By JLP | June 25, 2010
I had a review copy of Jason Kelly’s newest book, Financially Stupid People Are Everywhere: Don’t Be One Of Them*, waiting for me when I returned home from my family vacation. I’m not finished with the book yet so I’m not ready to post a review. However, I do want to share with you a quote from the book that resonated with me because it sounds like something I and other AFM readers said when we were discussing the housing bubble. Here’s the quote:
In all the talk of the economic meltdown, the media blamed the Federal Reserve for putting too much money on the street, blamed mortgage brokers for lending it out at easy terms, blamed banks for going along with the loans that came in from the brokers, blamed financiers for inventing ways to repackage and resell those loans, blamed homebuilders for building more houses than the market coud support, blamed housing prices for falling instead of rising forever, and blamed corporations for laying people off when the economy stalled.
Nobody blamed the borrowers.
Maybe “nobody blamed the borrowers” is an exaggeration, but he does have a point. Government (Republicans and Democrats alike) for sure placed the blame on everyone and everything EXCEPT the borrowers, who were largely “victims” of the whole mess. The reason for this is political. It’s not good politics to call voters stupideven though it seems most Americans did indeed consider most of those who got into trouble as stupid or at least ignorant.
The point of Kelly’s book is that companies have ALWAYS sought ways to separate people from their money. People would be wise to understand this and consider it in ANY business transaction. In other words…BUYER BEWARE! If all Americans understood this and it was backed up by NO BAILOUTS, it would drastically change the way people thought about their finances.
In other words, the real key to solving our problems is through EDUCATION! Unfortunately, it requires that people actually be proactive in seeking this education. Regardless, our system should be based on allowing those who take the initiative to succeed and those who don’t, to pay the price for their mistakes. It shouldn’t be up to government to try to cover all the bases by over regulating society.