Dear Dave,
I want to tell you a story.
My wife is both an amazing mom to our two young kids and a supply teacher who picks up shifts on occasion when we are looking for some extra cash. A few weeks ago, she decided she would take a shift teaching online. Schools were desperate for teachers, and my wife was getting multiple calls a week asking for her help. However, in order for her to work, someone would have to watch our two young kids. Since I work full time from home we decided that I would help the kids between my work calls, so that we could both work on the same day.
It was a hard day. It was very challenging to attend to the immediate needs of our children while at the same time trying to both keep up with our work obligations. At the end of the day, we had the satisfaction of knowing we had earned an extra $200 and helped kids amidst a supply teacher labour shortage. It was a sacrifice, but it was worth it.
However, two days later, we were told by our friend about a COVID relief government program. The program pays people who cannot work due to their kids being home from school because in person learning is closed. The pay? $450 per week! We realized in that moment that after all that sacrifice and hard work we actually lost $250. My wife would have qualified for the $450, but by working, she became ineligible for the program. If we had known sooner, we could have just applied for the funding, had way less stress, and made more money.
Funny story right? Wrong. I find it utterly confusing and slightly terrifying.
What the government had created for us was an incentive to do nothing. They created a system where sacrifice was hindered and passivity was rewarded. What does this say about us as a culture when our incentives are reversed? Where does that lead us as a country?
Years ago I was obsessed with your show. I read your book: The Total Money Makeover. You are known for being America’s money guy, a Christian (like me) who teaches down to earth principles related to life and money. I memorized your slogan, which can only be said with your classic southern drawl: “Welcome to the Dave Ramsey show, where cash is king and the paid off home mortgage has taken the place of the BMW as the status symbol of choice.”
Through your popular radio/youtube show, you encourage wise financial stewardship as you respond to each of your callers: “Are you thinking about taking a student loan? Don’t! Instead, go get a part time job and work hard to pay for school. Learn yourself some responsibility and a solid work ethic in the process! Are you thinking about leasing a new car? Don’t! Instead, buy an old beater that will get you from A to B securely and use the rest to pay off your debts. Are you thinking about getting a mortgage to buy a house? Well… okay, but make sure it’s only a 15 year loan and that you work your butt off to pay it off in half that time.”
Dave, your advice has been great for so many people, including me. You’ve helped thousands get their lives together and regain hope. You have rescued many from bad consumer debt and brought them into a safe haven of healthy financial habits by setting a strict budget, working hard, paying down debt and storing wealth.
But there’s a problem, Dave. Your “no debt” program doesn’t work in our current financial system. In fact, by going your way it will mean people will stay poorer than others who work less than them. Why? Let me explain.
In our current financial system, people get rich not by working, but by using debt to buy assets. For evidence, look no further than Canadian housing prices. In 2020, the average Canadian home owner made just as much from appreciation on their house than they did from their salary. Stop and think about that for a minute. You can either work a whole year, exchanging your precious time and effort to make a salary (and in the process, you will be contributing to the overall good of our society through providing value to others) or, you can just buy a house, sit and play video games for a year, contributing nothing to society, and you will wind up in the same financial place one year later.
Needless to say, this is insane. What this says about us as a society is that getting ahead has very little to do with how hard you work, and everything to do with how well you can play the system. But wait, it gets ever more sinister!
The government is in the process of keeping interest rates low and doing something called quantitative easing. I’m not a technical expert, but I know enough to know that what this does is fill the system with more money. We celebrate because we’re getting free stimulus cheques from #DaddyTrudeau. But where is that money coming from? Answer: it’s coming from no-where. It’s being created out of thin air. Here’s the danger in that: as more money floods the economy, all money becomes less valuable. It’s like having a rare collection of Beanie Babies, only to find out that the manufacturer decided to make way more of those same Beanie Babies. Now everyone and their dog has the Princess the Bear TY, and suddenly, yours isn’t worth as much.
By printing more money two things happen: 1) The cash you own loses value. This is seen by rising prices at the hardware or the grocery store. 2) Money moves toward hard assets. People who actually want to preserve their wealth and save for their future are forced to find “rare” (or scarce) things to put their money into. Because rates are so low, they borrow at next to 0% interest and buy things like property or stocks.
Here’s the point: Those who own assets get richer and those who do not get poorer. The rich already own assets and the poor do not. This creates and exacerbates the wealth divide. Hard working people who do not have assets, are being priced out of the housing market and falling further behind. No amount of hard work can get them ahead because work doesn’t gain wealth. More money keeps entering the system, robbing them through dollar inflation, and the money goes to the rich through asset inflation.
So here’s the question: How does someone hold to “the same advice your grandmother would give you” and make it in this system? Dave, your advice falls short, not because the principles are bad, but because of our flawed system. Why would anyone work hard, get out of debt and save when they would end up in a better place by not working and leveraging as much debt as possible?
I’m sure you would respond by saying that I’m not accounting for risk. But what risk? We’ve already learned from 2008 that governments are ready to print themselves out of any problem. They will not choose austerity. They will choose to debase our currencies.
So in our system, no, Dave, cash is not king. Cash is trash.
As our economy becomes more turbulent, what we need is a solid foundation. We need a pure substance that cannot be debased upon which to set our trust and put our savings. We need something to invest in that can hold and increase purchasing power far into the future. We need Bitcoin.
Dave, your principles do not work in our current fiat system, but work beautifully on a Bitcoin standard. On a Bitcoin standard hard work and savings are incentivized, not punished. I’ve heard you disregard Bitcoin because of it’s volatility when you fail to recognize that because of that volatility, leveraging is dangerous and discouraged. Hodling is encouraged.
Dave, you tell people to invest in mutual funds with a 10 year track record of earning and average of 10% or more per year. Why not tell them to check out an asset with a 10 year track record that has averaged 200% per year?
Dave, please stop dismissing the antidote to our debt problems and start seriously considering how Bitcoin fixes our monetary system. We need your voice!
Sincerely,
Hodling Jesus
HODLing Jesus 