in the system or regime and those that did not. for example, the civil war in the united states was a very bloody one, but it failed to overturn the existing system or order, so it was in the second group at the bottom of the table; those who overturned the system or order were at the top. these classifications, of course, are imprecise, but equally, we will not allow inaccuracy to prevent us from seeing things that cannot be seen without adherence to precision. most, if not all, of these conflicts have taken place in the prototype manner described in this section. i don't know

"The classic examples of civil war that destroyed the system and had to build a new one are the 1917 Russian Revolution and the civil war. This created the internal order of communism, which finally entered phase 5 in the late 1980s, and led to its attempts to revolutionize the system — the so-called “economic reform” (perestroika, meaning restructuring) — but failed, followed by the collapse of Soviet order in 1991. The communist internal order lasted 74 years (from 1917 to 1991). This order was replaced by a new system or order that now ruled Russia, which was established in the classic manner described earlier in this chapter in the interpretation of phases 1 and 2. I don't know

“Another case is the Meiji Research in Japan, which resulted from a three-year revolution (1866-69). The revolution occurred because the Japanese were unable to make progress by adopting a closed-door policy towards the outside world. The forced opening of Japan by the Americans prompted a revolutionary group to challenge and defeat the rulers (led by the military Shogun General), which led to the overthrow of Japan's internal order, which was then run by four classes — samurai, farmer, craftsman and businessman。

This old Japanese order, run by traditional people, is extremely conservative (for example, social mobility is illegal) and is replaced by revolutionaries who are relatively progressive and who have changed everything by restoring modern emperor power. In the early part of this period, a great deal of labour disputes, strikes and riots occurred as a result of the classic wealth gap and the triggering of bad economic conditions. In the process of reform, the leadership provided universal primary education for boys and girls, adopted capitalism and opened the country to the outside world. They have done so using new technologies, which have made them very competitive and have gained wealth. I don't know

“There are many such cases in which some countries have done the right thing to produce revolutionary and beneficial improvements, just as many revolutionaries have done the wrong thing, bringing terrible suffering to their people for decades. By the way, as a result of its reforms, Japan has continued to complete the classic phase of the "big cycle". It became extremely successful and rich. But over time, it has become decaying, overextended and fragmented, has experienced a Great Depression and has fought costly wars, all of which have led to the demise of the classic. It's order of governance and its classic "big cycle" lasted from 1869 to 1945 for 76 years. I don't know

“Civil wars and revolutions inevitably occur in order to radically change the internal order. I don't know

“they include the comprehensive reorganization of wealth and political power, which covers the complete re-establishment of debt and financial ownership, as well as the reorganization of political decision-making mechanisms. these changes are a natural consequence of the enormous changes that need to be made within the existing system. almost all systems encounter them. that is because almost all systems benefit others at the expense of certain sectors, which eventually becomes intolerable to the extent that fighting breaks out to determine the way forward。

When the gap between wealth and values becomes very large and the ensuing dire economic situation results in a system that does not work for a large part of the population, people fight to change the system. Those who suffer most economically will fight for more wealth and power from those who possess wealth, power and benefit from existing systems. The revolutionaries naturally want a radical change in the system, so they are naturally willing to break the laws that those in power demand from them to comply with. These revolutionary changes usually occur through civil war violence, although, as noted above, they can be achieved peacefully without overthrowing the system. I don't know

"In times of civil war, it's usually cruel. Often, these early wars were powerful and orderly power struggles, and as fighting and emotions intensified and the parties resorted to unforeseeable increases in cruelty. To the extent that the actual cruelty of the civil war and revolution in phase 6 would be considered impossible in phase 5. Elite and moderates often flee, are imprisoned or killed. Reading stories of civil war and revolution, such as the Spanish Civil War, the Chinese Civil War, the Russian Revolution and the French Revolution, gives me the creeps. I don't know

"How did they happen?" Earlier I described the dynamics of phase 5, which led to the crossing of the boundary into phase 6. At this stage, all these factors will increase significantly. I'll explain. I don't know

"How Civil War and Revolution happened."

“As previously described, the cycle of creating wealth and wealth disparities has led a very small number to control a very high proportion of wealth, leading ultimately to the overthrow of the rich minority by the majority of the poor through civil wars and revolutions. This happens more than can be imagined. I don't know

“although most of the typical civil wars and revolutions have shifted power from the right to the left, many have shifted wealth and power away from the left. however, the latter are small and varied. they usually occur when the existing order slips into dysfunctional anarchy (dysfactional anarchies) and most people aspire to strong leadership, discipline and productivity。

Examples of revolutions from the left to the right include Germany, Spain, Japan and Italy in the 1930s; the fall of the Soviet Union in the late 1980s to the early 1990s; the 1976 Argentine coup that replaced Isabel Perón with a military commission; and the coup that led to the Second Reich of France in 1851. All these cases that I have studied have the same reasons for success or failure. Like the left-wing revolution, these new internal order succeeds when it can produce widespread economic success and fails when it fails. As widespread economic prosperity is the greatest reason for the success or failure of the new regime, the long-term trend has been the increase in total wealth and the spread of wealth (i.e. the improvement of the economic and health status of ordinary people). This macro vision can easily be ignored when a large life cycle takes place at some stage and goes through it. I don't know

"As a rule, the people who led the civil war or revolution were (and are) well-educated people with middle class backgrounds. For example, the three key revolution leaders of the French Revolution are Georges-Jacques Danton, a lawyer who grew up in a bourgeois family; Jean-Paul Marat, a doctor; and Maximilien Robespierre, a lawyer。

The leaders of the Russian revolution include Vladimir Lenin, a middle-class educated family whose father is a senior civil servant, and Leon Trotsky, a wealthy peasant family. Among the leaders of the Communist Revolution in China were Mao Zedong, who was born in a wealthy peasant family; and Zhou Enlai, a doctor's family. Fidel Castro, from a very wealthy plantationer family, started his political activities while studying the law. The officers who led Japan to right-wing populism and fascism in the 1930s were mostly from the middle class. As these examples show, leaders usually come not from the poor, but from those with knowledge, vision and ability to organize the masses. I don't know

"these leaders are also often endowed with extraordinary personality charms, capable of working well with others and building strong and well-functioning organizations, and thus the power to initiate revolutions. if you want to look for revolutionaries in the future, you can look at those who have those qualities. over time, they often evolve from idealist intellectuals who want to make the system more equitable to brutal revolutionaries who seek victory at all costs. i don't know

“Although the great gap between rich and poor in times of economic hardship is usually the largest source of conflict, there are always other causes that lead to conflict, which cumulatively create a huge opposition to leadership and institutions. Often in revolutions, revolutionaries with different claims come together to drive revolutionary change; while they looked united during the revolution, they often fought each other over specific issues and power after winning the revolution. I don't know

“as noted earlier, during the cycle of civil war/revolution, the governing government almost always faced severe shortages of funds, credit and purchasing power. this shortage creates a desire to take money from the rich, which leads those who possess wealth to transfer assets to safe places and assets and, in turn, the government to block these flows — that is, to limit transfers to other jurisdictions (e.g. other countries), other currencies or assets that are more difficult to tax and/or less productive (e.g. gold) through capital controls. i don't know

" Worse still, when internal disturbances occur, external enemies are more likely to challenge the country. This is because the vulnerability resulting from internal conflicts makes external wars more likely. Internal conflicts divide nationals, consume them financially and divert leadership attention from other matters — all of which create the conditions for foreign forces to exploit vulnerability. This is the main reason why civil and foreign wars often follow。

Other reasons include the rise of emotions and temperaments; the fact that powerful populist leaders who come to power at this time are natural fighters; the fact that, when internal conflicts exist, leaders find perceived external enemies threatening to bring their country together around them, and therefore tend to encourage conflict; and the fact that deprivation leads to a greater willingness on the part of the population to fight for the resources they need, including those of other countries. I don't know

"almost all civil wars involve certain foreign forces in an attempt to influence the outcome for their own benefit. I don't know

"The beginnings of civil war and revolution are not clear when they occur, although they are obvious when you are trapped in them. I don't know

“Although historians set dates for the beginning and end of the civil war, these dates were artificially defined. The fact is that very few people knew that the civil war had begun or was over, but they knew that they were in it. For example, many historians designated 14 July 1789 as the beginning of the French Revolution, when the mob attacked the arms depot and prison known as Bastille. But no one thought it was the beginning of the French revolution, and no one knew how terrible and cruel that civil war and revolution would become. While one may not know what will happen in the future, it is possible to help locate itself at the stage of movement through vague markings, to see the direction of movement and to understand the shape of the next phase. I don't know

“The civil war is cruel because it is a war of death and death. Everyone is an extremist, because everyone is forced to stand side by side and fight — and, moreover, moderates always lose in the frenzy. I don't know

"what leaders are best suited to civil war and revolution is the inspirational generals, who are strong enough to gather support and win the battles that must be won. because fighting is brutal, they must be cruel enough to do whatever they can to win. i don't know

“The civil war, marked by historians, usually lasts for several years and determines the official victory and failure, is usually reflected in who can occupy government buildings in the capital. But as in the beginning, the end of the civil war/revolution is not as clear as the historians say. The fighting for the consolidation of power may continue for a long time after the end of the formal civil war. I don't know

“Although civil wars and revolutions are often extremely painful, they often lead to reorganization and, if properly handled, can lay the foundation for improved future outcomes. The future after the civil war/revolution depends on how the next steps are handled. I don't know

Status: Minneapolis and the United States on the powder barrel

Let us now focus on the major events of the past few days: The killing of the second ICE protester in Minneapolis. Two classic markers from Phase 5 to Phase 6 appear to be happening:

“The death toll in the fighting is a mark that almost certainly marks the next stage of a more violent civil war, which will continue until the victory is clear. I don't know

“History shows that, in times of great conflict, federal democracies, such as the United States, usually clash with the central government over their relative powers. I don't know

Now America is a powder keg. According to the latest PBS News/NPR/Marist poll, nearly one third (30 per cent) of Americans say that people may have to resort to violence in order to get the country back on track. Pew Research Center, September-October 2025, found that 85 per cent of adults in the United States acknowledge that politically motivated violence in the United States is on the rise。

AN ANALYSIS BY THE CENTRE FOR STRATEGIC AND INTERNATIONAL STUDIES (CSIS) FOUND THAT FROM 2016 TO 2024, THERE WERE 21 PARTY POLITICAL ATTACKS OR CONSPIRACIES, COMPARED TO ONLY TWO IN OVER 25 YEARS BEFORE 2016. THIS MEANS THAT IN A RELATIVELY SHORT PERIOD OF TIME, POLITICALLY MOTIVATED CONSPIRACY/ATTACKS HAVE INCREASED ABOUT TENFOLD. THERE ARE MORE GUNS IN THE UNITED STATES AND MANY ARE VIOLENT。

THERE IS NO DOUBT THAT THE CONFLICT BETWEEN THE CENTRAL GOVERNMENT AND MINNESOTA (AND OTHER STATE GOVERNMENTS) IS VERY SERIOUS AND APPEARS LIKELY TO DETERIORATE FURTHER. THE WORLD HAS SEEN THE KILLING OF TWO OPPONENTS OF THE TRUMP ICE PROJECT IN MINNEAPOLIS, AND IS NOW WATCHING WHICH SIDE WILL RETREAT. MANY PEOPLE ARE WAITING TO SEE THAT PRESIDENT TRUMP WILL CONTINUE TO FIGHT — AND I THINK THIS WILL RISK PUSHING US CLOSER TO THE BRINK OF CIVIL WAR; OR WILL HE TRY TO PULL US BACK FROM THE MARGINS BY CALLING FOR PEACE, COMMITTING AND PROVING THAT THE JUDICIAL SYSTEM WILL DEAL WITH THE SHOOTING PROPERLY, AND CURTAILING ICE ACTIVITIES. (IN AN INTERVIEW WITH THE WALL STREET JOURNAL, HE STATED THAT THE GOVERNMENT WOULD REVIEW THE KILLING AND THAT ICE WOULD NOT REMAIN IN MINNEAPOLIS FOREVER. I'M NOT SURE

While his choice will have a great impact on the next development (including the possibility of a barrel of powder being lit), it is important, in any case, to look at what is happening in the context of all the forces and events that drive the “large cycle”. Whatever the outcome of the Minneapolis case, these are important forces that are evolving and determining how the "big cycle" progresses。

Conclusions (from Principles for a Changing World Order)

"my study of history tells me that nothing is eternal except evolution. in the process of evolution, there are tide cycles that are difficult to change or confront. in order to respond appropriately to these changes, it is important to know at what stage of the cycle they are at and to grasp the principles of immutability and universality in dealing with them。

As conditions change, the best response changes — that is, what is best depends on the environment, which is always changing in the way we see it. It is therefore a mistake to be rigidly convinced that any economic or political system is always the best. Because there will certainly be times when the system is not appropriate for the circumstances; if a society does not adjust, it will disappear。

That is why continuous reform of the system to adapt to the environment is the best option. The test of any system is simple, that is to say, how well it delivers what most people want, which can be measured objectively, and we are doing and will continue to do so。

Having said that, history has taught us the clearest and clearest lesson: efficient win-win relationships through skilled collaboration, large and well divided cakes that make most people happy, far more valuable and painful than civil wars for wealth and power, which lead one to enslav the other. I don't know