Information, Inc., CreditSights, Inc., Dealogic LLC, DTCC Data Repository (U.S.), LLC, Ecoanalitica, EPFR Global, Eurasia Group Ltd., European Money Markets Institute – EMMI, Evercore ISI, Factset Research Systems, Inc., The Financial Times Limited, GaveKal Research Ltd., Global Financial Data, Inc., Haver Analytics, Inc., ICE Data Derivatives, IHSMarkit, The Investment Funds Institute of Canada, International Energy Agency, Lombard Street Research, Mergent, Inc., Metals Focus Ltd, Moody’s Analytics, Inc., MSCI, Inc., National Bureau of Economic Research, Organisation for Economic Cooperation and Development, Pensions & Investments Research Center, Renwood Realtytrac, LLC, Rystad Energy, Inc., S&P Global Market Intelligence Inc., Sentix Gmbh, Spears & Associates, Inc., State Street Bank and Trust Company, Sun Hung Kai Financial (UK), Refinitiv, Totem Macro, United Nations, US Department of Commerce, Wind Information (Shanghai) Co Ltd, Wood Mackenzie Limited, World Bureau of Metal Statistics, and World Economic Forum. While we consider information from external sources to be reliable, we do not assume responsibility for its accuracy. The views expressed herein are solely those of Bridgewater as of the date of this report and are subject to change without notice. Bridgewater may have a significant financial interest in one or more of the positions and/or securities or derivatives discussed. Those responsible for preparing this report receive compensation based upon various factors, including, among other things, the quality of their work and firm revenues. Chapter 8 The Archetypical Cycle of Internal Order and Disorder Published 12/03/20 The Cycle of Internal Order and Disorder & Where We Are in It How people are with each other is the primary driver of the outcomes they get. Within countries there are systems or “orders” for governing how people are supposed to behave with each other. These systems and the actual behaviors of people operating within them produce their consequences. In the next two chapters we will explore the timeless and universal cause/effect relationships that shape the internal orders that people have and the behaviors that drive the shifts between periods of order and periods of disorder. We are now seeing growing disorder in a number of leading countries around the world, most importantly in the United States. I wanted to put that disorder into context so I did the research I am sharing in these chapters. Because how the US handles its disorder will have profound implications for Americans, others around the world, and most economies and markets, in these two chapters I am focusing more on the US than on other countries, though I will follow these chapters with examinations of other leading countries. The following chart shows in a simplified way where the US is within the archetypical Big Cycle as determined by the previously described measures that drive the rise and decline of empires. It is in this stage when there are bad financial conditions and intensifying conflict. Classically this stage comes after periods of great excesses in spending and debt and the widening of wealth and political gaps and before there are revolutions and civil wars. The United States is at a tipping point in which it could go from manageable internal tension to revolution and/or civil war. To be clear, I am not saying that the United States or other countries are inevitably headed that way; however, I am saying that now is an especially important time to know and watch the markers in order to understand the full range of possibilities for the period ahead. In this chapter, I explore those markers by drawing on the lessons from analogous historical cases. Because the subject is so important I want it to be complete, which has made it more than 40 pages long, so I put it in two chapters: Chapter 8 is “The Archetypical Cycle of Internal Order and Disorder” and Chapter 9 is “Delving into the Six Stages of the Internal Cycle with a Particular Focus on the US Now.” Remember: if you want to get through this quickly you can just read the highlights, which are in bold. Principles are in bold and italics. Chapter 8: The Archetypical Cycle of Internal Order and Disorder