The Changing World Order(RAY DALIO)

It was nice to be able to see the economic history of the past (the rise and fall of key currency countries, etc.) and learn a lot.

 

From the middle of the story, I was disappointed because most of the content was positive about China compared to the United States.

 

Still, I would like to summarize what I thought was important after reading the book.

 

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1. Expenditures are more important than income.

 

To be successful, you must earn at least as much as you spend.

 

In the end, people who make a profit even if they earn a little less are more likely to be successful than people who earn a lot but run a deficit.

 

mobile e-book: 166p

 

We are very obsessed with high income.

 

Of course, income is important, such as an annual salary of 100 million won or a monthly income of 10 million won, but I think assets and expenses are also important.

 

Looking at a company's financial statements, if sales are high but there is no net profit, the company will soon go out of business.

 

I believe that individuals are the same as companies.

 

Even though profits are high, if you continue to live in a deficit every month, it will be difficult to handle the aftereffects if your income decreases or disappears.

 

That's why they say you should always manage your spending.

 

If you do not manage your expenses, you will inevitably go bankrupt just as the company will fail, and not managing your assets means not preparing for the future.

 

Because happiness right now can lead to unhappiness in the future, we must always think, manage, and work hard.

 

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2. Check the national economic cycle

 

The most obvious indicator of the outbreak of a civil war or revolution is a serious gap between rich and poor and the collapse of government finances.

 

mobile e-book: 323p

 

Ray Dalio's national economic cycle indicators are as follows.

 

Step 1 - Establishing a new order

 

Step 2 - Establishing a resource distribution system and government bureaucracy

 

Stage 3 - Peace and Prosperity

 

Stage 4 - Gap between rich and poor due to excessive spending and debt

 

Stage 5 - Deteriorating financial situation and conflict

 

Stage 6 - Stage 1 again after revolution and civil war

 

In my personal opinion, the Republic of Korea and Japan are currently at level 4-5, and the United States and China are at level 5.

 

Revolutions and civil wars do not necessarily result in bloodshed, and revolutions can also occur through peaceful means.

 

However, I think there is always a need to keep an eye on the global economy, and I think we should always respond by revising our goals and plans.

 

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3. Impact of increase in currency and interest rates

 

If the growth and inflation rates are judged to be too low, the central bank releases money to create more credit.

 

This leads to an increase in purchasing power, causing the economy to grow, and prices begin to rise with time.

 

When the central government suppresses the growth of money and credit, the opposite occurs, slowing economic growth and inflation.

 

mobile e-book: 419p

 

Due to COVID-19, most countries around the world, including the United States, which became a reserve currency country, lowered interest rates and released money to increase the money supply due to the economic downturn.

 

The currency that had been loosened came back like a boomerang, causing price increases and inflation.

 

This is why the United States and Korea are now raising interest rates because they need to control price increases and inflation.

 

This cycle will continue to repeat itself, and there is no need for us to get angry or react emotionally when interest rates rise or fall.

 

All you have to do is adjust your investment direction according to changing interest rates.

 

Also, due to the nature of capitalism, money will continue to increase due to credit, debt, and growth.

 

Naturally, as the money supply increased, the value of money fell.

 

The decline in the value of money means that the value of 100,000 won in the past is different from the value of 100,000 won now.

 

Therefore, my personal opinion is that the sooner the better it is to secure real assets or something with investment value.

 

This is because as time passes, the value of currency will fall and the prices of real assets will rise.

 

This is because if you invest in something with real asset value, you can suffer less loss than if you hold currency.

 

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◎Additional appendix (opinions on China)

 

Personally, I differ from the author's opinion that China will become the next hegemony after the United States.

 

As we know from past history, the end of a dictatorship is tragic.

 

Also, I think that no matter how much free trade China pursues, there are bound to be limitations because it is communist.

 

I also think that the gap between rich and poor will be worse in China than in the United States.

 

Like the monarchy of the past, there are regional classes (representatively the hukou system), and because government officials have great power, corruption is expected to be more severe than in democratic countries.

 

Who developed the vaccine first for the COVID-19 outbreak?

 

In Asia, the damage from the coronavirus was reduced because people wore masks, but how do we deal with the problem of delayed language development in children as a result of the aftermath?

 

Which country developed Chat GPT, which is becoming a hot topic right now?

 

Where is the center of technology, including global services (Google, Amazon, Microsoft, etc.) and products (Apple, Samsung, etc.)?

 

Looking at various evidence and phenomena, I believe that China can never become the next reserve currency country.

 

In my personal opinion, I think that the only way for China to become a reserve currency country is if it becomes a perfect liberal democracy.

 

I believe that only then will we surpass the United States and become the next reserve currency country and hegemony.

 

However, I have a personal hope that such a day will never come.

 

◎Korean Book Review

 

변화하는 세계 질서(저자 : 레이 달리오, 출판사 : 한빛비즈)

 

 

The Changing World Order

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저자

Dalio Ray

출판

Simon & Schuster Audio

출판일

2020.09.15