[00:00:00] Intro: Forget the civilized path. It’s time to break the chains of debt and dependency, take control of our financial lives, and live free. This is the Fiscally Savage Podcast.

[00:00:16] Dylan Bain: Hello and welcome to Fiscally Savage. I’m your host, Dylan Bain. Happy Friday, everybody. And if you’re new here, on these Friday shows, we try to take something on the news and go one step deeper unless Dylan’s decided to go on a series, which is what I’ve been doing for the last three Fridays. But today, we’re gonna be doing and ask me anything or an AMA. And so I’ve asked on Instagram, you can follow me on Instagram @fiscallysavage, and I’ve asked four questions. What are the questions that you would love to ask about money, about life, about me, about anything? And so I’ve got a variety of questions and we’re just gonna kind of start at the first one and work our way down and see how far that we get.

[00:00:50] So the very first question comes from Aaron. And Aaron says, “Hey, I got an AMA for you while you’re talking about economic systems. What do you think of Objectivism? — this is the philosophy of Ayn Rand — and do you think that a really government hands-off system like Ayn Rand described in ‘Atlas Shrugged’ could actually function, and could it be implemented in the real world effectively? And what do you guess the problems would be, and what would they come up if somebody were to try to actually implement that?”

[00:01:20] Okay. So lots and lots here to unpack. So I think the first thing we actually have to talk about is what is Objectivism. Objectivism is a philosophy, and I’ve made the comment before that economic systems are philosophies as well. But specifically, Objectivism is the philosophy of a woman by the name of Ayn Rand or Ayn Rand, depending on how you wanna actually pronounce it. And she’s an interesting person. Just her history is interesting in and of itself and kind of informative in a lot of ways to discussing her philosophy. So in brief, Ayn Rand was born in Russia in 1905. And if you know anything about Russian history, you know that in 1917, the Czar was overthrown and the Bolsheviks came to power, thus issuing in a number of different revolutions that eventually wound up creating the Soviet Union. One of the things that’s interesting to note about her is that when the Bolsheviks took over, one of the things that they really did was they tried to go for this total utopian egalitarian idea of education, thus opening up universities to women. And Ayn Rand was one of the people who signed up right away and started her studies in something called social pedagogy and also majoring in history. Now, social pedagogy, for those of you who don’t know, it describes a relationship-based, holistic way of conducting education and caring for people. So she’s studying not only history, but this idea of, like, oh, well, like, the way that we treat people will actually start to influence them and directs the course of her life.

[00:02:49] Now, another part of her life that’s worth noting is that she was Jewish by heritage and she was also born to a bourgeois family, which you can imagine in Soviet Russia, eh, maybe not the best thing to be. And so when she had the opportunity, she fled. And she fled, she moved to the United States in 1926, and basically lived out her entire life. She published a number of books. But her most famous, of course, are “The Fountainhead,” “Anthem,” and “Atlas Shrugged.” And it’s in these three books that she develops this philosophy that we have come to call Objectivism.

[00:03:21] So if you’re gonna try to boil down Objectivism into five different points, the first point would be that reality exists as an objective absolute. That is to say that there’s a single reality independent of any consciousness or feelings and the facts exist and whatever they are, regardless of any beliefs, desires, or fear, is what they are. That is to say that I can have one belief, but the objective reality will in no way, shape, or form be altered by whatever my belief is, whatever my feeling is. Reality is reality is reality. Period. End of statement. No discussion. That is where the term Objectivism comes from. There is an objective reality. This is, like, step number one for Objectivism.

[00:04:00] Step number two is that reason is man’s only means of perceiving reality — not faith, not feelings, not emotion. Reason. That is, your ability to think. So she — it’s kind of interesting because on the first point, she starts to get away from somebody like René Descartes who says, well, I can’t trust anything ’cause I could just be a brain and a vat although he didn’t use those terms. And then, he gets to the point of, well, you know, cogito, ergo sum — I think therefore. Reason then becomes his way of viewing the world. So she’s doing something very similar here in saying the exact opposite in no, there’s an objective reality, and reason’s the only way that I can ever understand that reality. So my feelings don’t matter. My faith doesn’t matter. My culture doesn’t matter. My lived experience doesn’t matter. It’s reason. Our ability to think is the only way to perceive reality.

[00:04:49] Okay. Number three is that man, and in this case she’s talking humanity, that man is an end in and of himself, okay? So she believes that each individual owns their own life, and happiness is the ultimate moral purpose; that self-interest or selfishness is seen as a virtue, not a vice. In fact, that is the thing that people can do; that we are the end in and of ourselves and our pursuit of happiness no matter how we end up getting that is the ultimate moral purpose.

[00:05:19] Which, of course, then brings us to point number four: laissez-faire capitalism is the ideal political-economic system. So what Ayn Rand is arguing for is that a system where all property is completely 100% privately owned and the role of the state is drastically limited. So you can almost kind of see like the beginnings of Reagan’s idea that the state should be shrunken so small, we can put it in a bathtub and strangle it to death. She’s going even further than that. Okay, so side note here. Ayn Rand actually really didn’t like Ronald Reagan and there is plenty of videos on YouTube where you can go look this up, but, like, she really didn’t like him. Why? Because Reagan professed a faith and she thought that was silly. So okay. End of the side note. But under Rand’s idea here, she believes that this system is the only system in which individuals could freely choose with their reason to pursue their own interests. And then, that would then lead to the best outcome for society as a whole. So what she’s saying here is that if you understand that reality is objective, that it doesn’t care what you think, and that reason’s the only way we can possibly get there, and you understand that by acting in your own self-interest to the exclusion of all other considerations, that you will eventually bring about the best choices for society. So this is taking Adam Smith’s idea of the invisible hand of the market and putting it on an absolute ungodly amount of steroids.

[00:06:43] And then, there’s the weird part that kind of gets thrown in here at the end, and that is art as a recreation of reality. So she viewed art as a necessary extension of philosophy, providing the concrete sensory representation of abstract ideas. She believed that the art should aim to represent the world as it could and should be in line with that person’s deepest values. One of the things that’s interesting if you’ve ever picked up a copy of any of her books, what you’ll see on the front is something that looks like it could fit into Tim Burton’s “Batman,” and that’s a style called art deco, which was very popular at the time, and she believed that that was good. So something like the Chrysler Building in downtown New York, she would look at that and go, “Ah, this is a good building! From the standpoint of Objectivism, this is artistic and that’s what we want.”

[00:07:37] And so that’s her idea. And it has a lot of parallels with the Austrian school. So the Austrian school, of course, remember, is a lot of these same things. It’s, you know, laissez-faire economics and limited government and free markets and all this other stuff. So the similarities that these two schools the philosophy have is they both emphasize the importance of the individual freedom and autonomy. That is to say that the individual is responsible for themselves and we should not do anything to prevent them from doing that. They both assert that individuals are the best judges of their own interest, and they should be free to make as many of their own choices, even if we on the outside look in and say, “Well, that’s dumb against their best interest.” It’s not for us to say.

[00:08:16] Okay. So then, the second similarity would be the free markets. So both of these schools of thought argue in favor of laissez-faire capitalism, advocating for minimal government intervention in the economy at all. They believe that the markets will lead to the most efficient allocation of resources and the greatest overall prosperity. So what they would say, like, take a road for example. They would say — they will just look at the highway system. It’s mismanaged. It always has cost overruns. It can never possibly be as good if we just let the market work and roads be built there. Same with education, same with social security, same with everything. And on the most extreme sides of this, they say even in the military, like, if you wanna have a subscription to the military, that’s fine. If you have a house, you know, the government’s job is to protect your property rights. But if you wanna have firefighting services, well, then, you should sign up for your local business that has a subscription for firefighting services. And if you don’t and your house starts burning down, well, your shit out of luck.

[00:09:14] And then, of course, I think it naturally follows that both the Austrian school of economics and Objectivism have a strong criticism of central planning. And this makes complete sense. Ayn Rand fled the Soviet Union, and this is the time when she left is the time in which you had all of the Red Scare was going on, you know, the first version of it. And then later when she’s writing is right around the same time — so Hayek in the Austrian school has put out the “The Road to Serfdom,” which is heavily critical of socialism. And they’re arguing that, like, this command control economy is morally evil. And her experience, of course, would bear that out. Hayek being from the Austrian school and, again, if you could find Austria on a map, you’ll figure out real quickly that yeah, the Russians were kind of a threat to them, and so it makes sense. These, you know, both Hayek and Rand are contemporaries of each other. Like, they probably read each other’s writings. So they might argue that any centralized planning’s gonna be inefficient, and it will infringe inherently on individual freedom, and therefore it’s morally flawed.

[00:10:24] The differences, though, are not nearly as stark as a lot of the similarities. The difference is, of course, is that Objectivism is a comprehensive political system and philosophical system. That’s what it’s covering. It looks at metaphysics, epistemology, ethics, politics, aesthetics, all this other stuff as the society as a whole. And, again, go back to Ayn Rand’s training with social pedagogy. This makes sense. She’s looking at all the different things that are gonna influence a person in their life, whereas the Austrian school really doesn’t give a shit about any of that. It only cares about the economic efficiency. And so they’re looking at markets as the ability to coordinate complex information knowing that no one person could possibly ever do it.

[00:11:06] Number two would be the role of values and economics. Remember the Austrian school has this idea of the subjective theory of value. That is, the value of goods and services is determined by the preferences of the individual, and those preferences are inherently subjectives and therefore can’t be measured. But Objectivism starts right off with saying there is one objective reality. This thing is either objectively good or objectively bad. It’s objectively useful or it’s objectively not. And so, while recognizing the individual preference, it stresses the importance of the objective, rational value of a thing. And so, you know, this is where the Austrian school and Objectivism are really gonna be at loggerheads. Because the Austrians are saying, “Well, no, it’s subjective. It changes from time to time,” and Objectiveism says, “No, a pen is just as useful now as it was in the 1950s. That is objective reality. It never changes.”

[00:11:55] And then lastly, of course, is the methodology. Austrian school has praxeology, which is studying of human action and decision-making but without any data at all. So it’s, you know, lock yourself in a room and think really hard about things, whereas Objectivism doesn’t adhere to any type of real methodology. It’s a moral system more than anything else. Where praxeology starts with the premise that individuals act purposely and in their own self-interest and then uses deduction from there, Objectivism says there is an objective reality and the humans are going to do their thing in that reality. So it sounds like it could be saying the same thing, but it’s really not.

[00:12:36] To answer the rest of Aaron’s question, though, is do I think that we could actually create this system, and the answer is no. I think it’s — if you study history, and this is the one thing that I think Ayn Rand missed and Hayek missed is that when we’ve had these experiments. Like, you can go look at the Gilded Age. You can look at company towns in the United States where there was very little state interference. When you shrink the power of the state, that doesn’t necessarily mean that that power diffuses evenly throughout the whole of society. It just flows to the next available vessel, which tends to be the people with the most means or the most capital. That is exactly what happened in company towns in the United States. And if you don’t believe me, you can look at a contemporary example and look at the anarchy in a place like Somalia. Well, I mean, they have very little government. The government’s extremely weak. They have a burgeoning black market, and some economists have actually argued that the economy is much better off under anarchy than it was under the corrupt kleptocratic government that it used to have. But other economists would argue, like, but yeah, there’s huge inefficiencies and the fact that, like, you can’t go from one town to the other without having to pay ransom insurance. And so there’s a tension here. I think that the state always has a role to play, and I believe that that role should be to create competitive markets to be able to safeguard consumers so that we don’t have to sit at the store and hold a can of beans and wonder whether or not it’s met enough safety standards so that I can eat it and not get botulism and die. And at the same time, I think that things like licensures probably go overboard to the point where they’re actually disincentivizing a lot of otherwise good economic activity. But a lot of this gets back into the entire idea that, like, you know, I can point to the government subsidies for fuel and cars and roads as creating a lot of human disconnection and incentivizing the conglomerates over small businesses. So, you know, it’s not that I’m a sadist by any extent of the mean. It’s just that I don’t think that anarchical capitalism, which is where both of these systems ideally end up, is a functional system of, well, literally anything. And so I think that you can really point to a lot of examples where there’s a balance. Going one direction or the other is, I think, inherently going to lead to a totalitarian or authoritarian state. And whether that’s a corporate state or a political state, it doesn’t really matter to me. Totalitarianism and authoritarianism are two peanuts in the same turd.

[00:15:02] Alright. My next question comes from Lourd Reyes. Lourd Reyes asks, “Interest rates for mortgages ever going to go down?” And the answer to that is I don’t know. Like, in all reality here, I don’t have a crystal ball. The one thing that I think is interesting, though, is that when I first got out of college and we’re talking — we’re in the early 2000s here — that was a period of time where the mortgage rates that we see today are still lower than when I was in the mortgage industry slinging home loans. The low interest rate environment that we’ve come to expect where you can get 2% or 3% for a 30-year fixed mortgage is an anomaly. Like, the 40-year average for mortgage rates in the United States is about seven and a half percent. Obviously, in the early eighties, they were much, much higher. And, you know, since 2008 they’ve been much, much lower. But I don’t think they’re gonna come back around unless we have some compelling reason to start cutting interest rates, and I don’t see that happening anytime soon. One of the things that, you know, is worth knowing is that mortgage interest rates are very sensitive to the 10-year T note. So if you were looking at something like, I don’t know, the debt ceiling debacle, and you were like, “Yeah, we should totally default,” well, you were really advocating for catastrophically high mortgage interest rates, which of course would kick out housing and that would be part of the economic fallout everyone talked about. Obviously, we’ve kicked that can down a road till after the next presidential election. But you get my idea here is that I don’t know. So I think the underlying implicit question here is, well, should I buy a house now or should I wait? And the answer is if you are in a place in life where it’s right for you to be buying a house, then you should buy the house. If you can afford it and it’s not gonna create a lot of arts and crafts, you should buy it. The rent-to-own question is a complex one, but it really comes down to, like, you never should buy your primary resident as an investment. Yes, it is an asset. Yes, that asset has been, you know, monetized in the United States, and people make a ton of money on their primary homes. And it’s really bad from a money psychology standpoint to think about it that way. You should buy the house that fits your life, not the one that you think will fit a future state, okay? So bottom line is if it’s right for you to buy a house now, go buy the house. And if interest rates drop, refinance. If interest rates go up, well, you have a 30-year fixed mortgage, you’re no worse off.

[00:17:31] Okay, Lourd Reyes also asks, “What do you think about dividend stocks like VYM? Good to create passive income or not?” Okay, so here’s the deal with dividend stocks. People are attracted to dividend stocks because of the cash flow. So the dividend, of course, is the percentage of profits that companies or their board of directors will elect to distribute to the owners of their stock. And this sounds great, right? Like, oh, I’m getting some cash flows and that’s good passive income ’cause I don’t have to go punch a time clock to get this money. There’s a couple of things that people don’t fully understand. If you have a company that is trading, say, at a hundred dollars a share, and part of — in theory, at least — part of what that value for a hundred dollars per share should be the total net value of their assets. So that’s assets minus liabilities should then equal that share price, okay? So if that share price is actually below that, so my assets minus my liabilities divided by the number of shares actually is a number that’s higher than what it’s trading on the market, we say that that stock is a value stock. It’s underperforming right now, and we consider it a bargain, right? But we also then have to go the other way, like, you know, the net asset value price is actually lower than what the stock is trading at, and that’s said to be trading in a premium. Why is this important? Because if you distribute your cash through dividends, the asset part of that equation decreases. So assets go down, liability stay the same, which means your stock price should inherently drop. If you need an example of this, go find ZIM Integrated Shipping. They have an outrageously high dividend amount, but you can actually look at their dividend date where they pay it out and their stock just craters every time they do it. And then, they build it back up over the course of a quarter, and then pay it out again. So if you’re in it for the cash flow, yeah, that’s great, but you’re relying on the dividend remaining consistent and it’s never gonna be as high as if you were taking an all-in strategy on appreciation of the stock itself.

[00:19:42] The other thing to understand about companies that are giving out dividends is that they may be infrastructure or legacy companies, you know, utilities fall into this. But also, they might be companies that have been strong-armed. One of the things that was interesting when Steve Jobs was at Apple was that he was notoriously hostile to the idea of doing a dividend because he wanted to keep the cash on hand to continue innovating and growing the company. And after he died and Tim Cook was put in place as the CEO, he was strong-armed into giving a dividend. And if you look at what Apple’s done since then, they have not come out with another Blockbuster product since. They have come out with new versions of the iPhone because they really operate on a planned obsolescence model, but they’re not the innovative, like, wonder makers that they were under Steve Jobs. Now, maybe those two things are unrelated. I don’t actually know, but it is interesting to note. So the question I would have for companies that are giving out dividends is, well, there’s no way you could possibly grow the company or innovate or find new things? I got questions.

[00:20:47] So the other question that I think is inherent in Lourd Reyes’s question here is, well, would that create good passive income, and my answer to that is maybe. Dividend stocks are notoriously fickle. And if you go chasing good dividends, chances are good you’re gonna get a stock that’s doing something weird, and then they’re gonna cut the dividend and you’re gonna be SOL. But the reality here is is that there is no such thing as passive income. If you’re actually gonna go all-in in trying to make dividend stocks passive income, well, you had better be in the investing phase of life. Remember there are three phases. There’s the income, the savings, and then investing. And investing is where you’re actually managing all of this because the results of your investments are your income, and so you’re gonna have to pay a lot of attention to it. And this is even true for real estate investments, Airbnb strategies, whatever. They’re offered up as passive income, but they rarely are. So my question here is what do you need the passive income? And at your current firepower level, how much could you actually put in to then get something out?

[00:21:51] If you went into something like VPU, which is a utility ETF that, you know, is pretty consistent, it’s giving like 3%, well, you’re gonna get higher returns and a high-yield savings account giving you 4% right now. So at least in that case, you’re in the high-yield savings account. The money’s not gonna fluctuate because it’s just a savings account. But if you put it into VPU, it’s gonna go up and down to the market. So maybe you’ll be up, maybe you’ll be down. But, you know, hey, you got 3% on the cash flow. But what is that 3%? Because if the 3% isn’t a sniffing amount of money, my question is: would you be able to create and save more money by working on your budget than by actually trying to work on this type of portfolio with a passive income strategy? So for example, if you put in to VPU right now $10,000 and be like, “Yeah, I got passive income,” that’s about $300 a year. Now, if you really stopped and think about it and you found more creative ways to, you know, I don’t know, eat out less, right, maybe you start, you know, adjust your budget. I bet you you can find more than $300 a year in savings in doing some budgetary adjustments more so than taking that $10,000 and hoping to get passive income. Now, maybe you should do that, but you shouldn’t do it for the passive income strategy here. I mean, yeah, that $300 would pay for a year for Netflix. But, I mean, it’s nothing really to write home to mom about.

[00:23:19] Okay. And my last question for this AMA comes from Anya Shakh, who is my co-host for “Vikings and Muses.” You can find that on Spotify. We’re working on getting it at Apple and everything else. Link to that podcast in the description. But she asked me a great question as money pertains to relationships. So she asks, “What’s the best way for couples to discuss money and how early in dating should you do so?”

[00:23:44] Okay. So let’s answer the first question first. What is the best way for couples to discuss money? Clearly, honestly, objectively. Period. That’s not gonna be a satisfying answer. So let me paint you a picture as to what that might look like. Couples need to have a business meeting, so if couples are having marital issues — barring individual attachment issues or wounding on the part of the two people in that couple — they’re going to come to money or kids nine times out of 10. And if it’s kids, well, then we need to get on the same page. And that’s probably gonna relate back to the aforementioned detachment issues. But if it’s money, the question I’m gonna ask is: well, when was the last time you had a business meeting? And so even if you’re dating somebody, if you are serious with this person and this relationship is going anywhere, sitting down and saying, “Honey, I love you and I’m ready to take our relationship to the next level. I’m ready to engage in the most intimate thing I think couples do. Let’s talk about money.” Now, if you’re dating somebody and they’re like, “No, absolutely not. Forget that,” they freak out, well, that’s information, isn’t it? If that person isn’t willing to be completely transparent and intimate with you on that level, they are not a long-term prospect. And I don’t care how good the sex is. It really just comes down to that is an intimate part of a relationship. It strikes into a lot of different places. Most notably, it’s the foundation on which we set Maslow’s hierarchy of needs. So if your partner’s not willing to have a business meeting with you, you don’t actually have a relationship. You have a temporary liaison, but you’re not in relationship because you’re not being open and honest with each other. So the way that you could approach that is to actually just do exactly what I just modeled. “Hey, honey, I love you lots and I’m ready to move our relationship to the next level and share the most intimate thing we have — our money. And I’m not talking about blending finances, but I wanna sit down and I’m gonna show you mine and I’d like you to show me yours.” And so this is where you can sit down and say, “Well, I’ve got this much in credit cards and I’ve got these student loans and this is my car loan and here’s my income and here’s how much I have saved.” And that’s information. Now, you should not be giving them access to your bank account. You shouldn’t be blending finances at that point, but you should be sitting down and having an open conversation because — and Anya, she’s female obviously, so she’s with a guy who’s just wining and dining her, and there’s tickets to Miami and there’s we’re going on trips to Vegas and this amazing stuff. My question is, like, what the hell does this person do for a living? Because if it’s just all going in the credit card and then you end up in a long-term relationship, their credit card debt is going to become your future. And the same thing is true if they can’t explain where their income comes from, that’s a red flag. Like, that’s not even a red flag. Like ,that is a red firework that detonates and you should run, not walk away, okay?

[00:26:45] So these are really important conversations. And I would argue that if you’re going to go and get engaged, after you get done with the tears and the hugs and the engagement sex, you sit down and you be like, alright, now we’re really gonna get naked. We’re really gonna have the conversation with finances. And you should run it like a business meeting. It should be dispassionate. Remember always to be, you know, clinical and not critical, and really have that conversation. And if it’s difficult, that’s also information both for you and for your partner. This is one thing as a financial coach that I excel at. I am very good at helping couples have this conversation and facilitate it, even when there’s a ton of hiding or lack of transparency or debt, even when there’s one partner who goes, “No, no. I just let him do everything because it scares me and I don’t like it.” Like, that’s my job as a financial coach. That’s what I do.

[00:27:39] So then, the next question that Anya has is how early in dating should you have this conversation? Well, I don’t know. What’s your comfort is really the answer to that question. I mean, me, Dylan is known for a directness. Earnestness is how some other people said it. “Dylan, you’re an asshole” I think is a third way to say it. But you get the idea. You know, if I sat down at a table and the woman said, “Alright. Well, first off, I gotta understand right off the bat before we go any further, you know, what is your net worth?” Well, I’m gonna ask her one question first before I give her that number and say, “Why are you asking?” And if she says, “Well, because I want to make sure that I’m not in a situation where I have somebody who’s gonna give me a lot of flash and has no responsibility around money,” okay, cool. Here’s my net worth. If they say, “Well, I just wanna know if you can treat me well,” yeah, it’s the end of the conversation for me, but I’d be willing to have the conversation. One question you could ask in a first date situation is to say, “Tell me one thing about money you wish you knew more about,” and just let them talk. Because if they immediately start talking about crypto strategies or start talking about investing or Airbnb strategies, this person is playing at this massively high level. And your follow-up question could be, “Well, how often do you budget? Do you plan that? If that’s the goal that you’re going for, how are you moving in that direction?” From a female perspective, this gives you an idea of where this man is going. And from a male perspective, you can get an idea of whether or not this woman is going to be a partner for you in this or if her expectation is that you’re gonna take care of it all because that happens and I’ve seen it all sorts of different ways and I’ve seen it in, you know, gay couples and hetero couples and those who the couples who have yet to make up their minds. Like, it’s all come across my practice at one point or another. So the earliness really depends, and you should be forewarned that if you’re looking for a good way to really test the spinal fortitude of this person, you can throw this question like right out on a first date: “Hey, when do you budget?” Like, that’s a great first date question, and it’s probably gonna end the date. So if you’re just looking for a good time, I would put the money questions aside. And if you’re really serious about figuring out if this person’s gonna be for you, well, the sooner the better if we’re gonna be entirely honest.

[00:29:59] Okay, ladies and gentlemen, that’s all I got. Have a great weekend. I hope that you go out and you do things that you will tell in stories and whispered tones later in your life, even if we are a little embarrassed of it today. Until next time, ladies and gentlemen, go out there, take control of your financial lives, live free. If you would be so kind, please leave me a rating and review wherever you’re listening to this and share the podcast with a friend. I’ll see you on Tuesday.

[00:30:26] Outro: Thanks for listening. If you like what we do here, please hit that subscribe button. Leave us a rating and review. And share the content with somebody who would benefit from the message. You can follow us on Instagram, Facebook, and Twitter, all @fiscallysavage. And head over to fiscallysavage.com to get our free tools, suggested reading, and everything else you need to take control of your financial life and live free.