update 6/05/2009: You can watch Dave Ramsey's Town Hall for Hope free on Hulu.
I attended Dave Ramsey's Live “Town Hall For Hope” Simulcast Thursday night and wanted to share some thoughts from the program. Is this related to the CPA Exam? No – but it's related to the economy and the job market – two things that strongly affect the accounting profession and your pursuit of the CPA designation.
Let me say two things:
1. This is Dave Ramsey's opinion (which I usually happen to agree with) and commentary and not intended as professional advice of any kind.
2. There will be people who take issue with various things that he said because everyone has an opinion and many people with opinions think that they're experts. As it turns out, they're just experts on their own opinion, and even that is subject to change. If you think Washington walks on water, the following will probably fall on deaf ears.
Oh, and one more thing – I was scribbling furiously during the event and took notes as fast as I could and still read my own handwriting. I tried to quote him word for word, but had to fill in the gaps afterward using the live blog from the telecast, and it *still* may not be perfect, but the spirit of the message is intact.
The program started with fear. Americans are scared right now. It starts in Washington, the media follows, and it causes Americans to freak out.
“Fear is the antithesis of hope.”
A man named John Maynard Keynes received a B.A. in mathematics from Cambridge in 1905. He came to the US in 1934 and had a meeting with FDR to tell him how to get the US out of the Great Depression. FDR finally listened – four years later. Keynes held that full employment can be maintained with government spending, government investment, and government hiring. Keynes also said that the government must deficit-spend in a slow economy.
In 1944, everything rebounded with the GDP skyrocketing and unemployment dropping to 1%.
The New Deal and Keynesian Economics worked a miracle, right? Wrong.
In 1941 something called World War II was going on and the men of the US were off fighting and the women were working stateside. Everyone was working and we were making stuff – a lot of stuff, for the war.
“Keynes got credit for what World War II did.”
Then, Milton Friedman – the father of capitalism came along and said “you're wrong”.
“…democracy is like a three-legged stool. One leg, political freedom; the second, economic freedom; the third, moral responsibility. Weaken any leg?the stool topples.” – Michael Novak
“We need a capitalism that has a value system that cares about its employees and cares about its customers.”
“Capitalism is the source of hope for America.”
Good Morning America
Dave was on Good Morning America around the time of the first bailout (Fall 2008) with two fellow “financial goobs” that he highly respects and believes that they are sincere. They made comments like “well Dave, they have to do something…most economists agree that something has to be done.”
“I'm reading a different (economics) book than they are reading.”
“I believe you can be sincere and still be wrong.”
“Bush bailed out stupidity. The new administration came in and they stimulated stupidity.”
“The truth is you're grownups, you don't need a keeper or a caretaker, and this is how life works. It's not fair…We've got to go back to some basics. We need to love people enough to allow them to fail. Failure brings clarity. Failure will run you towards excellence. If there's no chance you can fail, you will never be at your best…Failure needs to be an option.”
“We need to re-introduce a word into the culture. This word is now politically incorrect – the word is ‘no'. It will set you free … No, you can't buy a house. You're freaking broke.”
“My father used to say ‘you shot it, Tarzan, you eat it.' “
“Take responsibility when you cause the mess. Learn your lessons and keep going.”
Question for Dave: “Is this our generation's “Great Depression”?
“I hope this is this generation's Great Depression. People from the Great Depression were changed after going through it. That generation learned and gleaned something from the pain.”
In the Depression, the stock market lost 90%; we've only lost 57%. This isn't even the greatest recession in our generation.
When Nixon resigned, the stock market dropped 50% and took 60 months to recover. We had 11% inflation and gasoline lines that went around the block.
In 1982, after four years under Carter, US inflation was 10-13% and 30 year fixed interest rates were 17%.
Yet – 47% of Americans polled say that they fear losing their job.
Why? Fear – not reality.
Question for Dave: What other alternatives are there to the stock market since things are so bad?
Fact: In 100% of the 15 year periods in the stock market's history, the stock market has made money.
The stock market is artificially low right now. Why? Fear. It's hysteria driven by the media.
“If you don't believe that Wal-Mart and Home Depot will come back – you've given up. Do you really believe that these companies are worth half of this time last year?”
“If you have money to invest in the stock market, it's like you are at K-Mart and it's the blue light special.”
“I've decided that economic forecasters exist only to give meteorologists credibility.”
Three things to do if you're struggling with hope.
1. Get up. Take action. Get moving. Even if it doesn't make sense, at least you are doing something.
2. Don't participate in loser talk. If you hang out with losers, you know what you are going to be? A loser. Stay away from the “Eyeores” who whine about everything in life. Studies show that your income is within 10% of the average income of your 10 closest friends. Choose your friends and influences wisely.
“Five years from today you will be the same person you are today except for the books you read and the people you meet.”
3. Learn to give again. If you don't have money, go serve the homeless. All of a sudden, you'll get your eyes off your hopelessness.
Tonight was a breath of fresh air. It's nice to hear someone say publicly that we're going to “be ok” and have some optimism for a change. Optimism seems to be in short supply these days.
The quote of the night:
“It's not a perfect formula, but you know that your best chance at success is YOU…and it's really your only chance. If you wait on some congressman to fix your life – darling, you're going to have a long wait. Have you noticed how effective they are at anything? If you stand there at the mailbox, you're going to be standing there until you're old. The President is not going to fix your life whether he's Republican or Democrat…and it's not their job even if they think it's their job.
It's YOUR job to fix your life.”
Amen, Brother Ramsey.
I've been reading along for a while now. I just wanted to drop you a comment to say keep up the good work.
Nice writing. You are on my RSS reader now so I can read more from you down the road. Allen Taylor
Hey Jeff Thanks for the article. It was great to read. Apart from aspiring to be a CPA, one needs to inculcate other attitudes and worldly wisdom to make him/her competent. Your post was definitely an attempt towards that. Keep posting more such articles.
I love Dave Ramsey! I think everything he says here is dead-on.
Dave Ramsey is the best! Thanks for the inspiration on this front as well as the exam.
One minor correction: Carter wasn't President in 1982.
Eric - good catch. It should have read: "In 1982, after four years under Carter, US inflation was 10-13%..." Thanks for the heads-up. -Jeff
Nice work, Jeff. If the accounting gig doesn't work out, a writing career should be quite possible. I would add one thing to Dave's comments. The beginning of the end of the Great Depression actually began about the time that the New Deal started, based on at the unemployment and economic output numbers. They bottomed out about the time FDR's programs began. In fact, just eyeballing those macro numbers, it could be argued that the New Deal made things worse because the economy started another dip soon after the New Deal really kicked in. So I don't think even WWII can take any credit. Looks to me like the economy was going to recover once the money supply stablized. (Sorry about the economics lesson. Economists cannot resist these kinds of things!)
Dave has good points but oversimplifies a lot of things as always. I wonder about the "Washington doesn't walk on water" bit. I hear this increasingly. We live in a democracy. "Washington" consists of the duly elected representatives of the populace. The same people who cheer democracy with every step seem to be heavily implying of late that our duly elected government is unqualified to govern and is inherently disinterested in the well-being of the people who elected it. If that's true, then democracy is a failure. We cannot be trusted to govern ourselves. If democracy and self-determination are good things, then while nobody should place absolute trust in any individual elected leader (since human beings are fallible), the concept of government governing should be as natural as fish swimming. That includes taking economic actions for the benefit of the populace a as a whole. Otherwise, what exactly are we voting for? The president isn't going to step in and personally fix your life tomorrow, and so you should do what you can do now, but your life will hopefully exist past tomorrow. Governmental action is supposed to be for the long term, to build a better world for next year and ten years from now and for our children's children's children. But if democracy doesn't work, we've got way bigger problems than unemployment and stocks and real estate.
Well done, Jeff!
Thank you Lindzy. Susan - the Washington walk on water comment was from me, not Dave. I don't think Dave simplifies much of anything and definitely not "as always". I think he's spot-on, actually. Thanks for writing though...if you know of some areas where you think he over-simplifies, I'd like to hear some examples...maybe I've missed something over time...like you said, we're all fallible. Jeff
??democracy is like a three-legged stool. One leg, political freedom; the second, economic freedom; the third, moral responsibility. Weaken any leg?the stool topples.? - Michael Novak Wonderful quote and so true.... It unfortunately doesn't speak well for the direction of our current democracy. All three of these "legs" are in jeopardy. Ron Paul in 2012!!!!!!
Thank you for putting these together! I took notes and got home madly typing too - there was so much good to think about. I'm using your notes to help fill in some gaps on mine....
So funny. When I saw the title "Hope" I thought to myself "Damn another place has gone all liberal on me. I can't believe he is going to voice his politics!" Then I started reading about Keynes and I verbally moaned. After reading a little further I verbally cheered! Funny how my mind changed about you voicing your politics, right? Either way, it's nice to see some fiscal conservatives on the web. This election was interesting to me in how it was OK to talk politics in the office. It still amazes me the number of accountants in my firm that are so liberal. This article was a breath of fresh air and things I have been telling my friends for 10 months now.
That's funny Jim...I can see now how you would run the gambit of opinions about the piece. I have strong political opinions, but I've kept them out of this blog for the most part. I just want my kids to grow up in an America where their success is determined by how hard they work and the calculated risks that they take. I don't think that's being political...that's just being a good Dad and a good American, I think. Good stuff...thanks for chiming in.
Susan said that we are a democracy. I simply have to respond after reading that. The United States was founded to be a constitutional republic, not a democracy. In fact, our founding fathers' writings included warnings about becoming a democracy. To be a constitutional republic means to follow the rule of law. To be a democracy means to follow the majority rule (or mob rule). What if the mob is wrong? Did you know that the word "democracy" was not even used in a presidential speech until the early 1900's? For those students who are still taught the Pledge of Allegiance, the words are "and to the Republic," not "and to the Democracy." The common belief that we are a democracy is a colossal failure of our education system. Sorry about my rant, we history buffs can't help it.
Jeff, You beat me to the punch. This is exactly what I wanted to do--just got caught up in blogging about National Health Care and other issues! Thanks for the good work.
Thanks, Jeff, for your summary! I think Dave Ramsey is a great gift to us! Susan - thanks for being honest. Maybe this will sound simplistic. When things get out of control, in order to get our bearings, we have to return to the basics. Self-discipline is not popular, but it has a 100% success rate. Government needs to get back to basics and let the market work. "Yeah-but... what about the Enrons, AIGs, etc.?" Their sins eventually find them out in a free market system. Government needs to excuse itself from fixing the economy, education, marriage, parenting, healthcare and many other things. If government gets back to basics, will bad things still happen? yes. Will they resolve themselves faster? YES! Countries rebounding from Communism will testify over and over that part of the slowness of their rebound is that people spent so many years being told what to do that they lost their resourcefulness and creativity and ownership of their lives. We pray that NEVER happens in the U.S. For Bible readers reading this, remember when Israel asked for a king because they wanted to be like everyone else? That was the first major lesson in the history of mankind of the dangers of thinking there's an "ideal political system" other than self-governance by living according to Biblical (simplistic) principles.
Thanks for the useful info. It's so interesting