On Monday local time, Ray Dalio, founder of Bridgewater Associates, published a lengthy article titled "Civil War?". Dalio analyzes the "fifth phase" and "sixth phase" within the cycles of a nation. According to Dalio's summary, the fifth phase is the eve of class conflict triggered by fiscal deterioration, which is crucial in the internal cycles of a country, and the United States is currently in this phase. Dalio summarizes the "toxic combination" that leads to significant internal conflict, including: the state and the populace being in fiscal distress (such as massive debt and unpaid obligations); a huge gap in income, wealth, and values within society; and experiencing severe economic shocks. These "toxic mixtures" are often accompanied by other issues. The more of the following factors that arise, the greater the likelihood of severe conflict (such as civil war or revolution): intensifying social contradictions, a lack of empathy and connection between the rich and the poor; political polarization, the decline of centrism, and the rise of populist forces; rampant bureaucracy, making effective reform difficult; media distortion, loss of truth, and information being manipulated for struggle; weakening rule of law, with people focusing more on emotions and positions, abandoning rules; frequent violent protests. The article emphasizes that the solution is not violent revolution, but rather strong and peaceful reformers. To avoid catastrophic collapse, a nation must act during the fifth phase to promote truly effective reforms that benefit all, achieve a fairer distribution of wealth and opportunities, and maintain social cohesion. Such leaders need to have the ability to unite society rather than exacerbate divisions. Dalio warns against blindly believing that "this won't happen to us." Successful nations are those that can continuously self-repair and adapt to changes throughout the cycles. Dalio's latest article comes at a time when unrest is escalating in Los Angeles: According to Xinhua News Agency, the California state government filed a lawsuit on the 9th, requesting the court to rule that the presidential memorandum issued by President Trump on the 7th and the order from the Department of Defense to deploy the California National Guard to the Los Angeles area are illegal, and to revoke the relevant orders. Meanwhile, President Trump publicly supported the suggestion to arrest California Governor Newsom, stating that deploying the National Guard is a good decision and that he does not want a civil war. Below is Dalio's latest lengthy article, with some content omitted Seeing what is happening today feels like watching a movie I have seen many times before. My perspective comes from over 50 years of experience as a global macro investor and my study of the past 500 years of history. In my 2021 book "Principles for Dealing with the Changing World Order," I described a template that can be used to compare with actual developments to help understand how the world order evolves. I also explained the eternal and universal causal relationships that drive the major cycles of world order changes. This template leads me to believe that there is a high likelihood of a converging collapse of the monetary system, domestic political order, and international geopolitical order. Unfortunately, the events occurring in reality closely align with this template. The purpose of this article is to help you understand recent developments from the perspective of the template I proposed, especially how to understand the disintegration of domestic order (which I describe as a form of "civil war," though this does not necessarily mean people will kill each other) Chapter 5 of this book describes the "Great Cycle of Internal Order and Chaos." This process unfolds in a great cycle consisting of six stages, each with its unique characteristics. Considering the current government debt issues and the unrest in Los Angeles being suppressed by President Trump deploying the National Guard, I believe it is an appropriate time to remind everyone of this template. If you are interested in understanding the entire cycle and all six stages, you should read the complete fifth chapter. That section is too lengthy to elaborate on here. However, because I believe we are currently in the fifth stage, which is the "Pre-Civil War Stage," I will share my description of this stage, as well as the sixth stage, which is the "Civil War Stage." I believe this content serves as a good guide for what may happen in the future. As always, I welcome any questions or comments you may have. Stage 5: When Financial Conditions are Poor and Conflicts are Intense The core influencing factors in the great cycle are debt, currency, and economic activity. I have detailed this cycle in Chapters 3 and 4, so I will not elaborate further here. However, to understand Stage 5, it is essential to recognize that it connects to Stage 3 (Peaceful Prosperity, Good Debt and Credit Environment) and Stage 4 (Decadence and Deteriorating Conditions). This process ultimately leads to the most painful stage—Stage 6, which is characterized by depleted funds, usually accompanied by the outbreak of revolution or civil war. Stage 5 is the eve of class conflict triggered by financial deterioration. How different leaders and groups handle these conflicts will determine whether the country can undergo peaceful transformation or descend into violence. Many countries today are already showing this trend. Those with healthy finances (where income exceeds expenditure, and assets exceed liabilities) are relatively well-off; conversely, those in poor financial condition are in danger. They will seek to "take money" from those with more robust economies. The crux of the issue is that financially healthy countries are the minority compared to those in poor condition, the majority of which are in dire straits. This unevenness in the current situation is the primary driving force behind the disparities in various aspects (such as education, healthcare, infrastructure, and overall well-being) among countries, states, cities, companies, and even individuals. At the same time, there are significant cultural differences in how countries respond to these pressures; some countries tend to respond in a more harmonious manner, while others are more inclined toward confrontation. Since Stage 5 is crucial within a country's internal cycle, and many countries (most importantly, the United States) are currently in this stage, I will take some time to elaborate on the causal mechanisms within this stage and the key indicators to watch for when observing its evolution. I will then discuss the current state of the United States in more detail. The Classic "Toxic Combination" The "toxic combination" that triggers significant internal conflict includes: The state and the populace are in financial distress (such as massive debt and unpaid obligations); There are significant disparities in income, wealth, and values within society; Experiencing severe economic shocks. The convergence of these multiple factors often leads to chaos, conflict, and even civil war. Economic shocks can arise from various causes, including the bursting of financial bubbles, natural disasters (such as pandemics, droughts, and floods), and wars. Such shocks act like a financial stress test. The financial condition during the stress test (measured by the relationship between income and expenditure, assets and liabilities) serves as a buffer The greater the gap between income, wealth, and value, the higher the vulnerability of the system. When financial issues arise, the private sector is usually hit first, followed by the public sector. This is because the government will never allow financial problems in the private sector to drag down the entire system; the government's financial condition is key. A collapse occurs when the government loses purchasing power. However, before a collapse happens, there will be a lot of struggles surrounding money and political power. By studying over 50 civil wars and revolutions, it is clear that the most reliable leading indicator of civil war or revolution is the coexistence of government financial bankruptcy and a huge wealth gap. This is because when the government loses its financial capacity, it cannot fund the private entities that must be rescued to keep the system running (as the U.S. government did at the end of 2008), cannot purchase necessary supplies, and cannot hire people to complete essential work. The government loses its "power." A typical sign of being in the "fifth stage," as well as a leading indicator of the loss of borrowing and spending capacity, and one of the triggers for entering the "sixth stage," is a massive government deficit, where the government's deficit is enormous, and debt exceeds the purchasing willingness of buyers other than the country's central bank. This leading indicator is activated when a government that cannot print money has to raise taxes and cut spending, or when a government that can print money prints a large amount of money and buys government debt. Specifically, when government funds are exhausted (i.e., massive deficits, high debt, and exhausted financing channels), the options are extremely limited: either significantly raise taxes and cut spending, or print a large amount of money, leading to currency devaluation. Governments with the ability to print money usually choose to print money because it is a relatively "painless" path, but this causes investors to flee from devalued currency and debt. Governments that cannot print money must raise taxes and cut spending, which leads to the wealthy fleeing because they cannot bear the higher tax burden and loss of services. If these places that cannot print money also have severe wealth inequality, it often leads to some form of civil war or revolution. At the time of writing this article, this late-cycle debt dynamic is emerging at the federal and state levels in the United States, with the main difference being that state governments cannot print money to repay debt, while the federal government can. The federal government and many state and municipal governments are facing massive deficits, heavy debt, and significant wealth gaps, while the Federal Reserve has the ability to print money. The Federal Reserve prints money and buys federal government debt, which can fund a federal government that spends far more than it earns. While this helps the federal government and its beneficiaries, it also causes those holding dollars and dollar-denominated debt to suffer significant losses in real purchasing power. Regions (including cities, states, and countries) with the largest wealth gaps, heaviest debt, and most severe income declines are the most likely to experience conflict. Interestingly, the states and cities in the U.S. with the highest per capita income and wealth levels are often also the areas with the heaviest debt and the largest wealth gaps, such as San Francisco, Chicago, New York City, as well as Connecticut, Illinois, Massachusetts, New York, and New Jersey. In the face of these situations, either spending must be cut, or more funds must be raised in some way. The next question is: who will bear the costs of solving these problems, the "rich" or the "poor"? Clearly, it cannot be the poor. Cutting spending is the hardest to bear for the poorest, so more taxes must be levied on those who can pay, which also increases the risk of some form of civil war or revolution erupting However, when the wealthy realize that they will be taxed to repay debts and cover deficits, they often choose to leave, triggering a "hollowing out" process. Currently, this is driving population migration between some states in the United States. If economic conditions worsen, this process will accelerate. These factors largely drive the development of the tax cycle. History shows that increasing taxes and cutting spending in the context of a large wealth gap and poor economic conditions are the strongest leading indicators of some form of civil war or revolution. It should be clear that these changes are not necessarily violent, although they can be. I have seen these cycles occurring in my personal life. For example, I live in Connecticut, which has the highest per capita income in the United States, the most severe wealth and income gap in the country, and one of the highest per capita debt and pension gaps. I see the rich and the poor focusing on their own lives, with little concern for each other, as there is minimal interaction between them. Through my interactions with the wealthy in our community and the work my wife does to help at-risk high school dropouts, I have gained insight into the lives of both groups. I have seen the extremely harsh living conditions in poor communities, and I have also seen that the wealthy (who appear rich and extravagant in the eyes of the poor) do not actually feel wealthy. I see them both struggling with their difficulties—the wealthy with work-life balance, children's education, etc.; the poor struggling for income, food, avoiding violence, and ensuring their children receive quality education. I see that these two groups are more likely to hold critical, stereotypical views of each other, tending to despise one another rather than seeing each other as members of the same community who should help each other. I see that due to these stereotypes, and the wealthy believing they are not wealthy and that the poor do not deserve their support, mutual assistance becomes very difficult. I am worried about the future, as the current situation may further deteriorate. I have witnessed how the health and financial shocks brought by the COVID-19 pandemic have revealed the dire conditions in poor communities and are exacerbating the financial gaps that could trigger a "toxic combination" dynamic. Averages are not as important as the number of suffering individuals and the power they possess. Those who support policies beneficial to the overall economy—such as free trade, globalization, and technological advancements that replace human labor—without considering what happens if the overall distribution of benefits does not allow the majority to benefit overlook a key fact: the overall system itself may be in danger as a result. To achieve peace and prosperity, society must possess productivity that benefits the majority. Do you think we are achieving this today? History shows that when governments go bankrupt, one effective path to enhance productivity that benefits the majority is to restructure and/or devalue enough existing debts and non-debt obligations. This is a common practice in the fifth and sixth stages. Although such restructuring or devaluation is often painful in the present, it can reduce the debt burden and create conditions for rebuilding. One of the key factors for success is that newly created debt and currency must be used to enhance productivity and yield good investment returns, rather than being distributed unconditionally without generating production or income growth. If the latter occurs, this currency will devalue to the point of almost losing its purchasing power, and neither the government nor anyone else will benefit from it History shows that using borrowed money for projects that can bring widespread productivity improvements and have a return on investment higher than the cost of borrowing can enhance living standards and repay debts, thus making such policies effective. If there is insufficient funding to finance debt, it is entirely acceptable for the central bank to print money and act as a lender of last resort, as long as these funds are used for investments that have sufficient returns and can repay the debt. Both history and logic indicate that good investments in education at all levels (including vocational training), infrastructure, and research that can yield results are very effective. For example, large-scale education and infrastructure programs almost always succeed, even though the benefits of these investments typically take a long time to materialize. In fact, improvements in education and infrastructure, even when financed through debt, are almost key elements in the rise of all empires, while a decline in the quality of such investments is almost always a precursor to the decline of empires. If executed properly, these interventions can completely offset the "toxic mix" effect. The "toxic mix" is often accompanied by other issues. The more the following factors appear, the greater the likelihood of severe conflicts (such as civil wars or revolutions). Decadence In the early stages of a cycle, time and money are often spent more on productive matters; but in the later stages of the cycle, time and money are increasingly spent on indulgences (such as luxury homes, artworks, jewelry, and other refined consumer goods). This phenomenon begins in the fourth stage, when such spending is seen as fashionable; but by the fifth stage, it begins to appear distasteful. Typically, this extravagant consumption is financed through debt, exacerbating the deterioration of financial conditions. The psychological changes that accompany this shift are also understandable: the wealthy feel that the money they earn should be freely spent on enjoying life; while the poor, suffering in silence, see this consumption behavior as unfair and selfish. In addition to intensifying social resentment, extravagant consumption (as opposed to saving and investing) also undermines productivity. Where a society spends its money is very important. If it is spent on investment projects that can enhance productivity and income, a better future will result; if it is spent on consumption projects that do not improve productivity and income, the future will worsen. Bureaucracy In the early stages of the internal order cycle, bureaucracy is low; while in the later stages of the cycle, bureaucracy expands significantly, making it more difficult to make rational and necessary decisions. This is because as society develops, things tend to become more complex, ultimately making it impossible to advance even some obvious good things—often requiring revolutionary changes to resolve. In a system based on laws and contracts, this problem is particularly pronounced, as the law itself may become an obstacle to advancing obviously beneficial matters. Here is an example I have personally encountered, as my wife and I are very concerned about this. Since the U.S. Constitution does not list education as a responsibility of the federal government, education is primarily the responsibility of state and local governments, with school funding mainly coming from local taxes in cities and towns. Although there are differences between states, generally, children in wealthy cities in wealthy states receive a far better education than children in poor cities in poor states. While most people believe that children should have equal educational opportunities, the reality is clearly unfair and inefficient However, this institutional structure is deeply rooted in the political system and is almost impossible to change without revolutionary reform. There are many examples that illustrate how bureaucracy hinders wise and effective action, but I do not have enough time and space to list them all. This has become a serious issue in today's America. Populism and Extremism In times of chaos and discontent, leaders with strong personalities who are anti-elite and claim to "fight for the common people" often emerge, known as populists. Populism is a political and social phenomenon that appeals to ordinary people who feel their concerns are not valued by the elite. It typically arises in situations where the gap between wealth and opportunity is widening, differing domestic and foreign values are seen as cultural threats, and "systemic elites" hold power but fail to effectively promote the welfare of the masses. When these factors ignite the anger of ordinary people, populists rise to power. These populists can come from the left or the right, and their political positions are often far more extreme than those of centrists, tending to appeal to the emotions of ordinary people. They are usually confrontational rather than cooperative, and tend to be exclusive rather than inclusive. This can lead to intense conflicts between left-wing and right-wing populists due to irreconcilable differences. The extremity of the "revolution" they lead varies. In recent years, the election of Trump in the 2016 election in the United States reflects the rise of right-wing populism, while the popularity of figures like Sanders, Elizabeth Warren, and AOC illustrates the influence of left-wing populism. The momentum of populism is increasing in political movements across multiple countries. Observing populism and political polarization as key indicators. The more severe the populism and polarization, the more likely a country is to be in the fifth stage, approaching civil war and revolution. In the fifth stage, centrists become a minority; by the sixth stage, centrists almost cease to exist. Class Struggle In the fifth stage, class struggle intensifies. This is because, in times of crisis and escalating conflict, people are more likely to stereotype others as members of a certain class and view these classes as enemies or allies. In the fifth stage, this phenomenon begins to become pronounced; by the sixth stage, it may evolve into an extremely dangerous situation. A typical characteristic of the fifth stage, which further deteriorates in the sixth stage, is the "demonization" of other classes, which often leads to one or several classes becoming scapegoats, widely recognized as the root of the problem. The result is an impulse to exclude, imprison, or even eliminate members of these classes, which may occur in the sixth stage. Racial, ethnic, and socio-economic groups are often demonized under socio-economic pressure. "Demonization" and "scapegoating" are typical and dangerous phenomena that require our close attention. Loss of Truth in the Public Sphere As people become more divided, emotional, and politicized, the distortion of information caused by media manipulation and propaganda makes it increasingly difficult for people to discern the truth. In the fifth stage, the warring parties often collaborate with the media to manipulate public emotions for support and to attack opponents. In other words, left-wing media figures collaborate with left-wing political forces, while right-wing media figures team up with right-wing political forces, engaging in "dirty battles" against each other The media has become as reckless as vigilantes: people are often "convicted" by the media without a court trial, and their lives are completely destroyed. During World War I and World War II, the democratic country of Britain also established a "Ministry of Information" to disseminate government propaganda. Mainstream media publishers who complied with government propaganda demands were promoted, while those who did not cooperate were criticized and marginalized. Revolutionaries also distorted facts in various publications. During the French Revolution, newspapers run by revolutionaries promoted anti-monarchist and anti-religious sentiments, but once these revolutionaries came to power, they suppressed dissenting newspapers during the "Reign of Terror." In times of vast wealth disparity and rampant populism, stories exposing the elite are particularly popular and commercially valuable in the media—especially content where right-wing media attacks leftist elites and left-wing media criticizes right-wing elites. History shows that the large-scale increase of such activities is a typical issue of the fifth stage, and when the media's opinion-forming power is combined with other punitive measures, the media becomes a powerful weapon. This phenomenon is now widely recognized. The "credibility" of traditional and social media has fallen to the lowest level in our lifetime. For example, a 2019 Gallup poll showed that only 13% of American respondents "very trusted" the media, and only 41% said they "somewhat" or "very trusted" the media. This figure was as high as 72% in 1976. This is not only a problem for fringe media but also for mainstream media and society as a whole. Even the Wall Street Journal and The New York Times, once seen as paragons of journalistic integrity, have experienced a significant decline in trust. In addition to political motivations, sensational stories have become more profitable against the backdrop of the current financial strain in the media industry. Most media professionals I encounter share my concerns, although they usually do not express these views publicly. This dynamic is hindering freedom of speech, as people fear being deliberately distorted and attacked in traditional and social media, making them reluctant to speak out. Even very capable and influential individuals today are hesitant to speak out publicly or run for office due to fear of the media. Since almost all high-profile individuals face criticism, nearly everyone I know believes that being vocal in public and standing up for truth and justice is dangerous, especially for those who might offend extremists skilled in manipulating the media. Such issues are rarely discussed in public but are frequently talked about in private. For example, I recently had lunch with a retired general who had held a senior position in the government, and we talked about his next steps. I asked him what he was most passionate about, and he said, "Of course, helping my country." When I asked if he would be willing to run for office, he replied that while he would sacrifice his life for his country, he could not bear the thought of enemies fabricating lies through the media and social platforms to harm him and his family. Generals like him, as well as many others I know who should be heard by society, are now afraid to speak out publicly because they fear being attacked by extremists, and such attacks are amplified by sensational media. Many of my friends have advised me not to publicly discuss these controversial issues in my book, saying that doing so could likely lead to a "media siege." I think they may be right, but I will not be silenced because of it Rules are abandoned, and the naked struggle begins When the "demands" that people are passionate about become more important than maintaining the decision-making system itself, that system is in danger. Rules and laws can only function under two conditions: first, they must be extremely clear; second, the majority must value cooperation within the rule system enough and be willing to compromise to ensure the system operates well. If these two conditions are not met, the legal system becomes precarious. If opposing parties are unwilling to communicate rationally with each other and unwilling to make concessions for the collective good (i.e., to give up the benefits they might gain through struggle), some form of civil war will emerge, testing the power dynamics among the relevant parties. At this stage, "winning at all costs" becomes the game rule, and "any means necessary" becomes the norm. In the later stages of the fifth phase, people no longer reason but are completely dominated by emotions. When "winning" becomes the only important goal, unethical struggles will escalate in a self-reinforcing manner. When everyone is fighting for their beliefs but no one can reach a consensus, the entire system is on the brink of civil war or revolution. This situation typically manifests in several ways: In the later stages of the fifth phase, those in control often use the legal and police systems as political weapons. Additionally, private armed groups may emerge—such as thug gangs that engage in violence and theft, or security forces that protect the wealthy from these threats. In the later stages of the fifth phase, the number of protests significantly increases and becomes increasingly violent. When widespread dissatisfaction erupts in society and those in power allow it to spread, it may eventually evolve into riots; conversely, if they attempt to suppress it forcefully, the situation may explode. Conflicts in the later stages of the fifth phase typically accumulate to a climax, ultimately triggering violent clashes, marking the formal entry into what historians refer to as the "civil war period," which I call the sixth phase of the "great cycle." This leads to my next principle: When you hesitate, leave—if you do not want to be caught up in a civil war or conflict, you should leave as early as possible while you still can. This situation usually occurs in the late stages of the fifth phase. History shows that when the situation deteriorates, those who wish to leave often find that "the door has been closed." The same applies to investments and capital flows; during such periods, countries often implement capital controls and other restrictions. The critical point of transition from the fifth phase (i.e., extremely poor financial conditions and intense internal and external conflicts) to the sixth phase (i.e., entering civil war) is when the system for resolving disputes in society shifts from "still operational" to "completely dysfunctional." In other words, the system collapses to a point of no repair, and people begin to use violence against each other, while the leadership has lost control. It is conceivable that completely destroying a system/order and establishing a new one is far more difficult than carrying out revolutionary reforms within the existing system. Although destroying the system may bring more trauma, it may not necessarily be worse than continuing to operate within the original system. Deciding whether to retain and repair a poorly functioning old system or to completely abolish it and start anew has never been an easy task, especially when that "old system" refers to the internal order of a country. However, this situation will ultimately occur, and most of the time it is driven by emotions rather than rational thought When a country is in the fifth stage (like the current United States), the key question is: how much pressure can this system withstand without collapsing? The "one person, one vote" democratic process has flaws, as voters typically do not evaluate candidates' abilities as carefully as companies do when selecting executives, but are swayed by popularity. History also shows that during times of severe conflict, democracy is prone to collapse. Democratic systems require consensus and compromise through negotiation, which means that opposing viewpoints must effectively cooperate within the system. While this ensures representation of major groups, it also results in extremely low decision-making efficiency, much like a large committee with significant differences in members' opinions. The greatest risk of a democratic system is that its decision-making process may become fragmented and hostile, leading to governance failure, poor outcomes, and ultimately triggering a revolution led by populist strongmen—these strongmen represent the masses who crave order and strong leadership. Another point worth noting: history shows that during severe conflict periods, federal countries (like the United States) often experience conflicts over the division of power between the central and local (state) governments. This phenomenon is not yet apparent in today's America, but once it arises, it will signify a further progression of society into the sixth stage. There are far too many cases of democratic collapse to discuss individually. While I have studied some of these cases and observed their patterns, I have not yet conducted a comprehensive and in-depth analysis, and I will not elaborate here. However, I can say that when various factors of the fifth stage are pushed to extremes—especially poor fiscal conditions, social extravagance, internal strife, and external threats—it creates a dysfunctional situation that can lead to power struggles led by strongmen. Typical cases include: Athens from the late 400s to the 300s BC, the dissolution of the Roman Republic 27 years ago, the Weimar Republic of the 1920s in Germany, and the fragile democracies of Italy, Japan, and Spain in the 1920s and 30s that turned to right-wing dictatorship (fascism) to restore order. Different stages require different types of leaders for optimal outcomes. The fifth stage is a crossroads, where one path may lead to civil war/revolution, while the other may lead to peaceful and (ideally) prosperous coexistence. Clearly, the path of peace and prosperity is the ideal path, but it is also the most difficult to achieve. This path of peace requires a "strong peace builder," who must strive to unite the nation, including proactively reaching out to opposing sides, incorporating them into the decision-making process, and reshaping the social order in a way that most people perceive as fair and functioning well (i.e., a highly productive new order that benefits the majority). Such leaders have been extremely rare in history, and we can only hope for their emergence. The second type is a "strong fighter," who possesses the ability to lead the nation through the flames of civil war/revolution. Sixth Stage: When Civil War Erupts Civil war is almost inevitable. Therefore, rather than blindly assuming "this won't happen to us," as most people in most countries do after a long period without civil war, it is better to remain vigilant and pay attention to signs that may indicate its approach. In the previous section, we explored non-violent revolutions occurring within the framework of the existing order, while this section focuses on the almost always violent civil wars and revolutions—they overthrow the old order and establish new systems. I could have studied countless examples to understand how they operate, but ultimately I selected what I believe to be the 29 most representative cases I categorize these cases into two types: one type leads to significant changes in the system or regime, while the other type, despite experiencing intense civil wars, fails to overthrow the system. For example, the American Civil War was an extremely bloody conflict, but it did not completely overthrow the national system at the time, so it is classified in the second group. Although this classification is not precise enough, we should not hinder our ability to identify patterns that would otherwise remain unseen in pursuit of precision. Most conflicts generally conform to the typical path described in this section, although there are exceptions. Civil wars and revolutions inevitably occur, fundamentally altering the internal order. Such changes are usually accompanied by a comprehensive restructuring of wealth and political power, including a complete reconstruction of debt structures, financial ownership, and political decision-making systems. These changes are a natural response to fundamental problems that the original system cannot resolve internally. Almost all systems eventually face such challenges. This is because almost all systems benefit certain classes while harming others, and when this imbalance reaches an unbearable level, struggles will erupt to determine the future direction. When the gap in wealth and values becomes extremely wide, compounded by economic difficulties that render the system unworkable for the majority, the populace will rise up, demanding a fairer system. The economically hardest-hit groups will attempt to seize more wealth and power from the affluent classes that benefit from the existing system. Revolutionaries naturally want to completely change the system, and thus will also naturally violate the laws set by those in power. Such revolutionary changes are often achieved through violent civil wars, although, as mentioned earlier, they can also be realized peacefully without completely overthrowing the system. Civil wars are usually extremely brutal. The early stages of war may still exhibit relatively organized power struggles, but as conflicts and emotions escalate, all parties will resort to any means necessary for victory, and the level of atrocities will rapidly escalate, far beyond what people can imagine in the fifth stage. Elites and moderates often flee, are imprisoned, or are killed. How do these civil wars occur? In the previous text, I have described a series of dynamics in the fifth stage that push society across boundaries into the sixth stage. At this stage, all these dynamics will be greatly intensified. I will continue to explain. How Civil Wars and Revolutions Occur As mentioned earlier, the cycle of accumulating wealth accompanied by widening wealth gaps ultimately leads to a very small number of people controlling a large proportion of wealth, while the majority of impoverished groups overthrow the rule of the wealthy through civil wars and revolutions. The frequency of such occurrences far exceeds people's imagination. While most typical civil wars and revolutions transfer power from the right to the left, there are also many cases where wealth and power are transferred from the left to the right. These cases are less common and manifest differently, usually occurring when the existing order falls into disorder and ineffectiveness, and the majority of the populace yearns for strong leadership, discipline, and efficiency. The success or failure of these new systems, whether left or right, hinges on the same reason: the key to success is whether they can achieve widespread economic prosperity; if not, they will fail. Because widespread economic prosperity is the decisive factor in the success or failure of new regimes, the long-term trend is a simultaneous improvement in overall wealth and wealth distribution (i.e., the economic and health conditions of ordinary people improve). When experiencing a certain stage of the "big cycle," people often overlook this macro perspective The leaders of these civil wars or revolutions, both in the past and present, are typically well-educated individuals from the middle class. These leaders often possess great personal charisma and excel at organizing and leading powerful and efficient revolutionary organizations to drive change. While significant wealth disparities and economic difficulties are often the main roots of conflict, revolutions are also frequently the result of multiple overlapping grievances. During the revolutionary process, groups with different demands often unite to push for change, but after victory, they frequently engage in infighting due to power and policy disagreements. As mentioned earlier, during the civil war/revolution phase, the ruling government almost always faces severe shortages of finance, credit, and purchasing power. This shortage prompts the government to seek to plunder resources from the wealthy, who then transfer their assets to safe places or forms (such as other countries, foreign currencies, gold, and other assets that are difficult to tax or do not generate productivity), which in turn leads the government to implement capital controls to prevent this outflow. Worse still, internal chaos can invite challenges from external hostile forces. Civil wars weaken the unity and capacity of the state, attracting foreign powers to take advantage of the situation. This is also one of the reasons why civil wars and external wars often break out simultaneously. Other reasons include heightened emotions, the tendency of populists to fight, leaders discovering that external conflicts can unite the domestic populace, thus deliberately creating conflicts, and a greater willingness to wage war externally to acquire necessary resources in extreme scarcity. Almost all civil wars are accompanied by external intervention, attempting to influence the outcome of the war for their own benefit. The onset of civil wars and revolutions is often not obvious at the time they occur; only when one is involved do they realize it. Although historians may designate start and end dates, these dates are often arbitrarily set. Civil wars are extremely brutal because they are a life-and-death struggle. Everyone is forced to choose sides, and moderates are the most likely to be eliminated in the midst of the conflict. In such situations, the most suitable leaders are "inspiring general-type figures"—those who can rally support and win various battles. Due to the fierce nature of the struggle, they must also be tough and willing to take all necessary measures to achieve victory. The "civil war period" marked by historians typically lasts only a few years, with the side that controls the capital's government institutions being declared the victor. However, just as the beginning is often unclear, the end of the war is also rarely as clear-cut as historical records suggest—power struggles may continue for years after the war. Despite the heavy costs of civil wars and revolutions, if reforms are implemented properly, they can often lay a better institutional foundation for the future. The future direction after a civil war or revolution depends on the responses and reconstruction methods employed in the aftermath. Conclusion My study of history tells me that apart from "evolution," nothing is eternal in this world. There exist cyclical patterns in the process of evolution—like the tides, they rise and fall, difficult to resist or reverse. To cope with these changes, the key is to understand which stage of the cycle one is in and to grasp the eternal and universal principles for responding to that stage. As environmental conditions change, responses must also be adjusted accordingly—in other words, the optimal approach depends on the environment, which is always in the dynamic changes we have just discussed If a society cannot adapt to change, it will ultimately decline. This is why continuous reform to adapt to change is the optimal path. The standard for judging the quality of a system is very simple: does it effectively meet the needs of the majority? This can be measured through objective indicators, and we are indeed doing so and will continue to do so. That said, the loudest and clearest lesson from history is that establishing win-win relationships through efficient collaboration, jointly expanding and reasonably distributing the "cake," and ensuring that the majority feel satisfied is far more rewarding and involves much less pain than engaging in civil wars for wealth and power, which leads to one side overwhelming the other