Ray Dalio: What 1930–1945 Teaches Us About the Current Economic Cycle

What Happened in 1930–1945?

This period marked a major global transformation, shaped by:

• The Great Depression (1929–1939):
  A massive collapse in global output, soaring U.S. unemployment (up to 25%), and long-term economic stagnation.

• The New Deal:
  U.S. President Franklin Roosevelt launched public works, social security, and financial reforms to recover growth.

• World War II Mobilization (1939–1945):
  War-driven industrial demand revitalized economies and erased unemployment.

• Global Order Reset (1944–1945):
  The Bretton Woods system and institutions like the IMF and World Bank were created, ushering in a U.S.-led financial era.

Why Ray Dalio Says “Today Feels Like the 1930s”

According to Dalio, the current moment reflects the late stage of a long-term debt cycle, with these parallels:

• Record-high debt in governments and corporations
• Internal conflict: rising inequality and polarization
• External geopolitical stress: China-U.S. tensions, regional wars
• Declining trust in fiat currencies and traditional institutions

In Dalio’s view, these signals mirror the chaos of the 1930s and foreshadow a coming global realignment.

Macro Outlook: My View as a Founder + Investor

We are living through a convergence of multiple cycles:

1. End of a Long-Term Debt Cycle (80–100 years)
2. Geopolitical restructuring similar to the 1930s
3. Midpoint of a 50–60 year tech supercycle (1970–2050), now powered by AI

My prediction: Turbulence is inevitable, but technology will reset the global growth engine.
A new economic and power structure will emerge by 2035.

The Role of Technology in Economic Cycles

1. Tech isn’t a cushion—it’s a reset button

AI is not just a tool—it’s the electricity of the brain, replacing or enhancing white-collar jobs like lawyers, engineers, and consultants.

2. K-Shaped Recovery & Social Reset

• Those leveraging AI tools will grow exponentially
• Those without access or skills risk structural unemployment
• Massive capital concentration will continue (e.g., OpenAI, xAI, Anthropic backed by billions)

Where I’m Investing

What Industries?

• AI infrastructure & vertical applications
• Smart manufacturing & robotics
• Bio-AI (e.g., protein folding, genetic engineering)
• Clean energy systems & renewables

What Kind of Companies?

• Early-stage teams with traction & speed
• Cash-efficient models that can weather macro volatility
• Anti-fragile business logic, aligned with global reshoring & inflation hedges

How Can Ordinary People Ride the Wave?

1. Stop chasing trends—study structural logic
   Understand how tech reshapes entire industries, not just how it “adds efficiency.”

2. Build skill-backed capital
   AI tools are the lowest-risk, highest-leverage investment in your future.

3. Create sustainable side projects
   A cash-generating digital product or service offers cushion and optionality.

4. Simplify your lifestyle + increase your cash buffer
   Volatility is the new normal. Preserve decision flexibility by minimizing fixed costs.

Final Thoughts

“Every time a major cycle ends, the world looks like it’s collapsing.
Every time a tech revolution begins, it looks like a fringe game.”

Right now, we stand at both thresholds.

If you can ignore the noise and build for the future, this may be the single best moment in your life to start something meaningful.

If you wait for things to return to “normal,” you’ll miss the very reset that redefines the next 50 years.

References:

https://www.masterclass.com/series/mastering-the-markets

“The Cycle” — Howard Marks

“The Unavoidable Economic Cycle (Vol. 1 & 2)” — Lars Tvede

“MegaThreats: The World’s Most Dangerous Trends and How to Survive Them” — Nouriel Roubini (Dr. Doom)

“The General Theory of Employment, Interest and Money” — John Maynard Keynes

“How the Economic Machine Works” — Ray Dalio

“Where Are the Four Major Economic Cycles Now?” — Caitong Securities (China)

“U.S. Economic Data and Indicators” — The Global Economy

“Japan’s Employment Ice Age: A Generation Left Behind” — Huxiu

“Dr. Doom” — The New York Times profile on Nouriel Roubini

“The Six Economists Who Predicted the Global Financial Crisis” — intheblack.com

Written by Hannah Zhao