Bridgewater Associates Ray Dalio: We have entered the early stages of the "Third World War"! Two major global blocs are forming, and the risk of a Taiwan Strait conflict is at 40%.

Bridgewater (Bridgewater) fund founder Ray Dalio’s 10,000-word analysis published on X on April 7 warns the public not to be misled by short-term news about the Middle East situation. He says the world has officially entered an early stage similar to the “world war stage” of 1938. He points out that two major camps have already taken shape, and he bluntly states that the United States is facing a vulnerable period of imperial overextension. In the end, the winner of a war is often the side that can “tolerate pain” the most.
(Background recap: Bridgewater Dalio: There is only one kind of gold in the world; global central banks will not choose Bitcoin as a non–safe-haven asset)
(Background addendum: Bridgewater Fund Dalio issues a warning: The world is on the “edge” of a capital war! Gold is still the best hedging tool)

Table of Contents

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• History repeats itself: Sliding into the “9th phase” of a world war
• Two major camps are established, and the United States faces an “overextension” crisis
• The winner of the war isn’t the militarily strongest, but the “most pain-tolerant”
• Conflict warnings for the next 5 years: Risk of a Taiwan Strait crisis reaches 40%

Ray Dalio, founder of the world’s largest safe-haven fund “Bridgewater” and a legendary investor, has offered a macro and heavy strategic assessment regarding the recent U.S.-Israel-Iran conflict. In a long post published on April 7, Dalio said that the public is overly focused on “short-term news” like a blockade of the Strait of Hormuz or a spike in oil prices, yet ignores the grand narrative of history: We are in the early stage of a “world war” that won’t end anytime soon.

History repeats itself: Sliding into the “9th phase” of a world war

Dalio uses the “Big Cycle” framework proposed in his book Principles for Dealing with the Changing World Order to dissect the current situation. He says that a true world war has never suddenly erupted on a specific date; rather, it is formed through the gradual escalation of multiple interconnected conflicts. Today, the world is already in:

• Russia–Ukraine–Europe–U.S. war
• Israel–Gaza–Lebanon–Syria war
• U.S.–Israel–Gulf Cooperation Council (GCC)–Iran war

In addition to the “hot wars” above, there are also fierce trade wars, technology wars, and capital wars. Dalio assesses that the global situation has progressed to its Big Cycle model’s “Step 9” (multiple theaters of conflict occurring at the same time, suppressing voices of opposition domestically). This is strikingly similar to the transition period before World War I in 1913–1914 or before World War II in 1938–1939, when “frontier skirmishes” shifted toward the “real fighting.”

Two major camps are established, and the United States faces an “overextension” crisis

Dalio observes that the world’s alignment of sides has clearly emerged through treaties and United Nations votes. One side is a camp led by the United States, Europe, Israel, Japan, and Australia. The other side is an alliance formed by China, Russia, Iran, and North Korea.

In terms of strategic resource comparisons, Dalio highlights a harsh reality. He says that the alliance among China, Russia, and Iran gives China a high degree of resilience in energy (China buys 80–90% of Iran’s oil, and has support from Russia along with massive inventories). By contrast, although the United States is an energy exporter, it has 750 to 800 military bases overseas, leaving its overall national power in a state of severe “overextension,” making it extremely difficult to handle military conflicts across multiple fronts at the same time.

The winner of the war isn’t the militarily strongest, but the “most pain-tolerant”

Dalio wrote: “History shows that in the end, wars are often not won by the stronger side, but by whoever can endure the pain the longest.”

He analyzes that although the United States has the world’s strongest military power, it faces extreme political polarization at home, large fiscal deficits, and low public support for the war. This makes the U.S. relatively vulnerable in long attrition wars (as seen in historical lessons from the Vietnam War and the Afghanistan War). By comparison, rivals such as China, Russia, and Iran may have a higher “endurance advantage” in terms of political systems and social tolerance.

Conflict warnings for the next 5 years: Risk of a Taiwan Strait crisis reaches 40%

In the article’s appendix, Dalio makes quantitative forecasts of the probability of major conflict escalations over the next five years based on his five-driver model (debt economy, internal order, external order, technological leaps, natural disasters):

• Iran–U.S.–Israel war: ongoing and escalating.
• Taiwan–U.S.-China war: outbreak probability about 30–40%, with the highest-risk window possibly falling in 2028.
• Ukraine–Russia war: risk expanded by about 30–40%.
• Conflicts related to North Korea: risk reaches 40–50%.

Overall, Dalio believes that within the next five years, the probability that at least one major conflict will escalate is greater than 50%. At the end of the piece, he emphasizes with heavy earnestness that this is absolutely not a scenario he “hopes” to see; it is an objective inference drawn from 50 years of investment experience and 500 years of historical data. The world is degrading from a “U.S.-led rules-based multilateral order” into the jungle law of “might-is-right.” He calls on investors and policymakers to break away from short-term news and respond to the coming turbulence with a more macro Big Cycle template.