Money isn't real. Well, it is, but the way a whole nation handles it is mostly just a giant game of confidence. When that confidence snaps, things get ugly fast. You've probably seen the headlines about inflation or national debt and wondered if we’re just whistling past the graveyard.
Honestly? History says we might be.
The way how countries go broke the big cycle works isn't some random accident. It’s a predictable pattern that has repeated for centuries, from the Dutch Republic to the British Empire, and now, arguably, the United States. It starts with productivity and ends with a printing press.
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The Mechanics of the Great Reset
Most people think a country goes "broke" like a person does—they spend too much on a credit card and the bank takes the car. It’s not that simple. A country with its own currency can’t technically "run out" of money because it can just print more. But that’s actually the trap.
Ray Dalio, the founder of Bridgewater Associates, spent years researching this for his book Principles for Dealing with the Changing World Order. He found that the "Big Cycle" usually lasts about 150 to 250 years. It’s a long time. So long that most people living through the end of it have forgotten how the beginning felt.
It starts with a new power rising. They have low debt, a strong education system, and they actually make things. Think of the U.S. after World War II. We owned 80% of the world's gold. We were the world's factory. Everyone wanted dollars because the dollar was "as good as gold."
But then, success breeds overextension.
The Cost of Being Number One
Maintaining an empire is pricey. You have to protect trade routes. You have to fund a massive military. You start borrowing money to keep up the lifestyle.
Eventually, the debt grows faster than the economy. This is a critical pivot point. When a country's debt-to-GDP ratio crosses a certain threshold—historically around 90% to 100%—growth starts to choke. You’re spending more on interest payments than on the stuff that actually makes the country better, like infrastructure or research.
Why We Just Keep Printing
When the bills come due and there’s no cash in the drawer, a government has three choices. None of them are fun.
- Austerity: They cut spending and raise taxes. This is political suicide. Voters hate it. It causes recessions.
- Default: They just don't pay. This destroys the country's credit rating and ruins the banking system.
- Printing: They create more money to pay the debt.
Guess which one they always pick?
Printing money is the "silent tax." It feels okay at first. The stock market goes up because there’s more cash floating around. People feel richer. But then, the price of milk doubles. Then the price of a house triples. This is the "devaluation" phase of how countries go broke the big cycle.
Look at the Roman Empire. They didn’t have printing presses, so they did "coin clipping." They’d take silver denarius coins, melt them down, and mix in cheaper metals like copper. By the end, the "silver" coin was barely 2% silver. The value was gone. The soldiers realized their pay was worthless, the borders crumbled, and the rest is history.
The Social Breakdown
Economic failure isn't just about numbers on a screen. It changes how people treat each other.
When the gap between the ultra-wealthy (who own assets that rise with inflation) and the poor (who rely on wages that stay flat) gets too wide, internal conflict explodes. We call this populism. People get angry. They look for someone to blame.
This internal strife usually happens right when an external rival is rising. Think of China today challenging the U.S. or the British Empire being overtaken by the Americans in the early 20th century. The incumbent power is broke, divided, and tired. The new power is hungry and productive.
Real World Examples: When the Music Stopped
It happened to the Dutch in the 1700s. They had the world's reserve currency (the Guilder) and the best navy. But they got into too many wars with the British and spent way too much. They stopped innovating and started becoming "rent-seekers"—basically, they just sat on their investments instead of building new businesses.
Then there's the British Empire. After two World Wars, they were drowning in debt. In 1944, the Bretton Woods Agreement basically handed the "World Reserve Currency" crown to the U.S. Dollar. The British didn't vanish, but their era of global dominance ended because they simply couldn't afford the bill anymore.
Is it happening now?
The U.S. debt is north of $34 trillion. Interest payments alone are starting to cost more than the entire defense budget. That’s a classic symptom of the late-stage cycle.
How to Protect Yourself
If you're reading this and feeling a bit of existential dread, you're not alone. But "broke" doesn't mean the end of the world; it means a transition of power. Wealth doesn't disappear; it just moves.
Diversify your "jurisdiction." Don't keep everything in one currency or one country. If your home country is devaluing its currency to pay off debt, you want assets that can't be "printed." This is why people buy gold, bitcoin, or productive real estate. These are things with "intrinsic" value that don't rely on a government's promise to pay.
Focus on "Hard" Skills.
In a devaluing economy, paper credentials matter less than the ability to actually do something. Engineering, medicine, repair, food production—these are things people will always trade value for, regardless of what the currency is called.
Watch the "Gold-to-Silver" Ratio and Debt Levels.
Keep an eye on the news, but filter out the noise. Watch the actual debt-to-GDP numbers. Watch the inflation prints. When a country starts paying its interest by issuing more debt, you know exactly where you are in the cycle.
Understanding how countries go broke the big cycle isn't about being a "doomer." It’s about being a realist. Cycles happen. They’ve happened for thousands of years. The people who thrive are the ones who recognize the season has changed and stop wearing summer clothes in the middle of a blizzard.
Actionable Steps for the Current Era
- Audit your cash exposure. If you have a large amount of savings sitting in a standard bank account, it is losing purchasing power every single day. Look into inflation-protected securities or "hard" assets.
- Reduce personal debt. When the big cycle turns, credit usually dries up and interest rates can spike. Being debt-free gives you the mobility to react when others are trapped.
- Learn the history of the 1930s and 1970s. These were "transitional" decades. Studying how people preserved wealth during those times provides a much better blueprint than looking at the "easy money" era of the 2010s.
- Invest in yourself. Your ability to earn in a variety of environments is the only asset that can't be taxed away or inflated into oblivion.
The cycle is bigger than any one politician or policy. It’s a force of nature driven by human psychology and the simple math of compound interest. Recognize it, prepare for it, and you’ll be ahead of 99% of the population.