Dalio posted: The ultimate battle! Everything depends on who controls the Strait of Hormuz

# Ye Zhen

Source: Wall Street CN

Ray Dalio of Bridgewater Associates argues that the Middle East’s “final showdown” hinges on control of the Strait of Hormuz. This is not only the lifeline of global energy but also the litmus test of U.S. hegemony: losing it would repeat the historical decline of empires and shake the foundations of the U.S. dollar; breaking through would rebuild global capital confidence. The world order is facing a historic test.

Ray Dalio, founder of Bridgewater Associates and a macro investor, has offered a clear judgment on the current Middle East situation: the ultimate outcome of this conflict will be determined by who controls the Strait of Hormuz.

In a long post published on X on March 16, Dalio stated that this strait is not only the core node of geopolitical rivalry but also likely to become a “final showdown” that will decide the global power structure:

If Iran retains control over navigation through the Strait of Hormuz, or even just the ability to negotiate by threatening to block it, the U.S. will be seen as having lost the war. Conversely, if the U.S. can secure freedom of navigation and weaken Iran’s threat, it will strengthen America’s global leadership.

The Strait of Hormuz is regarded as one of the world’s most critical energy transport routes; vast quantities of Middle Eastern oil and gas must pass through it to reach international markets. Any threat to passage would not only disrupt global energy supplies but also quickly ripple through financial markets, trade systems, and geopolitical alignments. For this reason, Dalio believes the struggle for control of the strait is likely to be the decisive factor in the war’s outcome.

## Historical Precedent: Imperial Decline Often Begins at Key Chokepoints

More importantly, Dalio draws parallels between this situation and pivotal turning points in multiple empires:

For instance, Britain’s global influence declined rapidly after the Suez Crisis. Similar patterns marked the fall of the Dutch and Spanish empires: when a dominant power proves unable to maintain order over key trade routes, global capital, allies, and political forces rapidly realign.

In his post, Dalio further articulates a critical historical pattern: when a dominant nation with a global reserve currency shows simultaneous fiscal, military, and political fatigue, its allies and creditors begin to lose confidence. This shift eventually manifests in financial markets—bond sell-offs, currency weakness, and rising gold prices.

## More Than a War: A Test of the World Order

Dalio also notes that the current situation is not an isolated event but part of a larger historical cycle. Over recent decades, the U.S. has fought the Vietnam, Afghanistan, and Iraq wars, all of which left lasting fiscal, military, and geopolitical impacts. If this conflict over Iran and the Strait of Hormuz evolves into another costly war, its cumulative effect could further erode the U.S.-led global order established after WWII.

At the same time, he reminds that the U.S. still holds enormous advantages in this contest. If America can use military power and its alliance system to secure safe passage through the Strait, it will once again demonstrate its ability to uphold international order and reinforce global capital’s confidence in the U.S. financial system and dollar assets.

In Dalio’s view, the impact of this conflict over the Strait of Hormuz extends far beyond the Middle East. The war’s outcome will shape global trade and energy flows, alter capital allocation worldwide, and trigger cascading effects on the geopolitical relations of affected nations.

Thus, this potential “final battle” is not merely about winning or losing a war—it concerns the future of the global financial system, the dollar’s status, and the direction of the world order.

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### Full Text of Dalio’s X Post (AI-translated, slightly abridged)

**It All Comes Down to Who Controls the Strait of Hormuz: The “Final Battle”**

Comparing current events to historical parallels and cross-referencing with smart, well-informed leaders and experts has always helped me make better decisions. I’ve found that most wars are filled with profound disagreement about the future and major unexpected events.

Yet in this war with Iran, one thing is clear and nearly universally agreed: everything hinges on who controls the Strait of Hormuz.

From top government officials, geopolitical experts, and people around the world, I’ve heard that if Iran retains the power to decide who passes through the Strait—or even just keeps it as a negotiating leverage—then:

1. The U.S. will be seen as having lost the war, and Iran as having won.

The reason is that if Iran can control the Strait and weaponize it, it will clearly show the U.S. cannot resolve the situation.

Allowing Iran to shut down the world’s most important strait—one where freedom of navigation must be secured at all costs—would have consequences for the U.S. that matter more than its ability to inflict pain.

Iran’s plan is to prolong the war and escalate incrementally, as it is well known that the American public and leaders have very limited tolerance for prolonged conflict and suffering.

Thus, if the war becomes painful enough and lasts long enough, Americans may eventually abandon the fight and desert their “allies” in the Gulf. The rest of the world’s allies will see that the U.S. will not protect them when it matters most.

This will weaken U.S. alliances.

3. Discussions of “ending the war via agreement”

While some talk of ending the war through agreements, everyone knows no deal can truly resolve it—because agreements themselves are worthless.

Whatever comes next—whether Iran keeps the Strait or control is wrested from them—will likely mark the worst phase of the conflict.

This “final showdown” to determine who wins and who loses will likely be massive.

Iran’s military has stated:

“All oil, economic, and energy facilities in the region that are partly owned by the U.S. or cooperate with the U.S. will be immediately destroyed and reduced to ashes.”

That is exactly what they intend to do.

If the Trump administration succeeds in persuading other nations to send warships for escort operations—and the Strait has not yet been mined—we will see if that provides a solution.

Both sides know the final battle that will decide victory or defeat still lies ahead.

They also know it would be catastrophic for Trump and the U.S. if they fail to reopen the Strait.

Conversely, if Trump wins this final battle and eliminates the Iranian threat for at least the next several years, it will shock the world, strengthen Trump’s authority, and demonstrate American power.

4. Global Impact of the “Final Battle”

The direct and indirect effects of this “final battle” will ripple worldwide, affecting:

- Trade flows

- Capital flows

- Geopolitical developments in relevant countries

The current war, along with other recent conflicts, is actually part of a larger “Big Cycle” process encompassing financial, political, and technological impacts.

The best way to understand these effects is to study historical wars and apply their lessons to the present.

For example:

A nation’s financial and military capacity to wage war depends on the number and intensity of wars it is fighting, its domestic political conditions, and its relations with like-minded nations.

The U.S. cannot fight multiple wars at once—indeed, no nation can.

In a highly interconnected world, wars spread like pandemics in unimaginably rapid ways.

Meanwhile, within countries—especially democracies with vast wealth gaps and value divides—fierce debates always erupt over what actions to take and who should bear the costs, financial or human.

These direct and indirect ripple effects will almost certainly be complex and unpredictable, but the outcome is unlikely to be good.

### Conclusion

Finally, I want to emphasize that I am not a politician.

I am just a pragmatic person who must bet on what may happen in the future. I study history to extract lessons that help me make better judgments. Now, I share these principles and thoughts simply to help others navigate this turbulent era.

As I’ve explained before, through studying the rise and fall of empires and reserve currencies over the past 500 years—research I conducted to inform my global macro investing and shared in the book and video *The Changing World Order*—I’ve identified five interconnected forces that determine the rise and fall of monetary, political, and geopolitical orders.

They are:

- The long-term debt cycle (fully explained in *How Countries Go Broke*)

- The cycle of political order and chaos (which unfolds in identifiable stages, leading to civil war in extreme cases)

- The cycle of international geopolitical order and chaos (also unfolding in stages, leading to devastating world wars in extreme cases)

- Technological advancement (which can either improve or destroy lives)

- Natural forces

What is happening in the Middle East today is just a small fragment of this “Big Cycle” playing out in the present moment.

While we cannot accurately predict all details, it is not difficult to gauge the health of these five forces and the trajectory of the overall “Big Cycle”.

The important thing is to ask yourself:

Is this “Big Cycle” process real? Do these indicators show where we are in the cycle? If so, how should I respond?

If you’d like to ask questions in the comments, I remain ready to continue discussing these issues with you.

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### Risk Warning & Disclaimer

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