Original Article Title: The Big Thing: We Are In A World War That Isn't Going To End Anytime Soon.
Original Article Author: Ray Dalio
Translation: Peggy, BlockBeats

Editor's Note: While the market is still pricing in short-term questions such as "How long will the conflict last" and "How high will oil prices rise," this article attempts to shift the focus back to a longer time scale. Ray Dalio, the founder of Bridgewater Associates, believes that the current series of regional conflicts are piecing together into an unnamed "world-class conflict," the evolution of which is more akin to the prelude to a major war in history.

Viewing the current situation through a "long cycle" perspective, the article breaks down the current state of affairs into a series of synchronously occurring structural changes: realignment of blocs, escalation of trade and capital conflicts, weaponization of key channels, simultaneous conflicts in multiple war zones, and the gradual pressure on domestic politics and financial systems. Within this framework, the US-Iran conflict is no longer just a Middle East issue but a lens through which to observe the restructuring of global order—how it will affect ally trust, resource allocation, and strategic decision-making, spreading to broader regions such as Asia and Europe.

Of particular note, the article repeatedly emphasizes a overlooked variable: the outcome of a war depends not on absolute strength but on each party's capacity to endure long-term attrition. This assessment shifts the analysis from "who is stronger" to "who can hold out longer" and puts the United States in a more complex position—it is not only the current strongest country but also the most "over-extended" in global commitments.

In the author's view, the market's current implicit assumption—that the conflict will end in the short term and order will return to normalcy—may itself be the biggest miscalculation. Historical experience shows that wars often do not have a clear starting point but gradually evolve from economic, financial, and technological conflicts, manifesting simultaneously in multiple regions. The potential conflict paths listed in the appendix (Middle East, Russia-Ukraine, Korean Peninsula, South China Sea) also point to the same issue: the real risk lies not in whether a particular conflict erupts but in whether these conflicts begin to interact with each other.

As the world transitions from a "rules-based order" to a "power-based order," conflict will no longer be an exception but may become a new norm. Understanding this shift is the starting point for judging all future variables.

The following is the original article:

First, I want to express my hope that you are well during this challenging period. I also want to clarify that the picture outlined in the following observations is not the one I want to see come true; it is based only on the information I know and a series of indicators I use to objectively judge reality, leading me to believe it is closer to the true picture.

As an investor engaged in global macro investing for over 50 years, in order to deal with the ever-present changes, I have had to study all the factors that have impacted the markets over the past 500 years. In my view, most people tend to focus on and react to the most eye-catching events of the moment—such as the current Iran situation—while ignoring the larger, more important, and longer-term evolving forces that truly drive the current situation and determine the future.

At the moment, the most important point is this: the war between the United States, Israel, and Iran is just part of the ongoing world war we find ourselves in, and this war is not going to end soon.

Of course, what happens next in the Strait of Hormuz—especially whether control of its passage will be taken from Iran and which countries are willing to bear the human and financial costs—will have an extremely profound global impact.

Furthermore, there are a series of other questions worth considering: whether Iran still has the capability to threaten neighboring countries with missiles and nuclear weapons; how many troops the U.S. will deploy and what tasks these troops will undertake; how gasoline prices will fluctuate; and the upcoming U.S. midterm elections.

All of these short-term issues are important, but they also distract from those things that are truly larger and more critical. Specifically, because most people are used to looking at things in the short term, they are now generally expecting—and the market is pricing in based on this belief—that this war will not last long, and once it is over, everything will return to "normal."

But almost no one is discussing one fact: we are in the early stages of a world war that will not end soon. It is because of my different framework for interpreting the situation that I would like to explain the reasons below.

Here are a few key issues that I believe truly need attention:

Key Issues to Watch

1. We are in the early stages of a world war that will not end soon.

It may sound somewhat exaggerated, but one thing is undeniable: we now live in a highly interconnected world that is experiencing multiple hot wars simultaneously (e.g., Russia-Ukraine-Europe-U.S. war; Israel-Gaza-Lebanon-Syria war; Yemen-Sudan-Saudi-UAE war involving Kuwait, Egypt, Jordan, and other related countries; and the U.S.-Israel-Gulf Cooperation Council-Iran war). Most of these wars involve major nuclear powers. Additionally, there are a significant number of important "cold wars" happening concurrently, such as trade wars, economic wars, capital wars, technology wars, and geopolitical influence struggles, with nearly all countries involved.

These conflicts have merged to form a very typical, globally scaled war similar to historical "world wars." For example, past "world wars" were usually composed of interconnected multiple wars that often lacked a clear start date or a formal declaration of war, gradually slipping into a state of war. These past wars eventually converged into a typical world war dynamic mechanism, influencing each other; current wars are also showing a similar structure.

In Chapter 6, "The Great Cycle of External Order and Disorder," of my book Principles for Dealing with the Changing World Order published approximately five years ago, I extensively described this war dynamic mechanism. If you want to see a more comprehensive explanation, you can go read that chapter, which discusses the evolving trajectory we are currently experiencing and what is likely to happen next.

2. Understanding how each faction aligns and their relationships is crucial.

It is not difficult to objectively assess how each party is aligning. We can clearly see this through various indicators such as formal treaties and alliance relationships, United Nations voting records, statements by national leaders, and the actions they take. For example, you can see China aligning with Russia, with Russia aligning with Iran, North Korea, and Cuba; and this group of forces is broadly opposed to the United States, Ukraine (the latter aligned with most European countries), Israel, GCC countries, Japan, and Australia, among others.

These alliance relationships are crucial for assessing the future situation of the parties involved. Therefore, when observing the current situation and deducing the future, they must be taken into account. For example, we can already see the embodiment of these factional relationships in the actions of China and Russia at the United Nations regarding whether Iran should open the Strait of Hormuz.

For instance, many say that if the Strait of Hormuz is closed, China will be particularly hurt, which is not entirely accurate. Because the mutual support between China and Iran is likely to ensure that oil destined for China can still pass through; at the same time, China's relationship with Russia will also ensure that China can obtain oil from Russia. Additionally, China itself has a significant amount of other energy sources (coal and solar energy) and maintains a large-scale oil inventory, lasting approximately 90 to 120 days. It is also worth noting that China consumes 80% to 90% of Iran's oil production, further strengthening the power base in the China-Iran relationship. Overall, in this war, China and Russia seem to be the relative economic and geopolitical winners. On the other hand, in terms of the oil and energy economy, the United States is in a relatively advantageous position because it is an energy-exporting country, which is quite advantageous.

There are many ways to measure these alliance relationships, including United Nations voting records, economic ties, and significant treaties. The patterns they present are generally consistent with the description above. (If you are interested in viewing these representative major treaties, you can refer to Appendix 1. Similarly, if you want to understand the major existing or potential wars and how my indicator system assesses the probability of their occurrence or escalation within the next five years, you can refer to Appendix 2.)

3. Research Historical Analogies and Compare Them to the Current Situation

This approach is rarely used but has been extremely valuable to me in the past and present, and may be for you as well.

For example, whether by looking back at several similar cases in history or by deducing logically, it is not difficult to see how the dominant power of the world post-1945, the United States, behaves in a war with Iran, a medium-power country, how much money and military equipment it spends and consumes, and to what extent it protects or fails to protect its allies, will be closely observed by other countries, and these observations will significantly influence how the world order evolves. Most importantly, we know that the outcome of this war between the United States—Israel—and now the Gulf Cooperation Council countries—and Iran will have a significant impact on what other countries, especially those in Asia and Europe, will do next, which will further profoundly affect how the world order evolves.

These changes will unfold in a manner reminiscent of what has occurred repeatedly in history. For example, through studying history, we can easily identify those overextended empires, establish metrics to measure the degree of their overextension, and see how they were damaged by such overextension. Applied to the present, it is natural to look at what is happening in the United States: the U.S. currently has 750 to 800 military bases in 70 to 80 countries around the world (China, by the way, has only 1), and bears costly and highly vulnerable security commitments globally.

At the same time, history also clearly tells us that overextended great powers cannot successfully wage wars on two or more fronts simultaneously, which will inevitably raise doubts outside the United States about its ability to fight on another front — such as in Asia and/or Europe.

Therefore, I naturally contemplate further: what the current war with Iran means for the geopolitical situation in Asia and Europe and what it signifies for the Middle East itself. For example, if problems were to arise in Asia in the future to test and expose whether the U.S. is willing to rise to the challenge, I would not be surprised. However, the U.S. would find it difficult to respond vigorously at that time because it already has significant diversionary commitments in the Middle East, compounded by the lack of public support for the war with Iran as the mid-term elections approach, making it highly unrealistic for the U.S. to engage in another war on a different front.

This dynamic may lead to one result: as other countries observe the evolution of U.S.-Iran relations, they may readjust their own judgments and behaviors, thereby driving the reshaping of the world order. For example, countries with U.S. military bases deployed in their territory and who have long relied on U.S. security commitments may likely learn from and adjust their strategies based on the actual experiences of those Middle Eastern countries that similarly depend on U.S. protection in this conflict. Similarly, countries located near key straits, holding strategic significance, or hosting U.S. military bases in potential conflict zones (such as the Asian region where a potential U.S.-China conflict could erupt) will also closely monitor the developments of the Iran war and draw their own conclusions from it.

I can say with confidence that this kind of thinking is indeed happening at the leadership level in various countries, and similar situations have occurred multiple times in similar stages of the "long cycle." The judgments and adjustments made by leaders of these countries are part of a classic evolutionary path toward a large-scale war—a process that has been repeated in history and is happening now. Given the current situation and juxtaposing it with the classic cycle of international order and conflict, I believe we have moved forward to Step 9. Do you have a similar sense?

Below are the approximate steps of this classic evolutionary path:

· The economic and military power of the dominant world superpower declines relative to rising great powers, bringing the two sides closer in strength and leading to confrontation over differences on economic and military fronts.

· Economic warfare escalates significantly, manifested through sanctions and trade blockades.

· Economic, military, and ideological alliances gradually form.

· Proxy wars increase.

· Financial pressure, deficits, and debt rise, particularly more pronounced in dominant countries where fiscal expansion has been excessive.

· Key industries and supply chains gradually come under government control.

· Trade chokepoints are "weaponized."

· New war technologies accelerate.

· Multi-theater conflicts begin to occur simultaneously.

· Domestic pressures in each country demand high loyalty to leadership, and opposition to war or other policies is suppressed—just as Lincoln referenced in the Bible: "A house divided against itself cannot stand," especially in times of war.

· Direct military conflict erupts between major powers.

· To support the war, taxation, debt issuance, currency issuance, foreign exchange controls, capital controls, and financial repression increase significantly, sometimes even leading to market closures. (For the investment logic during wartime, refer to Chapter 7 of "Principles for Dealing with the Changing World Order.")

· Ultimately, one side prevails over the other, establishing a new order designed by the victor.

Among the series of indicators I track, many show that we are in such a stage of the "long cycle": the monetary system, parts of domestic political order, and the geopolitical order are all undergoing dissolution.

These signals indicate that we are in a period of transition from a "pre-conflict stage" to a "conflict stage," a phase that roughly resembles historical points between 1913–1914 and 1938–1939. Of course, these indicators are not precise predictions, and the picture they paint and the timing are not deterministic.

These indicators are more of a directional cue. History tells us that wars often do not have a clear starting point (unless triggered by significant military events like the assassination of Archduke Ferdinand, Germany's invasion of Poland, or the Pearl Harbor incident that led to formal declarations of war), and economic, financial, and military conflicts often unfold before formal wars break out. Major wars are often heralded by a series of signals, such as:

1) Arms and resource reserves begin to deplete;

2) Fiscal spending, debt, monetary issuance, and capital controls continue to rise;

3) Adversary nations observe conflicts to learn each other's strengths and weaknesses;

4) The over-expanded leading power is forced to deal with dispersed and geographically distant multi-line conflicts.

All these factors are crucial, and the relevant indicators I have observed are enough to keep one vigilant.

During this phase of the cycle, the typical evolution path of conflicts is not towards de-escalation but rather continuous escalation. Therefore, what happens next will largely depend on the course of the US-Iran conflict. For example, some countries have already become more skeptical about whether the United States will fulfill its defense commitments; at the same time, the perception that nuclear weapons possess both defensive and offensive capabilities is driving policymakers in various countries to discuss acquiring nuclear weapons, expanding nuclear arsenals, and strengthening missile and missile defense system development.

Once again, I want to emphasize that I am not saying that the situation will inevitably deteriorate along this cycle into a full-scale global war. I do not know for sure what will happen next, and I still hope that the world will ultimately be built on a win-win relationship rather than destroyed by a zero-sum relationship. I have been trying in my own way to push for this outcome. For example, over the past 42 years, I have maintained very good long-term relationships with senior policymakers from both China and the United States, as well as some people outside the establishment. Therefore, in the past and especially in the current highly confrontational period, I have been trying to support a win-win relationship in a way that is acceptable and recognized by both sides. I do this partly because I have feelings for people on both sides, and partly because a win-win relationship is obviously far better than a zero-sum relationship. Although it is becoming increasingly difficult to do so now because some people believe that "the friend of my enemy is my enemy."

As the "grand cycle" reaches this stage, which is the eve of a major war, fundamental contradictions that cannot be resolved through compromise often drive the cycle to evolve step by step until it ultimately ends in violence. Therefore, understanding this typical grand cycle structure and continuously observing what is happening in reality becomes very important. I provide you with this analytical framework in the hope that you can use it to compare the unfolding of real events, see what I see, and then decide how you will respond.

In line with this, I believe one point is particularly important to understand: the world order has shifted from a US-led and G7-based multilateral rules-based world order to a world without a single dominant power maintaining order, following more of a "might is right" approach. This means that we are likely to see more conflicts. Anyone who seriously studies history will realize that today's world order is closer to most of the periods before 1945 than the post-war order we are familiar with; and the implications behind this shift are also very significant.

4. As history has repeatedly shown, determining which country is more likely to win does not depend most reliably on who is stronger, but on who can endure pain longer.

This point was clearly also a key variable in the US-Iran conflict. The US President assured the American public that this war would end in a few weeks, at which point oil prices would drop, and life would return to its original normal and prosperous state. However, there are many observable indicators of whether a country can endure pain in the long term, such as public opinion support (especially in democratic countries) and the government leaders' ability to maintain control (especially in authoritarian regimes with weaker public constraints).

In war, victory does not automatically come when the enemy is weakened but only when the opponent surrenders. This is because you cannot eliminate all enemies. During the Korean War, China joined the war despite its much weaker strength compared to the US and the US possessing nuclear weapons. It is said that Mao Zedong once said, "They cannot kill us all." The meaning of this statement is simple: as long as there are people continuing to fight, the enemy cannot truly win the war. The lessons from Vietnam, Iraq, and Afghanistan are already very clear. True victory is when the winning side can extricate itself and ensure that the losing side no longer poses a threat. The US still appears to be the most powerful country in the world, but it is also the most overstretched superpower and the most vulnerable among major powers in enduring long-term pain.

5. All of this is unfolding in a typical "long cycle" manner.

The so-called "typical long cycle manner" refers to events primarily driven by five major forces: the long-cycle fluctuations of currency, debt, and economy between monetary order and disorder; political and social order collapse caused by wealth disparity and divided values; regional and global order breakdown caused by wealth disparity and divided values; significant technological advancements used simultaneously for peace and war purposes, along with accompanying financial bubbles that usually eventually burst; and natural events such as droughts, floods, pandemics, etc.

I do not want to delve into more elaborate explanations here to detail how the "long cycle" operates, how these five major forces drive change, and the 18 more underlying determinants behind them. But I still recommend that you understand this framework and suggest you read my book or watch the YouTube video of the same name: "Principles for Dealing with the Changing World Order."

6. Having a good set of indicators and continuously tracking them is of immense value.

Many of the indicators I use to track these evolving situations have been explained in "Principles for Dealing with the Changing World Order." I particularly recommend Chapter 6, "The Long Cycle of External Order and Disorder." If you want to understand the investment-related changes that are almost unimaginable in peacetime but often occur during wartime, then I also recommend Chapter 7, "Understanding Investment in War from a Long Cycle Perspective." I have recently shared these two chapters online, and you can read them there.

Above is my overall assessment of the situation so far. Because this assessment not only affects my investment decisions but also influences how I should act in other aspects of life, next, I will further discuss these issues. As mentioned earlier, the following sections also include two appendices: one contains information about the relevant alliance relationships between countries, and the other provides a brief overview of current or potential major conflicts.

Appendix

Appendix 1: Relevant Treaties

Below are some of the treaties I consider most important, including a 1 to 5 rating of their implied commitment strength and a brief description of each treaty. Overall, other measures of alliance relationships, such as leaders' statements and actual actions, broadly align with the relationships reflected in these treaties. However, it is now increasingly clear that all these treaties, especially those related to the United States, may change, and real actions will ultimately carry more weight than the text of agreements themselves.

1. Key U.S. Treaties:

2. Key China-Russia-Iran-North Korea Treaty:

Appendix 2: Ongoing and Potential Wars

Below are what I consider to be the most important ongoing or potential wars, including my brief assessment of their situations and the probability assessment of erupting or escalating into military conflicts in the next five years.

Iran-U.S.-Israel War
This is already a full-scale war and appears to be ongoing, with all parties continuing to expend resources. Key variables to watch include:
a) Who ultimately controls the Strait of Hormuz, Iranian nuclear materials, and Iranian missiles;
b) How much manpower and financial cost each country is willing to pay to win the war;
c) The satisfaction of each belligerent's alliance relationships;
d) Whether Iran's allies (such as North Korea) will directly engage in the conflict or support Iran through arms sales, or if conflicts erupt in Asia, forcing the United States to choose between fulfilling commitments and opting for inaction;
e) Whether the Gulf region can regain peace and security.

Ukraine-NATO-Russia Direct War
This is a current active war involving nearly all major military powers (excluding China), with a high risk factor. However, for three years the conflict has not expanded beyond Ukraine, which is a relatively positive signal, indicating that a larger-scale war is temporarily avoided. Currently, Russia is directly engaged in combat with Ukraine, NATO is providing weapons support to Ukraine at a significant financial cost, and European military spending and readiness for war with Russia are increasing. NATO has not directly entered the conflict, and fears of nuclear war on all sides have temporarily deterred conflict escalation. Risks to watch for include Russian attacks on NATO territory or supply lines, direct NATO military intervention, and accidental conflicts between Russia and NATO member states. I consider the probability of these scenarios occurring and leading to war escalation to be relatively low, roughly 30%–40% in the next five years.

Korean Peninsula-Related War
North Korea is a highly provocative nuclear state and has shown willingness to fight as an ally against the United States. It possesses missiles capable of carrying nuclear warheads and striking the U.S. mainland (although the current reliability is still limited), but this capability will significantly improve in the next five years. North Korea has close relations with China and Russia, and could potentially become an effective proxy force for them. Meanwhile, North Korea is extremely aggressive in demonstrating and developing its missile capabilities but not inclined to sell related weapons to other countries. I estimate the probability of some form of military conflict occurring in the next five years to be 40%-50%.

South China Sea-Philippines-China-United States Conflict
The United States and the Philippines have a NATO-like defense treaty, while there have been multiple standoffs between Chinese coast guard and the Philippines, which could further involve U.S. Navy patrols. The threshold for triggering a conflict is actually very low—such as ship collisions, Chinese attacks on Philippine vessels, blockades, or missile incidents—once it happens, the U.S. will face pressure on whether to fulfill its treaty obligations. However, American domestic voters may not necessarily support such military intervention, putting the U.S. leadership in an extremely difficult and highly symbolic dilemma. I estimate the probability of this conflict occurring in the next five years to be about 30%.

Overall, looking at these potential conflicts, I believe the probability of at least one occurring in the next five years is over 50%.

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