Is a revolutionary civil war imminent? Ray Dalio warns: America is heading towards the collapse critical point of a historical cycle.

Ray Dalio, the founder of Bridgewater Associates, proposed the "Big Cycle Theory (Big Cycle)" in his book "Principles for Dealing with the Changing World Order," indicating that every society goes through six stages of prosperity, excess, decline, and rebuilding. He recently stated that the United States is currently in the fifth stage, where the system is about to collapse, and is rapidly moving toward the sixth stage, which symbolizes "revolution or civil war."

Stage 5: Toxic combinations emerge, and the United States is entering the "Period of Internal Order Collapse".

Dalio pointed out that the typical characteristics of the fifth stage are the three major toxic combinations (The Classic Toxic Mix):

Severe deterioration of national finances: high debt, large deficit.

The huge gap in wealth and values: the rich and the proletariat

Sudden economic shocks: such as a pandemic or the bursting of a speculative bubble

He emphasized that these issues will exacerbate social divisions and intensify class conflicts, and the current situation in the United States aligns with this pattern:

Government debt is high, deficits are out of control, and the Federal Reserve is printing money in large quantities, while states face financial exhaustion as they cannot print money themselves, leading to the outflow of the wealthy and the deterioration of social resources.

It also adds, "When the rich realize they cannot escape and the government has no way to solve the problem of printing money, that is when the crisis fully erupts."

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Rising Tensions: Populism, Bureaucracy, and Extremism Stirring

Entering Stage 5, society will have three deteriorating forces: populism, extreme polarization, and bureaucratic rigidity. Dalio analyzed that the political polarization in the United States has intensified, and representatives of the right such as Trump and representatives of the left such as Bernie Sanders and AOC (Alexandria Ocasio-Cortez) are typical populist leaders.

At the same time, the legal system and administrative efficiency are increasingly declining, making reform difficult.

During this period, the centrists will gradually disappear, and society will fall into a serious confrontation of "those who are not of my kind are my enemies," with the democratic system facing the brink of collapse.

(Ray Dalio warns that the global order is facing a once-in-a-century collapse: a storm of debt, currency, politics, and tariffs intertwining )

The Collapse of Truth: Media Dysfunction and the Crisis of Social Trust

Dalio warns that the news media and social platforms have been manipulated as political weapons, distorting facts and intensifying emotions, becoming tools of struggle:

As trust in the media among the American public has fallen to historic lows, even mainstream media such as The New York Times (NYT) and The Wall Street Journal (WSJ) are not immune to skepticism.

He worries that when society cannot establish common facts, the democratic system will be difficult to maintain. Many capable leaders are also afraid to speak out, fearing being smeared or attacked, and the public discussion space loses its meaning.

What is the next step? The fork in the road between peaceful reform and total confrontation.

Dalio's statistical historical data shows that once a country enters the "bending or breaking" Stage 5 critical point, it will ultimately follow one of two paths:

Inclusive reform through "strong and peaceful leadership"

Entering a civil war of violent confrontation and institutional reconstruction ( like the French Revolution )

He emphasized that it is the visionary integrators, not the combative fighters, who can truly change fate. However, achieving this requires leaders to be willing to actively embrace the opposing camp and collaboratively reshape the order, which has been an extremely rare phenomenon in history.

For investors, he believes that one should take precautions in advance during this era, including asset reallocation or geographical risk diversification; and based on the principle of "productivity enhancement," invest funds in education, infrastructure, and technology investments that can improve long-term benefits.

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The lifespan of a system depends on its ability to reform, rather than its traditions and history.

Ray Dalio finally pointed out: "Only systems that can benefit the majority can exist for a long time."

He urged that American society must confront this crisis and no longer indulge in the illusion of "we will not have a civil war." After all, history does not repeat itself, but it often rhymes.

Is a revolutionary civil war imminent? Ray Dalio warns: the United States is heading towards a critical point of collapse in the historical cycle, first appeared in Chain News ABMedia.