The video explores the shifting dynamics involving BRICS nations (Brazil, Russia, India, China, and South Africa) and the global influence of the US dollar amidst threats of recession and economic instability. It outlines how BRICS nations are navigating global financial systems, focusing on the declining share of US dollar transactions in world trade compared to the increasing role of China. This shift emphasizes concerns about holding dollar-denominated assets, especially given the potential weaponization of currencies through sanctions.

The discussion highlights three major forces reshaping the global economic landscape: the accumulation of debt and money printing leading to inflation, internal conflicts fueled by economic disparities, and rising geopolitical powers challenging established global dominance. These forces underscore the precarious state of current financial strategies, as countries and individuals analyze their financial standing, wealth distribution, and their responses to internal and international economic pressures.

Main takeaways from the video:

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Key Vocabularies and Common Phrases:

1. weaponization [ˈwepənɪˌzeɪʃən] - (noun) - The act of using something as a weapon or for military advantage. - Synonyms: (militarization, armament, mobilization)

And then also there's the weaponization through sanctions.

2. populism [ˈpɑːpjəˌlɪzəm] - (noun) - A political approach that strives to appeal to ordinary people who feel that their concerns are disregarded by established elite groups. - Synonyms: (popularism, grassroots politics, people's movement)

The second force is the internal conflict, the amount of conflict that's internally largely due to the largest wealth gaps that we've had since the 30s, that produces populism of the left and the right.

3. geopolitical [ˌdʒiːoʊˈpɒlɪtɪkl] - (adjective) - Relating to politics, especially international relations, as influenced by geographical factors. - Synonyms: (international, global, diplomatic)

The third force is the rise of a great power, the geopolitical force that's going on that we're seeing today with China and Russia.

4. storehold [ˈstɔːrˌhoʊld] - (noun) - Something that retains or stores value over time. - Synonyms: (reservoir, repository, depository)

Then the usefulness of the dollar as a storehold of wealth changes.

5. inflation hedge [ɪnˈfleɪʃən hɛdʒ] - (noun) - An investment made to protect against the decreased purchasing power of money due to inflation. - Synonyms: (inflation safeguard, purchasing power protection, anti-inflation strategy)

The diversification means some assets that are inflation hedge prone.

6. diversification [daɪˌvɜːrsɪfɪˈkeɪʃən] - (noun) - The process of allocating capital in a way that reduces exposure to any one particular asset or risk. - Synonyms: (variegation, assortment, distribution)

diversification can reduce your risk without reducing your return.

7. vulnerabilities [ˌvʌlnərəˈbɪlɪtiz] - (noun) - Weaknesses or factors that make one susceptible to attack or harm. - Synonyms: (weaknesses, susceptibilities, liabilities)

...when the power of a country diminishes, okay, when we get weaker financially or how we are with each other and so on, there are greater vulnerabilities.

8. competitive [kəmˈpetɪtɪv] - (adjective) - Involving or determined by competition; having a strong desire to compete or succeed. - Synonyms: (rivalrous, ambitious, aggressive)

And there's always the competitive power that learns how to become stronger.

9. cohesively [koʊˈhiːsɪvli] - (adverb) - In a way that forms a united whole. - Synonyms: (unitedly, harmoniously, integrally)

The second force, are you operating cohesively, common mission and moving in the right direction.

10. geopower [ˈdʒiːoʊˌpaʊər] - (noun) - Power associated with geographical influence and political control at an international level. - Synonyms: (international influence, diplomatic power, global control)

The third force is the rise of a great power, the geopolitical force that's going on that we're seeing today.

Ray Dalio's FINAL Warning - It's Worse Than You Realize!

Banks collapsing, US Dollars under attack, looming recession. The BRICS nations, for people that haven't heard that acronym before, Brazil, Russia, India, China and South Africa are getting together. And I know this has been going on for quite some time. What is going on? How do we step back and think about this moment? I'm so eager to pass along an understanding of the mechanics so people themselves can do the analysis.

Two things are going on. First of all, they're holding all of this dollars, and the stuff that we talked about is going on. And then also there's the weaponization through sanctions. And so sanctions means you freeze other assets. You freeze assets, those assets are the bonds. And that happened with Russia, and there are threats of it with other countries, China and so on. And there's kind of the thinking, well, if I hold the bonds, can that happen to me? And then why am I transacting in this other third currency rather than transacting directly?

So, for example, the United States share of world trade has declined and China's share of world trade has increased to become greater. So if two countries are trading, what do they go to the dollars in order to do that? Then the usefulness of the dollar as a storehold of wealth changes.

I look at three major forces that are happening now. And those three major forces are the creation of a lot of debt and the printing of a lot of money to buy that debt. And then that gets people bad returns, bad. It produces a higher amount of inflation. The second force is the internal conflict, the amount of conflict that's internally largely due to the largest wealth gaps that we've had since the 30s, that produces populism of the left and the right, particularly when there are financial difficulties. The third force is the rise of a great power, the geopolitical force that's going on that we're seeing today with China and Russia and so on, and how that's changing.

So we have that dynamic taking place. Holding cash and debt assets is a bad thing. If you have bad financial conditions as measured by if you're spending a lot more than you're earning and you don't have a lot of savings, you have more debt or liabilities than savings, you're not in a good financial position. That's a fact. And if you have a downturn, if the country as a whole experiences that problem and you have a large wealth gap, you are likely to have a fight.

So I think there are three things, three big forces to keep your eye on. And when you see them in their cycle, then it's clear, first Are you earning more than you are spending? One man's debts are another man's assets. And when somebody is holding those assets and they're producing a lot more of that money in debt, they go down in value. Money goes down in value as they produce it to produce that buying power. And then that gets people bad returns, bad. And it produces a higher amount of inflation and it produces bad returns for holding debt or bonds.

So in other words, cash or bonds. And then people get out of cash and bonds and that produces rising interest rates while there's rising inflation. The second force, are you operating cohesively, common mission and moving in the right direction, the system working, or are you at each other's throats? Is the system threatened? It's a risky situation because it produces disorder and it can produce a form of civil war. And that is the internal piece.

And the third force is the rise of a great power, the geopolitical force that's going on that we're seeing today with China and Russia and so on. And how that's changing. Because when the power of a country diminishes, okay, when we get weaker financially or how we are with each other and so on, there are greater vulnerabilities. And there's always the competitive power that learns how to become stronger. And competition always happens. There's the establishment and then there's the new competition. And as they get stronger, they get stronger in all ways, militarily and commercially and so on. And that's the dynamic that we're seeing.

A lot of money is in cash because people think that cash is the safest investment. But think about it, it's lost. As of the most recent statistics, 8 1/2% over the last. Inflation is 8.5%. And they receive virtually no interest rate in cash. And so There was an 8 1/2% loss of buying power as a result of inflation. And so psychology should change and is in the process of changing to realize that you have to think in terms of buying power, not the number of dollars you have.

The next thing is to have a diversified portfolio of assets. The diversification means some assets that are inflation hedge prone. For example, you're better off to own an inflation index bond than a regular bond. I think that you have to understand what a good strategic asset allocation mix is, that is how to create a good, well diversified portfolio. Assuming that you don't know how to make these buy and sell decisions. Because diversification can reduce your risk without reducing your return. If you understand how to get equally attractive investments that are not correlated with each other, that diversify each other. You can build a diversified portfolio.

I would not want to be in debt or cash. And those instruments. I would want to diversify. Well, with a bias toward inflation, protected assets. And I would want to diversify between locations, countries, in terms of the investment, based on the criteria I've just mentioned.

Economics, Global, Finance, Brics, Sanctions, Inflation, Business Motiversity