Books How Countries Go Broke: The Big Cycle (Principles) by Ray Dalio (Author)

How Countries Go Broke: The Big Cycle by Ray Dalio presents a comprehensive framework for understanding sovereign debt crises and the economic cycles that lead countries to financial distress. Dalio draws on decades of macroeconomic experience and over 65 historical debt crises to develop a model called the "Big Debt Cycle," which outlines nine stages that countries typically go through—from private borrowing booms to central bank monetization and painful deleveraging.

The book emphasizes that countries rarely go broke through outright default alone; instead, they often experience gradual currency devaluation and inflation that erodes the value of sovereign debt and savings. Dalio distinguishes between crises in hard currency and fiat currency systems, noting that fiat currency crises tend to unfold slowly, lulling stakeholders into complacency until the situation becomes critical.