Navigating Economic Turbulence: Lessons from History and Today's Challenges

A recent article by American financier Ray Dalio caught our attention, as it examines the current state of the U.S. through the lens of his experience as a global macro investor and his study of the past 500 years of history. Symbolically, the piece was prompted by the mass riots in Los Angeles that erupted in June following large-scale immigration raids.

Dalio presents a model from his book "Principles for Dealing with the Changing World Order," describing the "Big Cycle of the Rise and Decline of Empires," which consists of six stages. He argues that the U.S. is currently in Stage 5, characterized by vast wealth gaps, financial troubles, and political polarization—conditions that could lead to civil war or revolution. The financier also discusses populism, extremism, "the loss of truth in media," and class struggle as signs of an approaching crisis.

The scale of sovereign debt burden and internal conflicts

"How often do you think about the Roman Empire?"—this viral meme that unexpectedly emerged on social media in 2023 reminds us of history's lessons. There are numerous scholarly theories about Rome's fall. The most common causes include: barbarian invasions, economic hardship, political instability, moral and cultural decline, as well as epidemics and climate change.

We should note that, according to most estimates, military pay accounted for at least half of Rome's revenues. Military spending was the largest item in state expenditures throughout Roman history. Meanwhile, the empire's revenue needs became increasingly extensive during the 3rd and 4th centuries AD, as internal decay became more and more evident, and external rivals grew stronger. For instance, the limited use of direct taxes and the prevalence of tax evasion could no longer satisfy budgetary needs. The armed forces, in turn, were used to maintain internal order.

Social unrest, inflation and external invasions ultimately led the Roman Empire to exhaustion and, at least in the West, to its end. The U.S. risks repeating this path: in fiscal year 2024, the budget deficit came to just over $1.8 trillion (6.4% of GDP), while interest payments on the national debt soared by 29% to a record $1.133 trillion, exceeding defense spending.

As of mid-2025, U.S. national debt reached $36.6 trillion, or about 122% of GDP. Historically high levels of sovereign debt often lead to economic crises, especially when debt exceeds 100% of GDP. In Greece in 2010, debt at 130% of GDP triggered recession and social unrest. Other examples include Lebanon (default, 2020), Sri Lanka (default, 2022), and Venezuela (hyperinflation), as well as Ireland (banking crisis, recession 2010–2013) and Portugal (recession, 2010–2014), which required financial assistance from the EU and IMF to avoid default.

The U.S., as issuer of the world's reserve currency, has so far avoided similar consequences, but confidence in the dollar is steadily eroding. Last year its share of global reserves fell to 57%, the lowest level in 30 years. Gold, meanwhile, overtook the euro to become the world's second most important reserve asset.

Emergency measures by the Fed, such as quantitative easing (QE, or "money printing") during the 2008 and 2020 crises, prevented the collapse of the financial system but sharply increased debt and led to asset inflation. Most research and economists agree that Japan in the 1990s faced a similar "liquidity trap": a situation described in Keynesian economics, where low interest rates failed to stimulate growth due to deflationary expectations and other factors. This led to the need for unconventional monetary policy tools, such as QE, following the collapse of the speculative bubble (asset prices) in 1990. It's no surprise that in 2025 the United States was excluded from the "elite club" of creditors with the highest rating: Moody's became the last of the three leading global agencies to revise its assessment of the American economy's reliability.

Against this backdrop, wealth inequality in the United States reached a critical level: in 2023, 1% of the population owned 32% of the wealth, higher than before the Great Depression (28%). The 2020 protests triggered by George Floyd's killing also had economic roots: unemployment among African Americans reached 16%, nearly double the average, while there was the largest gap in unemployment rates between African Americans and whites in five years. Moreover, automation and globalization eliminated 6.7 million manufacturing jobs in the United States from 1979 to 2019. According to the latest data from the U.S. Bureau of Labor Statistics, by the end of 2024, manufacturing employment accounted for only about 8% of the total compared to 21% in the early 1980s. These processes increased the incomes of "effective managers" and IT specialists, but reduced the incomes of low-skilled workers. Historically, technology has always created social divides: in 19th-century Britain, the mechanization of weaving during the Industrial Revolution sparked spontaneous Luddite protests.

Active participation in international armed conflicts and escalating trade wars are unfolding against the backdrop of maintaining empire status. Yet historically, trade wars have also led to crises: the Smoot-Hawley Tariff Act of 1930, conceived as a means to protect the American economy, reduced global trade by nearly a quarter, deepening the Great Depression (U.S. imports over several years plummeted by 66%!). If foreign investors continue reducing their holdings of U.S. Treasury bonds due to trade and political uncertainty, this could increase borrowing costs and destabilize the American economy.

Global order: U.S. decline could bring Russia geopolitical and economic gains

First, a weakening United States would allow Russia to more actively advance its interests in Eastern Europe (restoring energy supplies and national security issues), the Middle East (military-technical cooperation, development of the North-South corridor, strengthening OPEC+ influence), and Central Asia (economic integration within the EAEU framework). For instance, in Ukraine, diminishing U.S. influence is already providing Russia with greater freedom of action. Moreover, Russia could become a key energy supplier in global markets. In 2024, Moscow delivered a record 108.5 million tons of oil to China, surpassing Saudi Arabia, and continues reorienting gas exports eastward. The lifting of sanctions or reduction in their effectiveness would strengthen Russia's position in energy markets. Third, a multipolar world would allow Russia, which has repeatedly demonstrated its adaptability, to strengthen trade and technology alliances with China, India, and Africa.

We are effectively witnessing a transition to a multipolar world, where countries including Russia and China are strengthening regional alliances. China is actively investing in high-tech manufacturing and advanced technologies, while its Belt and Road Initiative spans 140 countries, creating alternative trade routes. The digital yuan (eCNY), whose transaction volume has approached the symbolic $1 trillion mark, in the near future could become a genuine alternative to the dollar in international trade and cross-border payments.

Economic turbulence exposes U.S. weaknesses and opens opportunities for other players. Yet the sovereign's decline carries risks as well. A global recession triggered by a U.S. crisis would dampen energy demand, as happened in 2008 when oil prices plunged and Russia's stock market lost roughly $1 trillion. Financial instability could spark ruble volatility, affecting reserves and inflation. Dependence on Beijing also poses real threats: China, as an economic superpower, may dominate, relegating Russia to junior partner status. Finally, unpredictable U.S. policy amid crisis could heighten tensions in regions where Russian and American interests intersect.

Russia can seize geopolitical and economic opportunities, but must minimize the risks of a global downturn and dependence on other regional players. Partnership on equal terms and domestic reforms aimed at economic growth and narrowing social divides will be key to stability in the emerging multipolar world.