What Is Pound Foolish About?
Pound Foolish can be summed up into this: In the financial world, everyone is a scammer, liar, cheat and/or thief. The game is rigged; don't even bother trying to better yourself. Olen contends that social justice and more regulations will solve our country's income inequalities.
The possibility that some of the problems within our society are the results of government policy is never discussed in this book, which is telling. I certainly think that the Federal Reserve, tax policies, government regulations and government spending could have caused some of the troubles Olen describes.
Also keep in mind that our very government failed to protect us from various financial crimes (*cough* Bernie Madoff) and that no central planner was able to predict the 2008 financial crisis. So I'd say that Olen's myopic view of the world caused her to miss the fact that central planners aren't good with finance, either. After all, they don't call former Secretary of Treasury Timothy Geithner “Turbo Timmy” for nothing.
What Does Pound Foolish Get Wrong?
The worst part of the book is her obviously slanted politics and her belief that we are all helpless little sheep.
Olen more or less repeats this theme throughout the book. In Olen's worldview, what's the point of even trying to better yourself and educate yourself about finances? It's not your fault you didn't study hard, chose an easy college major and now work at a low-income crappy job. It's not your fault you didn't educate yourself about finances, took out a bigger mortgage than you could afford and didn't read the terms before signing. Want to do investing yourself? Forgetaboutit! You are a poor investor — don't even try. Life is hopeless in Olen's world.
In the true form to any Statist, she believes that the government is our savior and the solution to all our financial woes. Other than this, Olen offers no other real solutions to the issues she discusses.
“Pound Foolish will tell the story of how we were sold on a dream — a dream that personal finance had almost magical abilities, that it could compensate for stagnant salaries, income inequality and a society that offered a shorter and thinner safety net with each passing year. The book will tell the tale of how that fantasy was sold to us by people, organizations and businesses that had a vested monetary interest in selling it to us. Finally, it will tell the story of how we allowed ourselves to be convinced that the personal finance and investment industrial complex would save our collective financial souls — and what comes next, now that it is clear it never could.”
What Does Pound Foolish Get Right?
On the positive side, the book is full of details about the contradictions that the financial “gurus” make and how their financial numbers often don't add up. Olen targets them all: Suze Orman, Dave Ramsey, Jim Cramer, David Bach, Robert Kiyosaki and even Sesame Street‘s Elmo! She certainly did her research for the book, but these are all easy pickings.
Gurus like Orman paint broad financial advice without getting into the personal specifics. As I've stated previously, it's called “personal finance” because it's personal. Take what you think applies to your situation and throw out the rest. What might make sense for someone making $40,000 per year with a negative net worth might be terrible advice for a small business owner making $500,000 per year with a net worth over $5 million.
The other good aspect of the book is that Olen discusses the lack of transparency and the tricks played by the financial industry. However, this shouldn't be a surprise, either. Caveat emptor, or buyer beware, should apply to all financial advice.
I'm not sure why individuals default to thinking everyone always has their best interests at heart. Ronald Reagan once stated, “Trust but verify.” This should apply to any finance advice you receive. (Also, the famous quote from P. T. Barnum, “A sucker is born every minute,” should apply to finance as well.)
If you are uneducated about these issues in the financial industry, this book should be an eye-opener. Otherwise, Pound Foolish isn't an exposé, but a book by someone who whines from chapter to chapter. Keep in mind that this book is by someone who started with no financial experience except writing a column in which she instantly declared herself a “financial expert.”
I will recommend passing on this “bitchfest.” I recommend empowering and educating yourself about finances instead. Education certainly DOES make a difference! In some cases, even bad education is better than no education in finance.
If individuals such as myself, with no family history, background or connections, can educate themselves about finance, then maybe — just maybe — it's possible for a few others to do the same. We are not all helpless victims of society as Olen portrays in the book.