Bridgewater founder Ray Dalio recently published a lengthy article on X, viewing the current US-Iran conflict—especially the control over the Strait of Hormuz—as a decisive turning point in America’s global standing.
(Background: Dalio warned of an imminent US debt crisis and suggested investing 15% of assets in gold and Bitcoin.)
(Additional context: Dalio has stated that the decline of the dollar makes gold indeed safer: “I feel the market is becoming bubble-like.”)
Dalio, the founder of hedge fund Bridgewater, earlier posted a long piece on X, considering the current US-Iran conflict—particularly the control over the Strait of Hormuz—a critical turning point for America’s global position.
He referenced the decline patterns of the British Empire, the Dutch Empire, and the Spanish Empire, noting that when a global hegemon loses control over key trade routes, it often signals the beginning of its collapse.
Dalio believes this is not just a military conflict but a contest over reputation, reserve currency status, and global confidence. If the US cannot secure passage through the Strait of Hormuz, it could become its “Suez Crisis” moment (referring to 1956, when Britain lost its superpower status after the Suez Canal crisis).
Below is the full Chinese translation after整理:
By comparing current events with similar historical situations and cross-verifying my thoughts with intelligent, knowledgeable leaders and experts, I have consistently made better decisions. I’ve found most wars are filled with huge disagreements over “what might happen” and the resulting surprises.
However, in the case of the Iran conflict, one point is clear and almost universally agreed upon: everything hinges on who controls the Strait of Hormuz.
From government officials, geopolitical experts, and people worldwide, I hear that if Iran gains control over who can pass through the Strait of Hormuz—even just retains negotiation leverage:
1. The U.S. will be deemed to have lost the war, and Iran will be seen as the winner. Iran will use the Strait as a weapon, clearly demonstrating that the U.S. lacks the ability to resolve the situation. Allowing Iran to close the world’s most vital strait—an area that must be kept open at all costs—would have enormous consequences for the U.S., its regional allies (especially Gulf allies), oil-dependent nations, the global economy, and world order.
If Trump and the U.S. fail to win this war—where victory simply means ensuring safe passage through the Strait—they will be viewed as causing a disastrous, unsolvable crisis.
No matter the reasons for America’s failure to control the Strait—whether it’s because anti-war politics threaten Trump’s midterm control, or because he and the U.S. are unwilling to bear the human and financial costs of winning; or because the U.S. lacks the military power to seize and hold control; or because he cannot rally other nations into an alliance to keep the strait open—both Trump and the U.S. will be seen as failures.
My historical analysis and perception of the current situation lead me to believe that if the U.S. fails in this way, losing control of the Strait of Hormuz could pose enormous risks—potentially becoming America’s “Suez Crisis” (like in 1956, when Britain lost its superpower status) or similar to the decline of the Dutch Empire in the 17th century or Spain in the 18th.
The pattern leading to empire collapse is almost always the same. Though I elaborate more in my book Principles: Life and Work, I can tell you here: history shows countless cases where a weaker power challenges the leading world hegemon over control of key trade routes (e.g., Egypt challenging Britain over the Suez Canal). In these cases, the dominant power (like Britain) threatens the weaker (like Egypt) to open the passage, while the world watches and adjusts its attitude and capital flows based on the outcome.
This decisive “final battle” that determines the winner and the fate of the empire reshapes history because people and capital tend to quickly and naturally flee the loser. These shifts impact markets—especially debt, currency, and gold markets—as well as geopolitical power.
Having studied many such cases, I’ve summarized the following principle:
When a global leading power with the world’s reserve currency overextends financially and shows signs of losing military and fiscal control, beware of allies and creditors losing confidence, the reserve currency’s decline, the sell-off of debt assets, and currency weakening—especially relative to gold.
Because people, nations, and capital will rapidly shift toward the winner. If the U.S. and Trump cannot control the flow through Hormuz, it threatens America’s position and the existing world order. While many have historically believed the U.S. is the dominant force capable of military and financial victory (especially against medium powers), the cumulative effects of Vietnam, Afghanistan, Iraq, and perhaps this Iran conflict—militarily, financially, and geopolitically—are not promising for the U.S. or the post-1945 American-led world order.
Conversely, when the leading power demonstrates its military and financial strength, it boosts confidence and willingness to hold its debt and currency. For example, after Reagan took office, he immediately secured the release of hostages from Iran, and during the Iran-Iraq war, he ordered the U.S. Navy to escort oil tankers, demonstrating American power.
If Trump shows he can do what he says—ensuring free passage through Hormuz and eliminating Iran’s threats to neighbors and the global economy—it would greatly boost confidence in him and U.S. strength.
2. Conversely, if the Strait falls into Iran’s hands and is used as a weapon against Gulf allies and the broader global economy, everyone becomes hostage to Iran. Trump would be seen as provoking a conflict he loses. He would leave U.S. allies in the region with huge problems and lose credibility, especially given his past statements.
For example, Trump has said: “If mines are placed and not immediately cleared, Iran will face unprecedented military consequences,” “We will easily destroy those targets, making Iran almost impossible to rebuild as a nation—death, flames, and fury will descend upon them,” “Iran’s new leaders must be recognized by us, or they won’t last long.”
I often hear senior policymakers from other countries privately say: “He talks well, but can he fight and win when it’s tough?” Some analysts are eager for a showdown, like Romans watching gladiators or sports fans waiting for the final climax. Trump now calls on other countries to join the U.S. to ensure free passage; whether he can do this will be a key test of his ability to build alliances and rally strength—success here would be a major victory.
It’s difficult for the U.S. and Israel to secure the passage without removing Hormuz from Iranian control, which might require a large-scale conflict. This outcome is a matter of life and death for Iran’s leadership and its strongest factions. For Iran, this war and revenge are tied to their commitment to values beyond life itself. They are willing to die because demonstrating willingness to die is crucial for their pride and devotion—while Americans worry about high oil prices, and U.S. leaders worry about midterm elections.
In war, the ability to endure pain is more important than the ability to inflict it.
Iran’s plan is to delay and gradually escalate the conflict, knowing that the American public and leadership have limited capacity to endure pain and sustain a prolonged war. Therefore, if the war becomes painful and long, Americans will give up, and their Gulf allies and other partners worldwide will see that the U.S. will not protect them. This would damage U.S. relationships with other countries in similar situations.
3. Although some talk about ending the war through negotiations, everyone knows any agreement would be worthless because it cannot resolve the conflict.
Whatever happens next—whether the Strait remains in Iran’s hands or they lose control—this could be the worst phase of the conflict. This “final battle” will clearly define who wins or loses control, likely involving a large-scale fight.
Iranian military officials have said: “All oil, economic, and energy facilities belonging to oil companies in the region, whether owned by the U.S. or cooperating with it, will be immediately destroyed and turned to ashes.” That’s their intent.
If the Trump administration succeeds in rallying other nations to send warships for escort, and the Strait remains unmined, we will see if that can be a solution. Both sides know the ultimate decisive battle is still ahead. They also know that if Trump and the U.S. cannot reopen the Strait, it will be catastrophic for them.
On the other hand, if Trump wins this decisive battle and eliminates Iran’s threats for years to come, it would impress everyone, empower Trump further, and demonstrate U.S. strength.
4. The direct and indirect impacts of this “final battle” will ripple worldwide. It will influence trade flows, capital flows, and geopolitical developments involving China, Russia, North Korea, Cuba, Ukraine, Europe, India, Japan, and others. Like other recent wars, this is part of a larger “Big Cycle” with financial, political, and technological implications. Studying past similar conflicts and applying lessons learned can help understand these effects. For example:
A country’s fiscal and military capacity to wage war depends on the number and severity of ongoing conflicts, its internal political stability, and its relationships with allied nations (like Iran, Russia, China, North Korea).
The U.S. cannot fight multiple wars simultaneously (no country can), and in an interconnected world, war spreads like a pandemic in unimaginable ways. Internally, especially in democracies with vast wealth and divergent values, there will be infighting over what to do and who should bear the costs (money, lives). These unpredictable, often adverse chain reactions are almost certain to occur.
【Conclusion】
Before ending, I want to emphasize I am not a politician; I am a pragmatic observer who must bet on the future. By studying history, I learn lessons to help me do this well. I now share my principles and insights to help others navigate these turbulent times.
As I’ve explained before, analyzing the rise and fall of empires and their reserve currencies over the past 500 years reveals five interconnected forces driving change:
- Long-term debt cycles.
- Domestic political order and chaos cycles.
- International geopolitical order and chaos cycles.
- Technological progress.
- Natural behaviors.
What’s happening in the Middle East is just a small part of this current “Big Cycle.” The key question: Is this cycle unfolding as expected? If so, what should I do?
