The global order has collapsed: What will happen to money and investments in the new era
The famous investor and founder of one of the largest hedge funds in the world had warned a decade ago about the coming change in the global system. Trade, technological, and currency wars are already underway, while historical experience shows that in periods of major geopolitical conflicts, gold constitutes the strongest refuge. For the first time since 1945, the leaders of the three largest Western powers found themselves in the same room and essentially formulated the same message: the global order has ended. This is not simply a transitional period or a gradual rearrangement of international balances. The previous system has now collapsed. The chancellor of Germany stated that the structure that kept the planet united for 80 years no longer exists. The president of France underlined that Europe must prepare for war, while the US Secretary of State messaged that the old world has passed. If three top political leaders had made similar statements ten years ago, markets would likely have collapsed by Monday. In 2026, however, the S&P 500 index reacted minimally.
According to the analysis, this reveals how much most investors underestimate the changes taking place in the international environment. The man who has been warning for a decade about this exact conjuncture is Ray Dalio, who recently published an extensive 60-page analysis on what is expected to follow. The founder of one of the largest hedge funds in history has dedicated his professional career to studying the rise and fall of empires over 500-year time horizons. The analytical framework he has developed no longer describes a potential future scenario, but, according to him, captures developments already underway.
The six stages of global order collapse
Ray Dalio distinguishes six successive stages in the path of any global order. The first five are usually relatively calm: peace, prosperity, debt accumulation, overexpansion, and the appearance of cracks in the existing system. According to his analysis, humanity experienced these five stages from 1945 to roughly 2015. The sixth stage is the most dangerous, as it is characterized by the absence of international rules, the prevalence of power, and conflict among major powers. This is the period during which international agreements cease to function effectively and a new system of rules has not yet been created to replace the previous one. In other words, the old international referee departs from the field and the new one has not yet been appointed. For a period of several years, the strongest players can impose their will without substantial restrictions. The last time the world found itself in this sixth stage was the period 1930-1945. The result is known: approximately 50 million dead, two cities completely destroyed by atomic bombs, restructuring of entire economies, currency collapse, and violent transfer of wealth from defeated to victorious countries. However, a crucial element often overlooked is that the war did not begin with the first military operations. Economic conflict had preceded it by about a decade. In 1930 tariffs were imposed, in 1931 trade restrictions followed, in 1935 asset freezes, and in 1941 oil embargoes. When the attack on Pearl Harbor occurred, economic confrontation had already been evolving for 11 years. Military conflict essentially constituted the final chapter of a war that had begun much earlier in the economic and geopolitical arena. Today, according to the same analytical framework, similar phenomena are observed: tariffs between the US and China, bans on advanced semiconductor exports, freezing of Russian assets in Western banks, capital market restrictions, successive sanctions, and the weaponization of supply chains. If Ray Dalio's theory proves correct, the world is not entering the pre-war period now. It is already five years into it.
The five wars before the start of military conflicts
Ray Dalio identifies five distinct forms of warfare preceding a generalized military conflict: Trade war, technological war, capital war, geopolitical war, and military war. The first four forms are already underway, with each reinforcing pressures toward the next.
Trade war: Return to the tariffs of the 1930s
The trade war is the most visible form of confrontation. Tariffs have returned to levels not recorded since the era of the Smoot-Hawley Act of 1930. This act, enacted in the US, contributed to initiating an economic spiral of protectionism, which, according to the columnist's historical analysis, was directly linked to the conditions leading to World War II. Despite historical lessons, the international economy appears to repeat similar patterns.
Technological war: The battle for semiconductors and rare earths
The technological war constitutes one of the most underestimated threats. The US has restricted China's access to the world's most advanced semiconductors, while China has restricted US access to rare earths, which are essential for operating the entire semiconductor industry. Each side attempts to limit the other's ability to develop the next generation of military and economic infrastructure. This is no longer a simple trade dispute, but strategic preparation in view of a potential broader conflict.
Capital war: Why gold is at the center
The capital war is the field directly impacting savings and investments. In 2022, the US proceeded to freeze Russian central bank assets amounting to approximately 300 billion dollars. This specific move sent a clear message to all countries on the planet: holding dollars no longer constitutes a completely neutral economic choice, but can carry political ramifications. The reaction was immediate, though largely discreet. Central banks began limiting their placements in US Treasuries and increasing gold purchases at rates that, according to the publication, are the fastest in modern history. Gold has strengthened more than 60% over the last 18 months. The critical question is why central banks are turning massively toward the precious metal. The answer, according to Ray Dalio, lies in the shift of trust toward the international monetary system.
Geopolitical war: International alliances are rearranging
The geopolitical arena is characterized by a broad rearrangement of alliances and strategic partnerships. Saudi Arabia prices oil in yuan, BRICS is expanding with the inclusion of countries like Iran and the United Arab Emirates, while Europe attempts to develop a defense industry independent of US weapon systems. At the same time, Japan is rearming for the first time since 1947. All these moves capture the effort of states to limit their dependence on the US and secure protection in a world where the US military and geopolitical guarantee is no longer considered a given.
Military war: The dangerous US-China front
The fifth and most dangerous type of conflict is the military war. Ray Dalio estimates that the risk of military confrontation increases when "both sides possess military forces of roughly equivalent power and have irreconcilable existential differences." The characteristic example is the US and China, centered around Taiwan. Dalio had pointed out this specific risk before the Covid-19 pandemic. Meanwhile, the global semiconductor supply chain continues to depend heavily on Taiwan, without substantial relocation of productive activity away from the island. Conversely, both sides have enhanced their strategic dependence on this specific geopolitical front, increasing the stakes of a potential conflict over an island with a population of 23 million people.
What history shows for investments and money
The most critical part of Ray Dalio's analysis concerns the impacts major military conflicts exert on currencies, bonds, stocks, and gold. The investor has studied major wars of the last 500 years and recorded the trajectory of key asset classes across each of these periods. According to his conclusions, a repeating historical pattern exists.
First phase: The illusion of economic stability
Before the start of a war, currencies appear strong, stock markets continue their upward trajectory, and bonds continue yielding their agreed payments. Investors consider that the existing system will continue functioning. This is a relatively calm period lasting even ten years. As long as it lasts, the impression is created that the existing condition is permanent.
Second phase: Economic conflict
Next, the economic war begins, with the imposition of tariffs, sanctions, and asset freezes. Markets become more volatile, yet may continue moving upward as the underlying economic system continues functioning. At this stage, investors exiting markets prematurely may be considered overly pessimistic.
Third phase: Military conflict and capital destruction
When real war begins, stock markets of defeated countries may suffer total destruction. A characteristic example is Germany and Japan, whose stock exchanges remained closed for five years at the end of World War II. When they reopened, previous shareholders had lost almost their entire wealth. Currencies of defeated countries collapsed. The Reichsmark lost its value, the yen underwent collapse, while government and corporate bonds of defeated countries either led to payment defaults or were dramatically diminished through inflation.
Gold as the ultimate historical refuge
According to Ray Dalio's historical study, the sole asset maintaining its function as a protection medium across all major wars examined, from the 17th century onward, was gold. This does not stem from some magical property of the precious metal, but from the fact that gold does not constitute someone else's liability. The dollar is essentially a payment promise from the US government. The euro constitutes a liability linked to the Eurosystem and the European Central Bank. A bond constitutes a government or corporate liability, while a stock represents a claim on a company's future profits, provided the company itself and the economy it operates in continue existing. Gold, conversely, does not depend on a state's creditworthiness or solvency. When countries cease trusting each other's currencies and financial promises, they turn to an asset maintaining its monetary function for about 5,000 years. Central banks know this dynamic and that is why they are increasing gold purchases. The private investor, according to Dalio, is usually the last to perceive this shift.
The major investment mistake that can prove fatal
Of particular importance is a characteristic observation by Ray Dalio, describing the relationship between economic and military war. As he states: "A war with real bullets is usually preceded by an economic war. Also, before declaring generalized wars, roughly a decade of economic, technological, geopolitical, and capital conflicts usually intervenes, during which rival powers intimidate each other and test the limits of their power." A decade is, according to this specific historical model, the critical time horizon. The economic war began around 2018. Restrictions on semiconductor exports intensified around 2020, while the freezing of Russian assets took place in 2022. Each move increased tension and each side responded with new measures. If the historical pattern Dalio has recorded over the last 500 years repeats itself, then the world stands somewhere between the fifth and seventh year of a ten-year cycle that can lead to generalized conflict. The problem, according to the analysis, is that most investors continue maintaining portfolios as if this countdown does not exist. A characteristic portfolio consists of 60% US stocks and 40% US bonds, with total investments denominated in dollars. This strategy made sense when the US constituted the undisputed global superpower and the dollar was the planet's undisputed reserve currency. Today, however, both these positions are actively challenged by a significant portion of the global population.
Gold, Bitcoin, and real assets
Investors studying Ray Dalio's analytical framework early have already proceeded with changes in their portfolio structure. According to the publication, they bought gold when its price stood at 1,200 dollars per ounce and Bitcoin when trading near 8,000 dollars. Simultaneously, they turned toward real assets, commodities, and productive enterprises in countries not directly exposed to the US-China geopolitical confrontation. Furthermore, they diversified their investments' currency exposure, limiting dependence on the dollar and allocating capital across a broader basket of assets. Conversely, many investors continue focusing on whether the next Federal Reserve meeting will lead to a 25 or 50 basis point rate cut. However, according to this specific analysis, the substantial issue is no longer just monetary policy, but the very change in the global economic and geopolitical system.
The old investment logic no longer works
For those tracking international developments over the last three years and struggling to comprehend the big picture, Ray Dalio argues there is a primary explanation. The old model of analyzing international reality stopped functioning around 2020 without most investors adjusting their strategy timely. The world previous generations grew up in did not constitute humanity's normal and permanent condition, but a specific historical arrangement. This order rested upon international rules, agreements, and power balances. Today, however, these rules are challenged and overturned in real time. The new world does not yet possess a stable system of rules. For a period of several years, likely about a decade, the strongest countries will attempt to impose their will, while weaker states will seek new protection guarantees. Alliances may shift faster than any period since the 1930s. Simultaneously, international capital flows will follow new and potentially unpredictable directions, while asset prices previously outside investment interest may record large shifts. Ray Dalio has published this specific analytical framework for ten years and updated it in November 2026, considering developments now follow the historical pattern he described. He does not attempt, according to the publication, to predict an unknown future, but to interpret current developments based on historical data studied for decades.
The critical question for investors
The question is no longer whether the world is changing, but whether investors will adjust their allocations timely or wait until the next phase of the historical cycle unfolds. The historical experience of 1935 constitutes a characteristic example. Investors proceeding with strategy changes timely preserved their wealth during the 1940s, while those delaying suffered massive losses. This is, according to the columnist, the main lesson from the sole historical case exhibiting characteristics comparable to today's transition. Ray Dalio has dedicated hundreds of pages to studying the rise and fall of global powers to highlight risks generated when an international order collapses. His message to markets is clear: the change in the global system no longer constitutes a distant possibility, but a process already underway.
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