Why I Believe Paul Volcker Was The Greatest American Hero I've Known

Dec. 11, 2019 4:20 AM ET15 Comments30 Likes
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Ray Dalio
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Summary

  • For the nearly 50 years that I watched him or knew him personally, I found Paul to be a man of unwavering character and capability who put working in the service of our country above all else.
  • In 1970-71, he managed the breakdown of the dollar monetary system with great skill.
  • In 1979-84, he broke the back of inflation, which was essential for our economic system's survival and required great character to do the right thing under strong criticism, because tightening monetary policy meant a lot of people had to suffer a lot.

Paul Volcker was the greatest American hero that I have known. I want to convey to you what made him such a great hero, both because I'd like the memory of him to be accurate and because I believe that we have lost sight of what great heroes look like and I hope that looking at one will help us rekindle that memory.

For the nearly 50 years that I watched him or knew him personally, I found Paul to be a man of unwavering character and capability who put working in the service of our country above all else, always putting doing the right and difficult things ahead of the expedient and partisan things.

In 1970-71, I watched how he managed the breakdown of the dollar monetary system with great skill. In 1979-84, I watched him break the back of inflation, which was essential for our economic system's survival and required great character to do the right thing under strong criticism, because tightening monetary policy meant a lot of people had to suffer a lot. At the time, he was the most powerful man in the world, because although the U.S. president could push the nuclear button, Volcker controlled how much money and credit there was in the world, which had a much bigger impact than anything else at the time.

After he left the Fed in 1987, I watched him be chosen to oversee the recovery of Holocaust victim assets from Swiss banks because the world considered him to be the most capable and least biased person to tackle this highly contentious issue. After that, I watched him take on and handle the highly politically charged investigation of corruption in the UN oil-for-food program in Iraq, once again because he was the most principled and capable person who everyone believed would do the right things rather than politically expedient things. Over the last 50 years, I watched presidents from both political parties and heads of states from all important countries in the world rely on his great capabilities and character to provide them with wise guidance. I knew him personally as a man who had great wisdom, humility, and classic heroism in which he sacrificed his well-being for the well-being of others.

Even after he knew that he was approaching his end, when we would talk, he never worried about himself as much as he worried about the well-being of our country and those who served it. When I asked him how he was doing, he would briefly give an accurate summary of his health and then move on to what was most important to him, which was making sure that public servants were well-educated and equipped to serve our nation well.

The below video discussion between us, in which I asked him to pass along his most important principles, might help you better understand this great man and the messages he most wanted to leave behind. When watching it, keep in mind that he then knew that his time was limited.

It is for all these reasons that I assess Paul Volcker to be the greatest American hero that I have ever known.

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Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

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Ray Dalio profile picture
7.11K Followers
Ray Dalio is the Chairman and co-Chief Investment Officer of Bridgewater Associates, which is a global macro investment firm and is the world’s largest hedge fund. He is known to have a very practical understanding of economics that is very different from conventional economic thinking and that he spelled out in "How the Economic Machine Works". He started Bridgewater in 1975 out of a two bedroom apartment in New York City and has been a global macro investor for more than 45 years. While at Bridgewater his industry-changing approaches to investing -- which include the invention of risk parity, currency overlay, portable alpha and global inflation indexed bond management -- prompted Alternative Investment CIO to write an article entitled “Is Ray Dalio the Steve Jobs of Investing?”, which compared his industry-changing inventions to those of the Apple founder. According to an industry study, Bridgewater's hedge fund has made more money for its investors than any other hedge fund ever -- an estimated $37 billion. Bridgewater Associates has received numerous awards, including over twenty “Manager of the Year” awards from every major financial publication, and Ray has received three “Lifetime Achievement” awards. Additionally, a long list of economic policy makers actively seek his advice, which prompted Time Magazine in 2012 to name him “One of the 100 Most Influential People in the World”. Ray is an active philanthropist with a particular interest in oceanographic research and conservation. He is a participant in The Giving Pledge, a commitment to give more than half of his wealth to charity. Ray believes that reality works like a machine and that principles for dealing with reality are required to be successful. For those who are interested in learning the principles that led to Ray's success, he set them out in Principles.org which focuses on management principles and EconomicPrinciples.org which describes the principles of the economic machine.
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