By Liz Blood
Another money talk—this time with small business owner Ken Blood, who is also my dad
For this third interview in our continuing series on money, I interviewed my dad, who for the last 34 years (and all of my life) has owned a small telecommunications business in Oklahoma City. He employees 18 people and together they sell, install, and service business phone systems, camera/closed-circuit systems, access control systems, and offer IT support, among other services.
Here, we get into economic theories, corruption, cash flow, suicide, currency trading, and some God stuff—all things that make up a fairly typical dinner conversation at my parents’ table. And, in typical my-dad fashion, we began the interview by him trying to interview me.
Things you need to know: Mumsey and Bumpa (boom-paw) are what we called his parents, my grandparents; The Hungry Peddler was Oklahoma City’s first fast casual restaurant and my dad’s early server job; Comdial was a telecommunications company that made phone systems, which he sold until the early aughts.
Ken: Just the whole idea of money is really—what got you interested in it?
I could kind of kick myself as your father reflecting about it because it is so deep and so important to understand the issues around it. 300-plus million people we have in our country, I’ll bet there’s not 1,500 people that really understand what it’s all about and what makes it tick. And I’m not one of them. But it has become, I would say in the last several years, an interest of mine.
Liz: What sparked your interest?
Ken: Well, I went to an economic conference and I listened to economists from various schools of thought speak. Do you know anything about Keynesian economics?
Liz: No.
Ken: Ok, well money—
Liz: I’ve got a lot of questions for you, so give me the—
Ken: I’ll just try to keep it [short], but it’s really essential. Ok, there’s three different kinds of money … commodity money, fiat money, and bank notes. Currencies are established by individual governments around the world. There’s hundreds of different currencies. But money in the broadest sense, a commodity is like what we had in the Constitution—it was a gold standard, okay. A man’s labor, take that in universal term, man, mankind’s labor was determined by how much his labor was worth, and it was a fixed standard.
Liz: How was money treated by your family when you were growing up? What was the financial situation of your childhood?
Ken: I considered it to be a middle class situation that we were in because we had people from all makes and models—doctors, engineers with patents, and barbers all living on the same block. It turned out that my parents were well-suited because Bumpa had a profession with the government and the government gave him a huge retirement. But when I was a kid, very blue collar, very, you know—t-shirts, a few pictures on the wall, no carpeting, no air conditioning.
Liz: I forgot you didn’t have air conditioning.
Ken: Nobody did. We had attic fans. But, I mean, it was a lot more modest and the incomes were a lot lower.
Liz: Was money a topic of conversation in your house when you were a kid?
Ken: Only to “be frugal” is what my Grandmother Blood said. This is one of the few quotes I remember: “It doesn’t matter how much money you make, it’s how much you save.”
And, you know, my dad—a product of the depression, and my mother—a product of the depression, they were raised on the belief of scarcity. That really limits a person if you’re afraid that you’re going to lose it all.
Liz: How did that scarcity mentality affect you?
Ken: Well, I saw being frugal as a virtue. My Grandmother and Granddad Blood and others would have an entire cabinet full of canned goods which would get them through a year. I don’t know that you could say that they were survivalists but they took responsibility for their ability to survive an unknown future.
Now, today, money is a wash on the international scene. It is transferred so quickly and so rapidly. I heard that there was $600 million a second being transferred in international funds. Well anybody that transfers money makes money because they’re in the middle of it—the people that do those exchanges make a little sliver of money off that $600 million dollars a second.
In the United States today it is calculated that we’re going to produce, our GDP, is going to amount to roughly $20 trillion. Well these global exchanges make $11 trillion dollars every five days.
As a small business man, I’ve got to come up with about $20,000 a week to pay my people. Well, sometimes I don’t have 20 grand. So I’ve got to go to the bank. And the bank says, “Ok, we’ll loan you some money, but how are you going to collateralize?” So then I’ve got to give them more goods, more assets, than what I’m taking in.
But you know, who cares—if I can float the money and I can pay my people and take a gamble on the future that I’m going to make more money? So there is a dance. And I’ll get focused, like everybody else, on my own immediate economy. But we don’t even think about how big the ocean is that surrounds the United States of America.
Liz: Are you speaking to a philosophy of, like, there’s plenty of money to go around, it’s just a matter of getting it?
Ken: That gets us back to these theories. Keynesian economics was based on floating economies, competitive floating economies and that got away from the gold standard. Hayek and the Austrian School of economics had a whole different view … more on the gold standard, but with all of the activities going around and speculations and derivatives and the fluidity of money and available services, the view among economists is not destabilizing because you’ve got speculators. You know there’s a tremendous number of big businesses and they speculate their own money. So they’re making money on speculations like currency trading and so on and so forth but it turns out that the two philosophies, Hayek and Keynesian of these floating competitive currencies and Hayek have reached some kind of …
Liz: Agreement?
Ken: Well, it’s so confusing! Some of the most outstanding economists in the world have speculated that maybe, with the speed with which money is being changed, it’s created a future that has taken away—momentarily, anyway—the risk for the exchanging of goods and services in these integrated markets and multi-national corporations. It is dizzying. So when you talk about money today … there’s a flow of $5 trillion a day across borders and that speed of money is creating a nice dynamic.
When I worked at the Hungry Peddler years ago one of the managers made this statement: “Cash flow solves lots of sins.” In other words, when things are slow all the problems of the restaurant just showed … but if things were just speeding along then there was lots of money and everybody was happy.
Liz: How do these economic philosophies that you’ve been talking about, or the way money moves internationally, how do these affect or influence you as a small businessman?
Ken: It doesn’t. It doesn’t because I’m in the weeds. But the reason that I’m exploring this is so that I can understand the world around me.
Milton Freeman, a huge influence in Reagan’s administration … and Obama’s economic advisors and others since 1930 have all agreed with Keynesian economics. But the Austrian school—Friedrich Hayek and a guy by the name of [Ludwig] von Mises, they had this concept of spontaneous order [where] things move so fast that people can trade in the present and also in the future. It appears that perhaps that those floating currencies and the spontaneous order of this competing school of economic thought are having some kind of, not impasse, but some kind of agreement.
Liz: What do you mean you’re in the weeds?
Ken: When a person is working to survive and trying to make good survival choices, then their thinking is more immediate and local than it is broad and general. If you can look from a 10,000 foot view and understand everything that’s going on beneath you, you can cover a lot more ground and make better decisions that should result in better rewards. Not so with a guy that’s only interested in closing a $2,000 deal.
Liz: The guy, is that you?
Ken: Yeah. I’m not going to be a one-percenter. I’m not even going to—most people are not going to be in the 10 percent group unless they have more command over the resources beneath them. So, there was a bigger gamble for me.
One out of 10 businesses fail within the first few years of business. And then of the businesses that succeed only three out of 10 are still in business 10 years later.
Liz: And how long have you been in?
Ken: 34 years. Boom. So, I’ve only been in business that long by God’s grace. One of the economists, Adam Smith, believed as I do, too … he wrote was that there is an invisible hand of economics that oversees the affairs of men and nations.
I don’t think he was trying to be too poetic … I just think he just saw these things on earth and he said there’s a lot of things that are unknowable but they tend to work out.
I haven’t ever heard anybody say this, but that invisible hand, where you’ve [now] got all these competing floating currencies which are trading at records speeds—it’s working and how it’s all working nobody, I don’t think, fully understands.
Liz: The invisible hand—does that mean God or what do you mean by it?
Ken: Well it does in my case. I will acknowledge God fully in the fortunate position that I have and your mother has. We had nothing, we still have most of that left, but you know, I’ve made some really crappy deals and God’s gotten me out of them.
Liz: What’s your earliest memory regarding money?
Ken: I was a kid, probably fifth grade. I didn’t get an allowance, I had to go out and earn the allowance. The neighbor lady down the street, she wanted me to mow the yard. I was also instructed that I had to clip—there were no power tools, weed eaters, none of that, so I had to take hand clippers and go all the way around this huge lot—around the fence line and around the driveway and down the street after I had mowed the yard. Well, I had all these blisters all over my hands and I got paid $3 for this. I just said “Well, I’m not going to do that anymore.” I was sunburned and my hands were nothing but blisters.
So about a week or two passed and she walks down and, “Well how come you didn’t mow the yard?” I go, “I quit.” She goes, “What do you mean you quit?” I go, “I’m not going to do it anymore. You’re not paying enough. Pay me five bucks.” And she goes, “I’m not going to pay you five dollars.” I said, “Fine, go find somebody else to do it.” Now again, I’m a kid and I just refused to work because there was not a fair exchange of paying for the, you know, I wasn’t getting compensated in my little tiny mind.
Liz: Does thinking about or talking about money stir any particular emotions in you?
Ken: When you were younger, I was completely distraught with money—completely. I didn’t have enough to take care of your mother; I didn’t have enough to take care of you kids. I had to have, sometimes, two jobs. I worked day and night and there still wasn’t enough money. On top of that there wasn’t enough money for the business. At one point, I owed more money than I could possibly pay off—it was just awful.
I was either going to blow off Christianity and go my own way—in fact, I was going to leave the family, that’s how bad it was. Or I was going to kill myself—one of the two—because I figured that with the insurance money I could pay off my debts. But the reason I didn’t commit suicide was that I thought, “Oh my gosh, a dad doesn’t check out.” And I just did the calculations and there wasn’t enough money to pay off all the people I owed. Your mother would have been stuck with an awful situation and so I decided just to stick with it. But that didn’t mean the pressure went away. I mean I was completely screwed up in my thinking. I can’t tell you how close I was to suicide.
Liz: And money was the driving factor in that?
Ken: One of them, you know, one of them. I had all sorts of issues. The business sucked. I had all these employees. One guy stole like $45,000 from me. I owed more money. It was unbelievable. I’d be driving down the street in that old Buick, that blue thing, you know? The door didn’t shut.
Liz: You mean the Thunderbird?
Ken: Well, that door didn’t shut either. But I had a blue Skylark—it was Mumsey’s car. It was all shot, it was just awful. I had to park a block away from my prospects when I went to go sell so they wouldn’t know what I was driving.
Back then, Graybar was my primary wholesale vendor. I had to pay them every 30 days, but I worked it to where it was ok if I paid every 45 days. Well, it came up where I wasn’t going to make the 45 days. I called the local credit manager and I said, “You need to extend my terms to 60 days.” He goes, “Ken, we don’t allow 60 days.” I said, “I’ve got a $40,000 deal that I’m closing right now. They’ve agreed to buy and I’ve got to get the equipment so I can make my $40,000. And with that $40,000 I can pay you.”
He went to the vice president of finance and a day or two later the vice president of Graybar, George, and this local guy show up at [my] door … completely unexpected. Now, we’ve already sold and installed the equipment that we spoke about. So, they walked in and they were chit-chatting with me and then they said, “Well, how’s that $40,000 project going?”
“Fine.”
“Did it go in?”
“Yes.”
The local guy was sitting right there at the edge of my desk, and George is sitting in the background in a chair. And the local guys says, “Did you get paid?” I go, “Yeah.” He goes, “Did you pay Graybar?”
“No.”
“What?!”
I said, “I’m certain that Graybar doesn’t take the money from a Comdial sale and pay Comdial. I’m sure that they get money for Comdial sales and they spread it out so they can cover their cash flow. In other words, I’m robbing Peter to pay Paul.”
He said, “Am I Peter or Paul?”
And I said, “You’re Darrell.”
Well this George guy, old guy, all wrinkled up like one of those stereotypical accountant guys, you know, he just started smiling. He walked out of that office with that young guy—who is now the vice president of Graybar—and said, “You loan him any money he wants.”
Liz: How does spending money align with your beliefs or your identity?
Ken: Well, a higher power says that we are to be generous with our time and talent and our money, that certain percentages of our money are not ours but actually we are a steward of the money or possessions that we’re put in charge of. But also from a secular standpoint we have a fiduciary responsibility to the community and to the poor.
Liz: How does that play out in your life?
Ken: Well, my accountant tells me I give too much money away.
Liz: What is your ideal money situation?
Ken: Well, the ideal money situation for me as a small businessman—make payroll, pay my vendors, take care of my family—not necessarily in this order—and to do those fiduciary responsibilities. Probably the latter is the very first place you spend your money, in my opinion, and that has to be kind of a faith step.
Here’s another place to give money away. If the company does well, who should get the fruits of the reward? Well, I believe that the army, you take the spoils of a victory and you share it with everybody.
Liz: What do you not like to spend money on?
Ken: Your mother’s liquor.
Liz: Is that a joke?
Ken: Are you going to edit that?
Liz: I will if you tell me to, but you better tell me.
Ken: It’s a joke, okay?
Alright now, taxes. You’ve got to spend your money on taxes and while there has to be the function of government, I hate paying confiscatory taxes for political boondoggles.
Liz: I’ll have to Google some of those words.
Ken: I encourage you to try to stay up with your old man.
Liz: Yeah, ok. What’s the biggest challenge you’ve ever faced in regard to money? Maybe you’ve already answered that question.
Ken: Yeah, I have. It almost cost me my life. I mean, there were other pressures but you know, that’s why we need higher power—there’s things that are destructive and will kill us if we’re just left alone to our own devices. And I’m not alone in that.
So, this is a very real topic and a lot of people, if they can’t turn to their family members or friends for solace, you know, it’s a tough deal. In fact people need people, I mean, you know, not to quote Barbara Streisand, but—
Liz: I know you have a bunch of her records.
Ken: Yeah, your mother does.
Liz: Those are yours!
Ken: Yeah. Okay, so what was your question? It’s a mosaic, you know, it’s a mosaic.
Liz: Do you have any parting thoughts that you would like to share?
Ken: (Sings) Money, money, money!
There is a book called “[Confessions of an] Economic Hit Man” and it was this guy that went around for the World Bank and [USAID] and he would talk third world countries into collateralizing or putting their national resources up so that they could get all this money [for development]. Well, it didn’t work, and so now international bankers [and corporations] have all of the resources of these small countries all over the globe. How unjust is that?
I have a theory, although it hasn’t been confirmed by anybody, but it just seems to me that the global currency, by default, is the U.S. currency. Sixty-three percent of all the currency traded is traded in [U.S.] dollars. I think that this huge flow of international cash, something like $5 trillion a day, $600 million a second—I think that the U.S. has figured out a way to prop up our dollar using everybody else on earth. I think it’s corrupt. I can’t prove it, but that’s my theory I’m working on.
Liz: You probably have something there.
Ken: George Gilder has a better idea as to what is going on in the real world from an economic, monetary standpoint. You saw me reading his book, “The Scandal of Money.” [He says]: Wealth is knowledge. How do you accumulate wealth? Experience. What is money? Money is time. It’s not that time is money, but money is time.
His theory works on a macro level, an international and monetary level, and it works on a micro level, like for a company. If you know something and you gain experience, so now you’re putting that knowledge to working knowledge, and the quicker you can replicate what you know, the quicker you can do it, the quicker you are making money.
I drill that into my employees. What is wealth? What’s the accumulation of wealth? What’s money?
Money, Money, Money, posted 8/27/18
Pollyanna or Whatever, posted 8/28/18
No Small Questions, posted 9/5/18