By Angelo Giuliano
The theory of the Big Cycle, as outlined by Ray Dalio, explains the rise and fall of global powers through recurring patterns spanning roughly 80 years. Drawing on centuries of history, it highlights economic, political, and geopolitical shifts reshaping governance and international relations. In August 2025, we are in a late-stage cycle, with the United States showing signs of decline while China re-emerges through a historically self-centered, non-confrontational approach, leveraging a diversified economy and cooperative global strategies.
The Big Cycle begins after conflict with peace, low debt, and prosperity, driven by education, innovation, and strong governance, as seen in the 17th-century Dutch Golden Age. Borrowing fuels growth, but bubbles, inequality, and tensions emerge. At the peak, nations dominate through economic strength, military power, and financial influence. Overextension—high debt, polarization, rivalries—leads to decline, often through crises or wars, like Britain's post-World War I fall and the U.S.'s post-World War II rise.
Five forces drive the cycle: debt cycles, where booms hide long-term debt; internal order/disorder, shifting to populism; geopolitical cycles, between cooperation and conflict; natural disruptions, like pandemics; and human inventiveness, boosting power but risking bubbles. Success depends on aligning education, competitiveness, innovation, economic output, trade, military strength, financial status, and currency dominance.
The U.S. has followed this arc. Post-Civil War borrowing sparked inflation and panics like 1873. The 1929 crash triggered the Depression; Roosevelt's policies aided recovery. Post-1945, the dollar became the global currency, but Vietnam-era spending caused crises. The 2008 crash and later stimulus inflated debt, risking instability. Internally, post-Civil War wealth gaps fueled unrest, eased by progressive reforms. The 1930s New Deal tackled inequality; the 1960s protests and 1970s woes led to Reagan's pro-market shift. Recent polarization has spurred populism. Geopolitically, post-WWI tariffs deepened global economic woes; Cold War rivalry shaped the mid-20th century; now, trade and tech disputes signal retreat. Natural disasters, like the 1930s droughts and pandemics, worsened strains. Innovation drove the Industrial Revolution, post-war tech booms, and AI, though bubbles persist.
In 2025, the U.S. decline is evident. Slow productivity, underinvestment in education, and massive debt limit growth. Stagnant wages fuel division, and an aging population strains the economy. Trade influence and alliances weaken amid protectionism; the dollar's dominance faces challenges.
China is ascending, reclaiming its pre-19th-century prominence. Historically, as the Middle Kingdom, it focused on internal harmony and a tributary system, avoiding conquest, unlike European empires. Since 1978, rapid growth has lifted millions from poverty, driven by centralized planning, infrastructure, and urbanization. Its diversified economy spans AI, renewables, quantum computing, services, and consumption, with heavy R&D boosting education and competitiveness. Global trade has expanded across Asia, Africa, and Europe, with military modernization prioritizing sovereignty. Reforms tackle inequality and demographics, fostering meritocracy. The Belt and Road Initiative, investing heavily in global infrastructure, promotes mutual prosperity. In 2025, China-Central Asia cooperation stabilizes regions through economic solutions. Its multilateralism via BRICS and the UN emphasizes development, with leadership in 5G and AI innovation.
U.S.-China rivalry, with trade and tech tensions, risks conflict as the U.S. struggles with overconsumption. Rebalancing—cutting deficits, boosting production, fostering cooperation—is crucial to avoid destructive resets. Individuals should diversify assets and prioritize education; nations must invest and cooperate. China's harmonious, development-focused model offers a path to global stability.
The views do not necessarily reflect those of DotDotNews.
Read more articles by Angelo Giuliano:
Opinion | BRICS united: Lula's tariff defiance signals a multipolar shift against US hegemony
Opinion | The two-state scam: Starmer and Macron's hypocrisy in betraying Palestine
Opinion | US-EU imbalance: CIA-orchestrated wealth transfer project
Opinion | Israel's Gaza genocide: A televised atrocity exposing Western complicity
Comment