How much closer are we to war after the collapse of order?

In February 2026, three signals appeared simultaneously, sounding the global alarm. At the Munich Security Conference, leaders from Germany, France, and the U.S. unusually stated that the post-World War II international order has already collapsed; hedge fund founder Ray Dalio published a lengthy article, positioning the current moment as a dangerous turning point in the long cycle; and the World Uncertainty Index (WUI) broke its all-time high, surpassing any crisis point in history. Politicians, financiers, and market data all point to the same conclusion — the old order is dead, the new order has not yet emerged, and we are heading toward an unknown confrontation.

Long Cycle Theory: Why Power Decides Everything

Dalio studied the rise and fall patterns of eleven major empires over the past 500 years and proposed a concise yet profound insight: The essence of the international order is not rules, but relative power.

While domestic order is maintained by laws, police, and courts, there are no such institutions on the international stage. The United Nations cannot control stronger nations. When core interests clash among great powers, the solution is not international arbitration but direct confrontation — negotiations to achieve peace, or escalation to conflict if talks fail.

Dalio breaks down conflicts among great powers into five escalating levels, forming a staircase:

Trade War → Technology War → Geopolitical War → Capital War → Military War

The first four levels tend to intensify and overlap gradually; as long as a military conflict has not yet erupted, dialogue remains possible. But once hot war begins, all dimensions are instantly weaponized. The most dangerous critical point is when both sides are evenly matched and core interests are fundamentally irreconcilable — in such cases, rational concessions are often seen as weakness, which accelerates confrontation.

Dalio highlights the most explosive potential conflict: the U.S.-China confrontation over Taiwan. This issue is not a marginal regional dispute but a domain involving two core interests that cannot be mutually yielded.

History Repeats: How World War II Unfolded Step by Step

Dalio uses the full case of WWII to illustrate how the long cycle ultimately leads to conflict. He sees startling similarities between the 1930s and today.

The logical chain is ruthless and clear:

Economic Collapse → Social Divisions → Rise of Extremist Politics → External Resource Seizures → Escalation of Economic Warfare → Final Military War

After the 1929 Wall Street crash, Germany’s unemployment soared to 25%, Japan’s exports plummeted, companies went bankrupt, and currency collapsed. Both countries turned to populism and military expansion — not because their rulers were inherently warlike, but because economic dead-ends made resource grabbing seem like the only viable option.

The U.S. sanctions against Japan are particularly revealing:

• 1940: Restricted steel and iron exports to Japan
• July 1941: Frozen all Japanese assets in the U.S., banned oil exports, closed the Panama Canal
• Consequences: 80% of Japan’s oil supplies cut off, strategic reserves only enough for two years
• Outcome: Japan was cornered — either surrender and lose great power status, or take a risk
• December 1941: Attack on Pearl Harbor

Dalio repeatedly emphasizes an overlooked timeline: Hot war usually follows a long period of cold war, often lasting a decade. Although Germany officially declared war in 1939, the conflict had already begun with the 1929 economic crisis. This means war does not suddenly erupt out of nowhere but results from prolonged economic confrontation and gradual escalation.

The Five Levels of Conflict: Where Are We Now?

Mapping Dalio’s conflict escalation framework onto current global tensions, the progress at each level is clear:

• ✅ Trade War: Fully underway. The U.S.-China tariff battle since 2018 has escalated to systemic disruption of global supply chains.
• ✅ Technology War: Fully underway. Chip export bans, AI algorithm controls, decoupling in quantum computing — a “Berlin Wall” in tech is slowly forming.
• ✅ Geopolitical War: Intensifying. Tensions in the Taiwan Strait, South China Sea, BRI conflicts in the Indo-Pacific — regional conflicts are escalating.
• ⚠ Capital War: Partially underway. Investment restrictions on China are tightening, but full asset freezes are not yet in place.
• ❌ Military War: Not triggered yet. But whether this is an “inevitable endpoint” or a “preventable scenario” depends on future decisions.

By analogy with WWII, the current situation roughly corresponds to 1937–1940 — economic and technological conflicts are heating up, regional clashes are intensifying, capital isolation deepening. The most dangerous threshold is approaching, but still at a distance that is shrinking.

The critical turning point hinges on whether capital war escalates into “full asset freeze.” If the global financial system is completely partitioned and assets frozen, it would be akin to the oil embargo — forcing the other side into a choice of “total concessions” or “taking a risk,” a dead end.

Data Screams: Markets Have Sensed the Crisis

It’s not just Dalio’s judgment. Market data are speaking plainly.

The World Uncertainty Index (WUI), compiled by The Economist Intelligence Unit, measures global uncertainty by counting the frequency of the word “uncertainty” in reports. In Q3 2025, WUI soared to 106,862.2 — the highest on record, far surpassing the peaks during 9/11, Iraq wars, the 2008 financial crisis, and even the COVID-19 pandemic.

Factors driving the spike include: escalating global tariffs, regional conflicts, a weakening dollar, and concerns over the Fed’s independence.

But here’s a strange contradiction: while uncertainty hits record highs, U.S. stock markets are soaring. Nasdaq surpasses 24,000, S&P 500 hits 7,000, setting new records. Meanwhile, the dollar index falls to 95.

This paradox confirms Dalio’s “late cycle” features: massive government money printing and fiscal spending push nominal asset prices sky-high, while real purchasing power quietly erodes. Stocks are rising on paper, but the dollar’s real value is declining.

What’s truly alarming is the performance of gold and silver. Gold surpasses $5,500/oz, silver exceeds $100/oz — both hitting all-time highs. This is not speculation but the “final vote” of “smart money”: institutional investors and seasoned traders are already preparing for the worst. Dalio has said “sell bonds and buy gold during wartime,” and markets are pricing in this risk in advance.

The True Meaning of Gold’s Rise

When gold and silver hit new highs simultaneously, while the dollar depreciates and stocks soar, it reveals a brutal reality: global capital is shifting into defensive assets.

The high prices of traditional safe havens (gold) reflect deep market panic — not just fear of recession (which usually causes gold to fall due to liquidity needs), but fear of “black swan” events, systemic collapse, and war risks. Historically, gold surges during war, revolution, and hyperinflation. Today, all three risks are present simultaneously.

Breaking the Deadlock: Is Avoiding “Foolish War” Still Possible?

Dalio is not purely pessimistic. He believes the long cycle does not have to end in disaster, provided different choices are made.

He proposes three conditions for breaking the cycle:

1. Strong nations exercise restraint. Avoid abuse of power, live within means, maintain productivity, and avoid overextending national strength.
2. Systems benefit the majority. Wealth and opportunities should not concentrate in a few; otherwise, internal divisions accelerate, and external expansion becomes the only outlet.
3. Maintain a win-win mindset with adversaries. Conflict should not be zero-sum; seek mutually beneficial solutions amid tensions.

He emphasizes a simple but often overlooked wisdom: Power is best kept like a hidden knife — don’t reveal it easily. Overexposing strength only prompts others to escalate arms races, leading to a “security dilemma” — your defenses appear as threats, and their countermeasures as aggression, spiraling into irreversible escalation.

Dalio summarizes this logic with a quote: “Victory means obtaining what matters most without losing what matters most. Wars that cost more lives and money than they gain are foolish.”

But he admits foolish wars still happen — due to prisoner’s dilemma, gradual escalation, pride, misjudgment, and misreading, rational actors can make seemingly irrational decisions.

The Cycles of History and Choices

Dalio’s framework may not be the only correct interpretation, but it offers a serious, data-supported perspective: the current world is not building a new order but is trapped in a dangerous vacuum where the old order is dead, and the new has yet to emerge.

The WUI indicates uncertainty at record levels. Gold and silver prices reflect market pricing for the worst-case scenario. The Munich Security Conference shows even the most reluctant politicians must face reality.

Historically, from 1500 onward, Europe experienced three complete peace-conflict cycles, each about 150 years long. After each prosperity, large-scale war followed. We are at a turning point of the fourth cycle. Will history repeat itself or break through?

History does not simply repeat but rhymes. The key question: in the face of escalating five-level conflicts, can humanity do better than before? Can we find a way to de-escalate before full-scale conflict erupts? Or will we fall into the prisoner’s dilemma again, pushing the other side into a dead end, leaving war as the only option?

The answers to these questions will become clearer over the next decade. And each of us stands at a pivotal moment in history.