Debt Management Debate - Ramsey Vs. Krugtman



Debt Management Debate -

The Debt Management Philosophies of two debt management experts - Dave Ramsey and Paul Krugman contrast sharply. A review of Ramsey's and Krugman's differing strategy on debt management shines a light on debt problems.

  Just consider the present US strategy on debt management.   Although the Republicans received a thorough thumping in 2012 after espousing a rigid public debt control strategy, there is definite evidence that excessive national debt is wrong and substantial debt management is necessary. (See Paul Krugman's arguments, below, for the opposite view).

  In regards to the current national debate on Government debt management, U.S. citizens have been bombarded by debt terms:budget, sequestration (automatic spending cuts), fiscal cliff,.debate ceiling, etc

David Ramsey - "No Debt Is Good Debt!"

David Ramsey, is concerned largely with personal finance issues such as whether to buy a house, borrow money, or personal debt management.

Dave Ramsey's debt management strategy is totally different from the strategy of Paul Krugman. Ramsey is one of the number one advocates of debt-free, cash-only personal finance. Occasionally, Ramsey leaves the personal finance area and comments on national financial issues. In US national finance issues, his philosophy remains the same: cash-only and no debt. He does not like congress, the IRS or (in the recent past) former President Obama. He often expounds his national debt-free philosophy on his nightly radio talk show and on FOX News.  

Dave Ramsey's real forte is personal finance. And Ramsey never saw a debt or credit card company that he likes. For example, he seems to consider most credit card companies as dishonest and loan-shark organizations as taking advantage of their customers (victims)! Ramsey is also against certain debt management systems (scams),

Ramsey believes in the Shakespeare (or was it the Bible?) adage: "Neither a borrower nor a lender be!" Some other of Dave Ramsey's adages pertinent to debt management follow:

     1.Never......never.........never co-sign anything for anybody!

     2. Never borrow money...except to buy a home!

     3. Don't loan to relatives...Christmas turkey won't taste the same! If the relative is very close to you, just give them some money!

    4. (On incompetent banks) Bank Of America is the worst bank in the history of America!

    6. (Best Dave Ramsey tale!) How, as a 6 year old, he chickened out because the diving board was too high! He wouldn't jump!   His body would have been crushed!  Later, when he was grown, he returned to the pool and discovered the diving board was only about two feet over the water!


Paul Krugman - "Debt Is O.K."

Paul Krugman, on the other hand, deals exclusively with large-scale US public debt issues. World financial issues might be a better description of his area of interest. He predicts recessions and depressions and recommends solutions to national debt management problems. At the present time, he is the number one advocate for deficit spending (debt is OK!) to stimulate the U.S. economy. His advice is to "spend, baby, spend!" He is upset at the sight of many European countries reducing spending to cut their budget deficits (austerity). He thinks severe spending cuts could put us back into a recession, or, even worse, a depression. Krugman is very concerned about unemployment and thinks excessive caution about deficit spending will cause more unemployment. In short, Krugman favors deficit spending,i.e. using debt, as a means of fiscal stimulus.   Paul Krugman's US debt management philosophy is definitely on the liberal side!


I have never seen Krugman discuss personal financial issues such as personal debt management strategy. Don't go to him for advice on whether you should go into debt to buy a house or make a payday loan!





Debt Or Cash-Only, Which is Correct?



I am strongly influenced by the advice of both David Ramsey and Paul Krugman regarding their debt management solutions. On the one hand, I agree with Krugman that, as a nation, the US could reenter a recession if our debt management philosophy leans too much toward a debt-free strategy . But, would his free-spending debt management strategy really stop a recession from occurring or would it simply cause excessive inflation?


On the other hand, would the cash-only, no-credit, debt-management solutions of Dave Ramsey solve the financial problems of the country or is it too simplistic a philosophy to be applied to a nation's finances? Would his no-debt strategy push us into a recession?


Dave Ramsey, without doubt, has become the number one radio talk show host providing debt management advice to individuals. His debt management advice is excellent on an personal basis. He has literally sparked a mini-revolution against both debt and the powerful financial scam artists (banks, etc) of America. While Ramsey's no-debt, no-credit advice - when applied to individuals - is good, his debt management advice, when applied to US national financial matters, may not be as effective.



Stay turned! The silent debate (as far as I know,the two men may have never met!) between Ramsey and Krugman, with their very opposite debt management strategies is raging in my brain. I think it likely that other U.S. citizens are having the same debt management debate.  









Websites For Public and Personal Debt Management




1.  Germany in World War 2.    The German side of World War 2.



2.  Conservatism vs. Liberalism.    is the major background issue in U.S. politics today.  Neither side will give way!


3. Dave Ramsey Website--- Get REAL debt help: Dave Ramsey's Total Money Makeover Plan  


4. Paul Krugman Blog --- Paul Krugman - Free Spender - And he could be right!





Search Amazon for top books on Debt Management.:




Conclusions: Debt Management Debate


Which debt management philosophy or strategy is correct at this time: Paul Krugman's "free spending" or David Ramsey's "no-debt, cash-only?" We will see!




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        Updated:           07/03/17