Amazing interview in U.S News and World Report. The first question is priceless.
Interviewer: What surprised you most about the current financial crisis?
Suze: That it happened at all.
Surprised at that response? On what did she blame the general lack of foresight? CEOs who “went on television and looked in the cameras and told everyone it was going to be OK, that they were fine.” This is just another example of the rampant economic and financial illiteracy that permeates the “expert” ranks on such matters. That Orman didn’t have a clue, and that she said, “I saw the stock market might be a little whatever,” reeks of professional incompetence. She gets even more stunningly stupid:
Why did I believe them? I believed them because do you think a normal human being, which I am, would think that after Enron, after WorldCom, after all those debacles and Sarbanes-Oxley and having to sign financial statements, would any CEO be that stupid to go on national television where everything is recorded and look in the camera and lie through their teeth? In a million years, I never thought that would happen.
Suze is right in that she is a personal finance counselor (she says “expert”), and though she says her job is “to look at what happened in the economy and what is going on in the world of finance and to tell people, based on fact, this is what’s happening now,” she says she has no responsibility for understanding the economy? She’s right that the recession (Depression, Suze) is a good thing – it’s a necessary correction to flush out the consumers-gone-wild spending habits she deplores. Strangely, she talks about a market strategy for investment, when asked, even though she says earlier in the interview that she is not a “stock market guru.”
I do like her show where she talks people out of stupid expenditures they can’t afford. She’s always given consistently sound advice to financially unsophisticated people, however, this interview makes it impossible to take her seriously as a professional. She is clearly a result of great marketing.
Note: for those new to the site, Mises University is the great, annual conference from the Mises Institute which offers the most comprehensive economic education ever offered to students of economics.
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Wait a minute. She blames CEOs for going on TV? Never mind the government officials (Paulson, Bernake, etc..), what about her?
She SELLS financial advice on TV and she doesn’t even understand how the economy works?
What happens when government bonds are worthless due to inflationary policies? Will she then blame herself for her sheer ignorance in always recommending (on TV) bonds as secured investments?
Suze Orman isn’t financially educated in any regard. She’s one of those “self-taught” financial experts, like that jerk that wrote Rich Dad, Poor Dad.
You’re talking about someone who thinks taking a loan from a 401k and paying it back somehow results in double-taxation, and insists on this view even when she is corrected.
This should not surprise you.
She’s paid to be bitchy, not smart. Don’t expect her to veer off the script.
After reading ‘Infinite Banking” by Nelson Nash it became clear as day that Suzy Orman was an ego-driven interpreter.
Many are mislead by these types.
Forget Suze Orman, I actually had my friend (BS Economics) try to tell me that the Fed actually could pull out all this new liquidity. The state of economic understanding is actually pretty bad. I’m not sure if the economic understanding is lacking or simply a financial adviser’s need to explain bad investments or a sort of blind optimism that something will get better.
Thanks be that I went to Auburn.
What turns my stomach is when she’s on the Oprah Winfrey show spreads propaganda like this mess is all due to greedy Wall Street bankers. Then they all pray to God to thank him for sending Obama, who will save us all.
Finance “experts” never understand complicated economic principles. They took a few classes in college, but have a very shallow understanding of economic theory. They are incapable of seeing the big picture; they merely observe the current condition, assume it will remain like this forever, and try to turn a profit. This is why finance “experts” never see it coming. It’s not her fault, she’s never heard of trade cycle or capital theory. The problem occurs when people mistakenly believe that she’s some kind of economics guru, and believe her misguided opinions.
DD,
“What happens when government bonds are worthless due to inflationary policies?”
I’m not sure I understand this, but inflationary policies means too much money in the economy, correct? If there is too much money, interest rates go down, which is another way of saying that bond prices go up, no?
Curious
Bonds lose value whenever the rate of inflation exceeds the rate of interest on those bonds. Increases in the money supply actually force bond interest rates up to encourage buyers-if the rate of inflation exceeds the rate of interest, then bonds are not a very good investment. And the government is printing too much money and it will not raise interest rates sufficiently. Policy officials are all concerned about “confidence in the dollar”, and an interest rate increase would destroy “confidence in the dollar”, so they won’t do it. Thus, government bonds will become worthless over time.
@ Curious who said “I’m not sure I understand this, but inflationary policies means too much money in the economy, correct? If there is too much money, interest rates go down, which is another way of saying that bond prices go up, no?”
Nominally, yes. In real terms the fixed dollar-amount of interest paid on issued bonds will be worth less and less in an inflationary environment. Because of this risk of dwindling real worth of dollar interest paid, investors will ask for higher interest percentages on newly issued bonds. This level of interest doesn’t have to coincide with the interest rate the Federal Reserve sets, as we can see now in the market (bonds rates went up from 2.x% to 4.x% while the Fed rate is near 0%).
“I’m a personal finance expert. My expertise is not as an economist, not as a stock market guru, not as a precious metal predictor, or in interest-rate foreshadowing. My job is to look at what happened in the economy and what is going on in the world of finance and to tell people, based on fact, this is what’s happening now; ”
I don’t think this girl is clear on what she really is, knows or wants… However, isn’t this the typical mindset of a modern politician with a huge dose of ignorance, pretended naivity and arrogancy?
Dave Ramsey is starting to kick her but… she gets her following from people who need a mommy to tell them what to do. (no surprise, she is a big government girl!)
IMHO, as a personal financial adviser the goal should be to give people more freedom. Dave suggests that to do that you should get out of debt entirely so you’re no longer beholding to others. The depression is waking people up to the fact that guys like Dave have a much better approach.
@thinker,
“…Increases in the money supply actually force bond interest rates up…”
I don’t think that’s true, which was my point. How does the fed lower interest rates? By purchasing treasuries and flooding the system with money in the process.
@Arend,
the fed said, it will spend about 300billion buying up treasuries. When they do, the price has to go up due to the increased demand, thereby driving the interest rates down, no?
Suze AND Dave Ramsey are both financial idiots.Its better to read or listen to R.Nelson Nash. His positions are the real key to wealth.
Economics and finance are very different things. I was very well versed in economics (including Austrian), but knew very little about personal finance. Warren Buffet is a financial genius (empirically demonstrable) but an economic idiot.
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