If a car is headed downhill, and swerves left, and then right, and...
Balaji@balajis
53 views
Nov 07, 2025
~2 min read
1
If a car is headed downhill, and swerves left, and then right, and then further left, and further to the right, it doesn't actually arrest the descent. However, all the swerving may make the car crash faster.
The G7 is like that car. It's the descending world.
x.com/RayDalio/statu…
The G7 is like that car. It's the descending world.
x.com/RayDalio/statu…
2
(1) The fundamental issue is that 1950-1990 was not the normal way things are supposed to be, but actually an extraordinarily unusual period historically. That was peak Westernization and peak centralization:
(2) As the center of mass of the world economy returns to Eurasia, where it was for thousands of years, the relative strength of the West has declined.
(3) In isolation this wouldn't necessarily be bad, as a decline in relative terms could still of course be combined with an ascent in absolute terms. It's possible for your economy to prosper even if other economies have become bigger.
(4) The problem arises because the West's living standards are entirely dependent upon continued absolute dominance, because it's propped up by the issuance of the global reserve currency, namely the dollar. It is only because Vietnamese factory workers accept digital dollars for physical shoes that US living standards are what they are.
(5) So the US can't tolerate a gradual decline to #2 status. As it descends from the undisputed #1 position, the tax base for dollar inflation contracts from at least 1-3B globally to maybe 300M Americans. A 60-90% drop in tax base of this kind will radically increase inflation, as fewer people will shoulder more printing.
(6) And these issues are shared across the entire G7. It's not just the US. We see France and the UK talking about IMF bailouts. But of course, who'll then bail out the IMF? Because we see soaring yields across the US, France, UK, Italy, Germany, and Japan at the same time, even as Chinese yields are falling:
(7) So, at a global macro level, market participants are selling Western bonds and buying Chinese bonds, gold, internet stocks, and internet currencies. The 20th century Western economy is being retired and its successors are China and the Internet, the land and the cloud respectively.
(8) To mix metaphors, this cake is already baked, but it hasn't been marked to market, so look out below. Everyone knows Western governments are bankrupt, just like everyone knew Biden was senile, but they were all in denial until it couldn't be denied.
(2) As the center of mass of the world economy returns to Eurasia, where it was for thousands of years, the relative strength of the West has declined.
(3) In isolation this wouldn't necessarily be bad, as a decline in relative terms could still of course be combined with an ascent in absolute terms. It's possible for your economy to prosper even if other economies have become bigger.
(4) The problem arises because the West's living standards are entirely dependent upon continued absolute dominance, because it's propped up by the issuance of the global reserve currency, namely the dollar. It is only because Vietnamese factory workers accept digital dollars for physical shoes that US living standards are what they are.
(5) So the US can't tolerate a gradual decline to #2 status. As it descends from the undisputed #1 position, the tax base for dollar inflation contracts from at least 1-3B globally to maybe 300M Americans. A 60-90% drop in tax base of this kind will radically increase inflation, as fewer people will shoulder more printing.
(6) And these issues are shared across the entire G7. It's not just the US. We see France and the UK talking about IMF bailouts. But of course, who'll then bail out the IMF? Because we see soaring yields across the US, France, UK, Italy, Germany, and Japan at the same time, even as Chinese yields are falling:
(7) So, at a global macro level, market participants are selling Western bonds and buying Chinese bonds, gold, internet stocks, and internet currencies. The 20th century Western economy is being retired and its successors are China and the Internet, the land and the cloud respectively.
(8) To mix metaphors, this cake is already baked, but it hasn't been marked to market, so look out below. Everyone knows Western governments are bankrupt, just like everyone knew Biden was senile, but they were all in denial until it couldn't be denied.
3
You're right that everyone's share can increase in absolute terms.
But the West's living standards are entirely dependent upon continued absolute dominance, because it's propped up by the issuance of the global reserve currency, namely the dollar.
x.com/pr337h4m/statu…
x.com/pr337h4m/statu…
But the West's living standards are entirely dependent upon continued absolute dominance, because it's propped up by the issuance of the global reserve currency, namely the dollar.
x.com/pr337h4m/statu…
x.com/pr337h4m/statu…