Financial Philistine: Dave Ramsey Attacks the Infinite Banking Concept — Again! — with Humiliating Errors

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by Ryan Griggs

Jun 18, 2021


Mega popular radio show host and online financial entertainment personality Dave Ramsey can’t help but attack the idea of “banking” with whole life insurance. In November of last year, Dave made that explicit on YouTube with his video entitled “Why Infinite Banking is a SCAM!” My business partner James Neathery and I responded just over a month later on our New Years Day episode of the Banking with Life podcast.

Does Dave Know What Cash Value Is?

Dave exemplifies the old 1970’s-style “consumer advocate” persona extremely well. His hokey, down-home, central east accent and his impressive rhetorical, — and as far as I can tell, improvisational — talent can be seductive. I totally understand how he overwhelms his audience with his method of communication rather than the content of his message. As James and I showed in our podcast episode earlier this year, a careful examination of the substance of the situation reveals that Dave seriously does not understand how dividend-paying whole life insurance can work. He’s simultaneously convinced that how he thinks it works is the only way.

Definitions Matter

Money is the general medium of exchange in a specific space. Money in the United States is the US Dollar. For a variety of reasons I won’t get into here, it is the medium deployed in exchange in order to allow people to more efficiently satisfy their desires (the short of it is that trading for a commodity that other people desire purely for its usefulness in exchange opens up the widest, deepest, and most efficient set of available goods and services, which, in turn, the individual will consume to satisfy his preferences).

Dumb as a Box of Rocks

This is such a vital distinction, because if we don’t grasp it, then we risk falling for dramatic over-generalizations designed to diminish and trivialize. Dave’s co-host whose name I do not know, nor do I care to know, demonstrated this tactic by comparing paying high premium in order to build cash value in order to be able to take a tax-free policy loan as “moving rocks from one side of the yard to the other.”

Proper Classification Produces Accurate Analysis

Hilariously (or humiliatingly, depending on your perspective), after demonstrating a severe misunderstanding of what cash value is, Dave then turns to mocking the method by which individuals make use of their cash value in dividend-paying whole life insurance.

Closing Remarks

Dave’s flirtation with total ignorance about the mechanics of and what’s possible with whole life insurance leads him to unintentional, fleeting alignment with the truth. For instance, he says that certain tax-qualified investments are “on another planet!” relative to what happens in cash value in whole life insurance. I couldn’t agree more. I’m not a tax or investment advisor, so this isn’t tax or investment advice, but if someone’s chomping at the bit to store up a whole bunch of capital in a collection of assets they probably don’t understand, that are controlled and managed by people they don’t know, which have an uncertain value connected directly to the fractional reserve banking boom-and-bust cycle, access to which is virtually pay-walled off by taxes, fees, and penalties — I mean, have at it.