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Ray Dalio Ray Dalio @raydalio · 1.5K subscribers
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“As previously mentioned, during the civil war/revolution stage of the cycle the governments in power almost always had an acute shortage of money, credit, and buying power. That shortage created the desire to grab money from those who had it, which led those who had wealth to move it into places and assets that were safe, which led the governments to stop these movements by imposing capital controls—i.e., controls on movements to other jurisdictions (e.g., other countries), to other currencies, or to assets that are more difficult to tax and/or are less productive (e.g., gold).”
“To make matters even worse, when there was internal disorder, foreign enemies were more likely to challenge the country. This happens because domestic conflict causes vulnerabilities that make external wars more likely. Internal conflict splits the people within a country, is financially taxing on them, and demands attention that leaves less time for the leaders to tend to other issues—all things that create vulnerabilities for foreign powers to take advantage of. That is the main reason why internal wars and external wars tend to come close together. Other reasons include: emotions and tempers are heightened; strong populist leaders who tend to come to power at such times are fighters by nature; when there are internal conflicts leaders find that a perceived threat from an external enemy can bring the country together in support of the leader so they tend to encourage the conflict; and being deprived leads people/countries to be more willing to fight for what they need, including resources that other countries have.”
“Almost all civil wars have had some foreign powers participating in an attempt to influence the outcome to their benefit.”
“The beginnings of civil wars and revolutions aren’t clear when they are happening, though they are obvious when one is deeply in the middle of them.”
“While historians assign dates to the beginnings and ends of civil wars, they are arbitrary. The truth is that almost no one at the time knows that a civil war has begun or that it has ended, but they know when they are in them. For example, many historians have designated July 14, 1789, as the day the French Revolution began because a mob stormed an armory and prison called the Bastille. But nobody at the time thought it was the beginning of the French Revolution or had any idea how terribly brutal that civil war and revolution would become. While one might not know what’s to come, one can have imprecise markers that help one place where one is, to see the direction that one is moving in, and to know something about what the next stage will be like.”
“Civil wars are incredibly brutal because they are fights to the death. Everyone is an extremist because everyone is forced to pick a side and fight—also moderates lose out in knife fights.”
“As for what types of leaders are best for civil wars and revolutions, they are the “inspirational generals”—people who are strong enough to marshal support and win the various types of battles they have to win. Because the fight is brutal, they have to be brutal enough to do whatever is necessary to win.”
“The time that historians stamp as the civil war period typically lasts a few years and determines the official winners and losers, which is conveyed by who gets to occupy the government buildings in the capital. But like the beginnings, the ends of civil wars/revolutions are not as clearly defined as historians convey. The fighting to consolidate power can go on for a long time after the official civil war has ended.”
“While civil wars and revolutions are typically extremely painful, they often lead to restructurings that, if done well, can establish the foundation for improved future results. What the future after the civil war/revolution looks like depends on how the next steps are handled.”
(End of excerpts).
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