Town Hall For Hope: Dave Ramsey's Views on Today's Economic "Crisis"

Last night I attended a local live viewing of Dave Ramsey's "Town Hall for Hope" broadcast. I am nowhere near an "economic whiz" nor possess any in depth understanding of economics. I have lived long enough, however, to have experienced our MSM's psychopathic fixation on tragedy, hyper exaggeration, and generating fear. I have also lived long enough to remember prior recessions in the 70s and 80s.

I was relieved to hear Dave Ramsey, host of a nationally syndicated radio talk show and author of several books on debt relief and personal finance, voice similar concerns that I have. He, too, is staggered by the constant gloom and doom reporting of the economy and the way the MSM and other financial "geniuses" harp on how bad times are.

Some of these "geniuses" have attempted to liken it to The Great Depression. Ramsey was quick to point out that the current situation isn't even close. He rattled off statistics of the Depression, as well as two other recessions from the 70s and 80s. Today's recession is still not as bad as those two.

Here's a brief comparison of the four economic challenges our nation has faced so far:

The Current Recession:

• The stock market experienced a 57% drop. (Interestingly, Ramsey pointed out that the stock marked has rebounded some 20% in the past seven weeks. It has recently risen from a low of 6400 to over 8000; but, the press isn't reporting this. Why???)

• Mortgage rates are at a 30-year low of 4 3/8%.

• 0% inflation (zero!)

• Unemployment: 8.5%

• No energy crisis, as was the case in the 70s

The 70s Recession: The political situation was extremely rocky with the resignations of President Nixon and Vice President Agnew. This occurred during a serious energy crisis that many of my colleagues and friends (of course, the MSM, too) have somehow forgotten. In 1973-1974 we were in a serious recession. Other facts:

• Unemployment: 15%

• Inflation: 10+%

• Stock market dropped some 50% (took 61 months to recover).

• Energy crisis: gas lines snaked around the block, and inflation became "stagflation": inflation in a stagnant economy.

The 80s Recession: The nation came off the coat tails of Carter and Reagan came on the seen to deal with the economic problems of the day. There was a similar 50% drop in the stock market.

• Inflation was over 10%

• Unemployment was over 10%

• Interest rate reached 17% on home mortgages

Now, let's compare these recessions to The Great Depression (most figures from 1938-1940):

• Stock Market dropped 89%

• Unemployment grew to over 17%, peaking at 25% in 1933

• Bread lines .... real bread lines .... were everywhere (Ramsey quipped that today's executives flying to D.C. in Gulfstreams looking for bailouts hardly compare.)

So, as you can see from the above information, today's recession pales in comparison to the two prior recessions, let alone when held up to the Depression.

Here's a little reality check on those home foreclosures: 60% of those were in 5 states (CA, AZ, FL, MI ... and missed the 5th one. Sorry!) There are 35 counties involved. Compare that to the remaining 40% of foreclosures spread out among the other 45 states.

Here are some issues the audience brought up that Ramsey addressed:

• Gold: he called this the "snuggie of investment." He really poo-pooed this as an investment strategy. According to Ramsey, gold is very volatile and, contrary to what you hear the gold ads that are everywhere, has not been used as a standard in failed economies since the days of the Romans. He gave New Orleans/Hurricane Katrina as an example: goods and services and bartering were used in that "failed economy" setting. No one was running around with little bags of gold. From 1833 to 2001, the compound annual growth rate was 1.54% -- not much return for your investment.

• A good time to start up a new business? He said it very well could be. He listed several highly successful companies, still performing well, that were started up by individuals in the 70s and 80s recessions: MicroSoft, Hobby Lobby, Dell, the Weedeater was invented and was super successful. In 1946, the Chick-fil-a company was started.

• Will we become a "cashless society?" Will the dollar be replaced as the world standard? Ramsey really doubted this and chalked such fears up to the "gloom & doom folks."

• Unemployment: Ramsey emphasized that jobs going down is a symptom of the economy slowing down. Making up jobs won't fix it. As the economy corrects, jobs will go up.

• FDR ended The Depression? Ramsey went back to the history of the day -- something that today's financial "geniuses" fail to factor in. Ramsey asserted that FDR had adopted the economic strategy of John Maynard Keynes (pronounced "Canes") of England -- "The Father of Deficit Spending." However, it wasn't Keynesian economic theory that saved the U.S., but rather World War II. That historic event is what dropped the country's unemployment rate down to 1% brought on by the astronomical demand for goods. Ramsey pointed out that Milton Friedman, who won the Nobel Prize for economics in 1976 for his theories on capitalism and free markets, thus shooting down Keynes' theories.

Ramsey ended the evening with recommending that the public not buy into the fear being generated by the press. Instead, he invited people to follow his three steps: 1) get up and take action; 2) don't participate in "loser talk", and 3) start giving. Please go to Dave Ramsey's site for tons of information and advice: Town Hall for Hope.