Page 26 - Ray Dalio - Principles

discovered I had hypoglycemia, which gave me an exemption.
When I look back on that, I see that I got out of serving on a
technicality—that my dad was essentially helping me dodge

the draft—which now gives me mixed feelings. I feel guilty I
didn’t do my part, relieved I didn’t experience the harmful
consequences so many others suffered from the war, and
appreciative of my dad for the love behind his effort to protect
me. I have no idea what I’d do if I were faced with the same
situation today.

As America’s politics and economy deteriorated, the

country’s mood became depressed. The Tet Offensive in
1
January 1968 seemed to convey the U.S. was losing the war;
that same year Lyndon Johnson decided not to run for a second
term and Richard Nixon was elected, beginning an even more
difficult era. At the same time, France’s president Charles de
Gaulle was turning in his country’s dollars for gold because he
was concerned the U.S. was printing money to finance its

spending. Watching the news and the market move together, I
began to see the whole picture and understand the cause-effect
relationship between the two.

Around 1970 or 1971, I noticed gold was starting to tick up
in world markets. Until then, like most people, I hadn’t paid
much attention to currency rates because the currency system
had been stable throughout my lifetime. But as currency

events increasingly appeared in the news, they caught my
attention. I learned that other currencies were fixed against the
dollar, that the dollar was fixed against gold, that Americans
weren’t allowed to own gold (though I wasn’t sure why), and
that other central banks could convert their paper dollars into

gold, which was how they were assured that they wouldn’t be
hurt if the U.S. printed too many dollars. I heard our
government officials pooh-pooh the worries about the dollar
and the excitement about gold, assuring us that the dollar was
sound and that gold was just an archaic metal. Speculators
were behind the rising gold prices, they said, and they would
get burned once things settled down. Back then, I still assumed
that government officials were honest.

In the spring of 1971, I graduated college with a nearly
perfect grade point average, which got me into Harvard