# Strait of Hormuz: Success and Failure Define Heroes - Ray Dalio Warns Iran War Could Be Key Turning Point in America's Decline

Bridgewater Fund founder Ray Dalio and tech thinker Balaji Srinivasan posted today. As the U.S. continues its military conflict with Iran, control of the Strait of Hormuz will not only determine the outcome of a Middle Eastern war but may also be the “final battle” in America’s era as the global dominant power and world superpower.

Ray Dalio: “The Strait of Hormuz” becomes the final battle for America’s survival

In his lengthy article, “Everything Depends on Who Controls the Strait of Hormuz: The Final Showdown,” Dalio points out that the ultimate criterion in this war between the U.S., Israel, and Iran is who can control the Strait of Hormuz. This shipping lane connecting the Persian Gulf and the Arabian Sea carries about 20% of global oil transportation daily. If Iran has the ability to blockade or negotiate, Dalio believes that even if the U.S. does not publicly admit defeat, it has already lost the symbolic significance of this critical battle.

He cites a common pattern in the decline of empires throughout history: when a dominant power is challenged on key trade routes by a weaker challenger, capital, confidence, and allies quickly shift to the victorious side. The most typical example is the Suez Crisis of 1956, when Britain conceded to Egypt, marking the end of the British Empire’s global leadership. Similar patterns also occurred during the decline of the Dutch Empire in the 18th century and the Spanish Empire in the 17th century:

When the world’s leading powers lose both military and financial control, it’s a warning that allies and creditors may lose confidence, reserve currency status may waver, debt assets may be sold off, and currencies may depreciate relative to gold.

Can Iran win this battle? Dalio exposes the asymmetrical U.S.-Iran relationship

Dalio highlights a strategic dilemma between the U.S. and Iran: Iran’s strategy is to prolong the conflict and continue to drain resources, because history repeatedly shows that American public and political leaders have limited tolerance for casualties and prolonged wars. In contrast, Iran’s leadership sees this as a fight for national survival and civilizational dignity, which is hard to compare with concerns over rising oil prices or midterm election pressures:

In war, the side that can endure pain is often stronger than the side that can inflict pain.

This view is similar to Dalio’s previous analysis last year on the “U.S.-China trade war and the disparity in confrontation due to differences in economic structure and political systems.”

The End of Five Eras: Balaji’s Structural Collapse Theory

Balaji’s analysis aligns with Dalio’s in some ways. He straightforwardly states: “If Iran gains the upper hand in this conflict, it will simultaneously end five centuries of historical eras.”

Balaji emphasizes the importance of the petrodollar system and economic structure. Since 1974, global oil transactions have been priced in dollars, providing the U.S. with sustained currency demand that supports large fiscal deficits and monetary expansion over the long term.

1780–2020 Political Stress Index (red) and Public Happiness (blue): Political stress surged after 2010, now approaching levels seen before the U.S. Civil War in 1860.

He believes that once this system collapses, it signifies the end of Keynesian-style fiscal management. In today’s polarized political climate, with divided information environments and bipartisan gridlock, this could be the final straw that breaks the U.S. federal system.

A Macro Perspective Beyond Warfare: Dalio Highlights Gold’s Importance

Dalio emphasizes that this final showdown will directly impact global trade and capital flows, involving regions from China and the U.S.-Russia conflict to Eurasia. This is part of his “Big Cycle” theory, which will influence finance, politics, and technology.

He points out that no country can sustain multiple simultaneous wars—whether Vietnam, Afghanistan, Iraq, or Iran—the accumulated costs are eroding the U.S.’s ability to maintain the post-war world order.

In investment terms, Dalio offers a clear principle: when the world’s leading power loses both military and fiscal confidence, capital will first flow into gold, and the dollar and U.S. Treasuries will be rapidly sold off. Conversely, if Trump’s administration successfully ensures free passage through the Strait of Hormuz, market confidence in dollar assets will be greatly strengthened.

(Ray Dalio warns of four major weaknesses of Bitcoin: BTC is difficult to become a safe haven asset; there is only one gold in the world)

This article, “The Strait of Hormuz: Heroes and Villains,” originally appeared on Chain News ABMedia.