Q & A: Dave Ramsey
Interview by Sarah Pulliam | posted 9/26/2008 11:13AM [Christianity Today]
What do you think of the bailout?
I think it's a disaster. It's the largest government department ever formed in the history of man, and they are doing it in five days, and they are doing it based on a spirit of fear.
There are other things we could be doing to calm markets. All of the Bush administration appears to be in a dead dog panic. I'm afraid it's going to pass, but that doesn't mean we're going to like it.
What do you recommend instead?
Change the market accounting rules. Do away with the capital gains tax, which will cause money to flood into the market instantaneously in 24 hours. Last, if we do need to do some insurance of some of these bonds, we can insure them rather than just buying them all. Only 7 percent of them are in foreclosure, while 93 percent of them are paying, so why are we buying them all—so we can make Paulson king?
Many people find this whole mess very confusing, because it is. Many financial advisor people are saying that something like what Congress is now trying to do is essential. They are wrong, and Dave Ramsey is exactly right.
Those market accounting rules require that at the end of each day, securities that no one would buy that day be counted as worthless. But a mortgage that no one wants to purchase today is not necessarily worthless. It is worth at least what the property it is on could sell for on the market, which, while it might be lower that it once was, is never nothing.
Dave Ramsey’s prescription would work, and work much better than the proposed total government buyout. But, of course, Congress - especially one controlled by Democrats - is never going to pass any such prescription. Can you guess why?
Because it is a solution that removes power from government, rather than giving government more power. Once you put the words 'remove' next to the word 'tax' Congress is sure to balk. Government meddling in markets is what caused this mess. It can be solved by taking away that very meddling.
But expecting government to limit itself is a bit like expecting water to run uphill.