What’s unique about this work is that a) he is writing each chapter in pseudo draft and publishing it on the internet and then asking readers to comment, he then amends it inline with the feedback and b) this is one of the richest men in the world saying the rich have conspired deliberately to keep us from earning our full potential.
This post is a review of the Introduction which when I first read it I thought was truly shocking. All the more so because it was written by a self made man and not a particularly left wing person with no experience of being rich or being an entrepreneur. So when Robert Kiyosaki calls something a conspiracy you better listen for your financial health.
He starts the book off with the following sentence, “Is the love of money the root of all evil? Or is the ignorance of money the root of all evil?” His argument, and I agree which is why I am a Financial and Wealth Education Consultant, is that it is irresponsible of all governments to leave financial education out of the school curriculum. He actually uses the words, “cruel and unconscionable”, strong stuff.
His point is valid whether you are going to set up in business or enter paid employment, the impact of money on our daily lives is so huge it is an essential skill everyone needs to acquire. We are not talking everyone becoming Accountants but we are talking about educating people to effectively manage their money and and any investments they have.
The classic quote of Kiyosaki’s I love is the question he always poses, “Is your house an asset or a liability?” Nearly everyone answers an asset, when actually it’s a liability – this has Accountants and Bankers jumping off ledges. The reason is it does not provide you with any income. Even if you own it outright you still have maintenance and property tax to pay. So it’s a drain on your income, hence a liability.
He traces the current problems back to when President Nixon changed the rules of money. Without approval from Congress he took the dollar off the Gold Standard in 1971. The decision was made over a two day meeting at Minot Island in Maine , without consulting the State Department or the International Monetary System.
So why did Nixon change the rules? Well essentially it was because of the Vietnam War. Other currencies no longer had any confidence in the dollar because of the rate at which it was being printed. It could not be backed up by the US Gold Reserves. By freeing the link between gold and the dollar Nixon made it illegal to directly exchange dollars for gold.
Due to the change inflation took off and more dollars were printed each decade. The value of the dollar decreased and the prices of goods and assets went up. Overnight millionaires were made because house prices just kept climbing. People were getting credit cards in the post. To pay off their credit card bill they used their homes and then repeated the process. This was on the received wisdom house prices always go up.
The real culprit crept in in 2007 – the sub prime borrower – this is someone who borrowed money to buy a house who could not afford it. At first it was thought only the financially foolish were doing this but this was not the case. Basically banks were getting greedy and ignoring normal risk management and allowing themselves to get into a position where they had too much debt and not enough cash.
Governments around the world could not afford to let the banking system fail so a new term stared being used – bailout. Millions of people were devastated by this is real terms, savings wiped out, retirement funds wiped out and college funds gone. Even California which if it were a country would have had the sixth biggest economy in the world resorted to issuing IOUs instead of cheques to lawmakers because it was going broke.
I will finish off today’s post in a series on the 8 new rules of money by saying this is not some fringe idea that has come to Robert. It is based on his reading a book by Buckminster Fuller in 1983 called, Grunch of Giants. Grunch stands for Gross Universal Cash Heist.
The book explains how the super rich and the powerful have been stealing from and exploiting people for centuries. Robert says that back then he could see the current downturn happening he just did not know when. He credits the book with enabling him to invest well in spite of the current economic climate. He said it wanted to make him, study, “the subject of how the rich and powerful exploit the rest of us – legally.”
The reason I believe the main part of my business is so worthwhile is because it teaches people precisely the financial education skills they need and allows them to set up a business selling products that teach people these skills.
If you are interested in exploring the opportunity of providing financial education and at the same time investing in your own business then click on the black logo on the side called “entrepreneurs wanted”.
It costs nothing to find out more and if this sounds like something you believe you can do and improve both your own livelihood and that of others feel free to click on the logo. More from Robert’s 8 New Rules of Money the rest of this week.