Robert Kiyosaki, author of the 1 bestselling personal finance book of all time, Rich Dad Poor Dad is taking a new approach with his next book. Reader feedback will then be incorporated into the book as it is written and released, chapter by chapter, on the Internet. The fact that he is committed to writing and distributing a new book to the world for free is amazing to us, and indicative of his genuine concern for the challenging economic times in which we live.
Today, more than ever, the world needs a voice they can trust and someone they can rely on to deliver the cold, hard facts about what is really happening in the world. The time for this book is now — and the Web will let us do that.
Conspiracy of The Rich A free online interactive book. The Right Book. Most parents belong to this system, so they pass it down to their kids. The traditional view worked better in the 20th century, when strong growth and decades-long employment meant stability was a viable strategy. Nowadays, pensions are rarely guaranteed; job security at a loyal employer is rare; professional education and academic success are no longer guarantees for security.
Even worse, they let money control their life: Fear of not having money makes people work hard. Then once they get a paycheck, greed gets them to buy things they covet. But the joy is short-lived. As they spend unwisely, they have money problems, and the fear of not having money drives back in.
They have to go back to work to get the next paycheck. This cycles endlessly, even as their paychecks increase with raises - this is the Rat Race.
Money ends up running their lives. They get stuck in jobs they dislike for the sake of money. This is obvious In a new tweet, the author of the best-seller Rich Dad Poor Dad tells his 1. Dec 22, Rich Dad Poor Dad is a modern classic of personal finance and our favorite finance book of all time.
Personalized content and ads can be based on those things and your activity like Google searches and videos you watch on YouTube. Only a few know the difference between capital gains and cash flow and which is less risky. Most people blindly accept the idea of going to school to get a good job and never know why employees pay higher tax rates than the entrepreneur who owns the business. Many people are in trouble today because they believed their home was an asset, when it was really a liability.
These are basic and simple financial concepts. Yet for some reason, our schools conveniently omit a subject required for a successful life—the subject of money.
In , John D. Rockefeller created the General Education Board. It seems this was done to ensure a steady supply of employees who were always financially in need of money, a job, and job security. Without a basic financial education, long-term financial security is almost impossible. In , millions of American baby boomers began retiring at a rate of ten thousand a day, expecting the government to take care of them financially and medically.
Today, many people are finally learning that job security does not ensure long-term financial security. Constitution, were very much against a national bank that controlled the money supply. Without proper financial education, few people know that the Federal Reserve is not federal, it has no reserves, and it is not a bank.
Once the Fed was in place, there were two sets of rules when it came to money: One set of rules for people who work for money, and another set of rules for the rich who print money. In , when President Nixon took the United States off the gold standard, the conspiracy of the rich was complete.
In , the U. This act effectively forced millions of workers who enjoyed employer-provided defined benefit DB pension plans to instead rely on defined contribution DC pension plans and put all their retirement money in the stock market and mutual funds.
Wall Street now had control of the U. The rules of money were completely changed and heavily tilted in favor of the rich and powerful. The biggest financial boom in the history of the world began, and today, in , that boom has busted. Reader Comment I remember when they stopped backing our money with gold. Inflation went crazy. I was only a teenager and had gotten my first job. The discussions of the adults revolved around how this could have happened. They felt that this could be the downfall of our whole economic system.
It took a while but here it is. As mentioned, the conspiracy of the rich has created two sets of rules when it comes to money, old rules of money and new rules of money.
One set of rules is for the rich and another set is for ordinary people. The people who are most worried by our current financial crisis are those playing by the old set of rules. If you want to feel more secure about your future, you need to know the new set of rules—the eight new rules of money. This book will teach you those rules, and how to use them to your advantage. The following are two examples of old rules of money versus new rules of money. As a consequence, savers became losers.
The U. For years, people all across the globe have believed that U. For years, savers dutifully bought U. At the start of , thirty-year U. Treasury bonds were paying less than 3 percent interest. To me, this means there is too much funny money in the world, savers will be losers, and in , U.
This subject of money, bonds, and debt will be covered more fully later in the book—unlike in your high school economics class. It is worth knowing, however, that what used to be the safest investments, U.
They go to school to get a high-paying job, and then they spend years working at that job to earn money.
They then do their best to save it. In the new rules, it is more important that you know how to spend your money, not just earn or save it. In other words, people who spend their money wisely will always be more prosperous than those who save their money wisely. Of course, by spend I mean invest or convert your money into long-lasting value. They know that the key to wealth is investing in cash-flowing assets.
Today, you need to know how to spend your money on assets that retain their value, provide income, adjust for inflation, and go up in value—not down. This will be covered in more detail throughout this book. Diversification, however, did not protect investors from a 30 percent plunge in the stock market and losses in their mutual funds.
If diversification protected you, why sell all of a sudden at near market bottom? If you are evenly diversified, when one asset class goes down, the other goes up. You are static. Meanwhile, inflation, a topic we will also discuss in detail later in the book, marches on. Rather than diversify, wise investors focus and specialize. They get to know the investment category they invest in and how the business works better than anyone else.
For example, when investing in real estate, some people specialize in raw land and others in apartment buildings. While both are investing in real estate, they are doing so in totally different business categories.
When investing in stocks, I invest in businesses that pay a steady dividend cash flow. For example, today I am investing in businesses that operate oil pipelines. After the stock market crash of , the share prices of these companies dropped, making the cash flow dividends bargains. In other words, bad markets offer great opportunities if you know what you are investing in.
Smart investors understand that owning a business that adjusts to the ups and downs of the economy or investing in cash-flowing assets is much better than owning a diversified portfolio of stocks, bonds, and mutual funds—investments that crash when the market crashes.
Take control of your money and focus your investments. During this current financial crisis I took a few hits, but my wealth remained intact. That is because my wealth is not dependent upon market values going up or down aka capital gains.
I invest almost exclusively for cash flow. For example, my cash flow decreased a little when the price of oil came down, yet my wealth is strong because I still receive a check in the mail every quarter. The same is true with most of my real estate investments. I invest for cash flow in real estate, which means every month I receive checks—passive income. The people who are hurting today are real estate investors who invested for capital gains, also known as flipping properties.
In other words, since most people invested for capital gains, counting on the price of their stock investments or their home to go up in price, they are in trouble today.
When I was a boy, my rich dad would play the game of Monopoly over and over again with his son and me. By playing the game, I learned the difference between cash flow and capital gains. And the ultimate goal was to have one red hotel on the same property. To win at the game of Monopoly, you had to invest for cash flow—not capital gains.
Knowing the difference between cash flow and capital gains at the age of nine was one of the most important lessons my rich dad taught me. In other words, financial education can be as simple as a fun game and can provide financial security for generations—even during a financial crisis.
Today, I do not need job security because I have financial security. The difference between financial security and financial panic can be as simple as knowing the difference between capital gains and cash flow.
The problem is that investing for cash flow requires a higher degree of financial intelligence than investing for capital gains. Being smarter about investing for cash flow will be covered in greater detail later in this book.
But for now, just remember this: It is easier to invest for cash flow during a financial crisis. The longer this crisis lasts, the richer some people will become.
I want you to be one of them. Today, one of the new rules is to focus your mind and money, rather than to diversify. It pays to focus on cash flow rather than capital gains because the more you know how to control cash flow the more your capital gains increase, and so does your financial security. You might even become rich. These new rules, learn to spend rather than save and focus rather than diversify, are just two of the many concepts that will be covered in this book, and they will be covered in more detail in future chapters.
The point of this book is to open your eyes to the power you have to control your financial future if you have the proper financial education. Our educational system has failed millions of people—even the educated.
There is evidence that our financial system has conspired against you and others. But that is ancient history. Today, you control your future, and now is the time to educate yourself—to teach yourself the new rules of money. By doing so, you take control of your destiny and hold the key to playing the game of money according to its new rules. Reader Comment I think most people who are reading your books are looking for some sort of magic pill solution because that is the mind-set of society in America today, with their instant gratification desires.
And I think you do a good job of letting people know that this is not a magic pill book. The subject of money does not make sense to most honest people.
In fact, the more honest and hardworking you are, the less sense the new rules will make. For example, the new rules allow the rich to print their own money. If you did that, you would be sent to jail for counterfeiting.
But in this book, I will describe how I print my own money—legally. Printing your own money is one of the greatest secrets of the truly rich. My promise to you is that I will do my very best to keep my explanations as simple as possible. I will do my best to use everyday language to explain complex financial jargon.
For example, one of the reasons why there is a financial crisis today is because of a financial tool known as a derivative. Derivatives are bringing down the biggest banks in the world. The problem is that very few people know what derivatives are. To keep things very simple, I explain derivatives by using the example of an orange and orange juice.
Orange juice is a derivative of an orange—just like gasoline is a derivative of oil, or an egg is a derivative of a chicken. One of the reasons we are in this financial crisis is because the bankers of the world began creating derivatives out of derivatives out of derivatives. Some of these new derivatives had exotic names such as collateralized debt obligations, or high-yield corporate bonds aka junk bonds , and credit default swaps. In this book, I will do my best to define these words by using everyday language.
Remember, one of the objectives of the financial industry is to keep people confused. Multilayered derivatives border on legal fraud of the highest order. They are no different than someone using a credit card to pay off a credit card, and then refinancing their home with a new mortgage, paying off their credit cards, and using the credit cards all over again.
My research has found that a bailout is an integral part of the conspiracy of the rich. One of the reasons I believe my book Rich Dad Poor Dad is the bestselling personal finance book of all time is because I kept financial jargon simple.
I will do my best to do the same in this book. I will use real-life stories, rather than technical explanations, to make my point. If you want more detail, I will list a number of books that explain subjects covered here in greater depth.
For example, Dr. Simplicity is important because there are many people who profit from the subject of money being kept complex and confusing. I believe it is more evil to keep people in the dark, ignorant about the subject of money. Evil occurs when people are ignorant of how money works, and financial ignorance is an essential component of the conspiracy of the rich.
Reader Comments I went to Wharton and am embarrassed to say that nothing in my course of study explained wealth creation this clearly. Timeline of a Crisis In August , panic silently spread throughout the world. The banking system was seizing up. This set in motion a domino effect that threatens even now to bring down the entire world economy. Their long-term survival is in question.
The crisis threatens not only major corporations and multinational banking conglomerates, but also the security of hardworking families. Today, millions of people who thought they were doing the right thing by following the conventional wis- dom of going to school, getting a job, buying a home, saving money, staying free of debt, and investing in a diversified portfolio of stocks, bonds, and mutual funds are in financial trouble.
Who can solve the problem? And when will the crisis end? The following is a brief and by no means comprehensive timeline highlighting some of the major global economic events that have led us to the precarious financial state we find ourselves in today. As global credit markets locked up, the European Central Bank injected nearly 95 billion euros into the Eurozone banking system in an effort to stimulate lending and liquidity.
August 10, A day later, the European Central Bank pumped another 61 billion euros into global capital markets. August 13, The European Central Bank released another September Northern Rock, the largest mortgage broker and a large consumer bank in Britain, experienced a run on the bank by depositors.
It was the first bank run in over a hundred years. During the early part of the campaign, even though there were clear signs that the world economy was on the verge of collapsing, the major presidential candidates rarely mentioned the economy as an issue. Rather, the hot campaign topics were the war in Iraq, gay marriage, abortion, and immigration.
When the candidates did discuss the economy, they did so dismissively. In the face of all the evidence of a mounting major financial crisis, where was our president? Where were our leading presidential candidates and financial leaders?
Why were the media darlings of the financial world not warning investors to get out? Why were our political and financial leaders not sounding the warning call about this financial storm? Additionally, the U. Many states and city governments were also now asking for bailout money.
September 29, On a black Monday, after President Bush asked for bailout money, the Dow plunged points. It was the biggest singleday point-based drop in history, and the Dow closed at 10, October 1, , through October 10, In one of its worst spans ever recorded, the Dow dropped 2, points in a little over a week.
October 13, The Dow began to exhibit extreme volatility, going up points in one day, the best point gain in history, closing at 9, October 15, The Dow plunged points, closing at 8, October 28, The Dow gained points, the second best point gain in history, closing at 9, December It was reported that Americans lost , jobs in November, the biggest posted loss since December Unemployment was reported at a fifteen-year high of 6.
Economists finally admitted the U. One year later, the economists finally figured it out? Investors took solace in the fact that the fund outperformed the market—by losing less than the average. Yale and Harvard universities announced their endowment funds lost over 20 percent in a year. December 31, The Dow closed at 8,, down 5, points from its record high achieved just over a year earlier.
Those are the words of his father, George H. Where did all that money go? In the meantime, we got to solve the problem. Given that slogan, we must ask a question: Why did President Obama hire many of the same people who worked in the Clinton administration? It seems like status quo. All of these men were members of the Clinton economic team and played a part in the repeal of the Glass-Steagall Act of , an act that forbade banks from selling investments.
Banks selling investments in the form of derivatives is a big reason why we are in this mess today. In overly simple terms, the purpose of the Glass-Steagall Act of , crafted during the last depression, was to separate savings banks, which had access to Federal Reserve funds, from investment banks, which did not.
Many people do not know this, but at the time of its formation, Citigroup was in violation of the Glass-Steagall Act. Other people, firms, cannot act like this… Citicorp and Travelers were so big that they were able to pull this off. They were able to pull off the largest financial conglomeration—the largest financial coming together of banking, insurance, and securities—when legislation was still on the books saying this was illegal.
And they pulled this off with the blessings of the president of the United States, President Clinton; the chairman of the Federal Reserve system, Alan Greenspan; and the secretary of the treasury, Robert Rubin. The secretary of the treasury becomes the vice chairman of the emerging Citigroup.
He was undersecretary of the treasury from to under Treasury secretaries Robert Rubin and Lawrence Summers. Oh, what a tangled web we weave. In other words, these same men are partially responsible for triggering this financial crisis.
How can there be change if the same people who expanded this financial mess remain in charge? What does President Obama mean when he promises change we can believe in? Could one reason that President Obama hired virtually the same financial team from the Clin- ton administration be because he was interested in protecting the same system—a system designed to make the rich get even richer?
Only time will tell. Although President Obama was proud of the fact that he did not accept campaign money from lobbyists, the truth remains that his financial team is full of insiders who helped usher in the crisis they are now charged with fixing.
The only candidate who consistently mentioned the economy and the growing financial crisis during the early part of the presidential campaign was Representative Ron Paul of Texas, a true maverick Republican. Writing for Forbes.
Reader Comments I voted for Obama because I believe he is a sincere and compassionate leader. And, no matter how intelligent he may be, or anyone working with him, you, Robert, have taught me to see that financial education in this country is scarce! I worry that the folks in charge simply do not have a very high financial IQ. There seems to be no attention to determining the underlying root cause and changing the foundation flaws that led to the current financial crisis.
Rather, it is a banking cartel run by some of the most powerful men in the financial world. The creation of the Fed was basically a license to print money. Another reason the Federal Reserve System was created was to protect the biggest banks from failing by providing liquidity to those banks when they were in financial trouble, which protected the wealth of the rich, not of the taxpayers.
We see this in action even to this day. We were told the money was given to the banks with a mandate to lend it out, but our government was either unable or unwilling to enforce that mandate—or both.
The proof is in the pudding. If President Obama really wants to make changes in Washington, he needs to change this cozy relationship between the Federal Reserve System, the U. And maybe he will. It seems he will do as past presidents since Woodrow Wilson have done—protect the system, not change it.
Reader Comments I must say that reading your first chapter has opened my eyes. I am only twenty-three years old and never fully understood what the Federal Reserve System was or what it did for our country. I have to say that it does not shock me; I am truly grateful that you have been honest and are not afraid to give the truthful definition of what a lot of things mean and stand for.
It is however truly sad that taxpayers are affected by this and a lot of them do not even know or understand it! I had no clue that this was not a government or bank institution. It really worries me that this entity has almost limitless power with a lack of true oversight. The question becomes, how did they rise to such a prominent position? Who will cover those losses? Where did that money go?
Who will bail us out, the people who really lost money and now must pay for our own losses and the losses of the rich via bailout money paid for with our tax dollars? The year will mark the hundredth anniversary of the Federal Reserve System.
For nearly one hundred years the Fed has pulled off the biggest cash heist in the world. This cash heist is a bank robbery where the robbers do not wear masks, but rather business suits with American flag pins in the jacket lapels. It is a robbery where the rich take from the poor via our banks and our government. While a student sitting in Dr. Until that time, I had my own secret doubts about government. As a child, I often wondered why the subject of money was not taught in school.
As a Marine pilot in Vietnam, I wondered why we were fighting the war. I also witnessed my dad resign his position as superintendent of education to run for lieutenant governor of the state of Hawaii because he was very deeply disturbed by the corruption he found in government.
So, although Dr. In the early s, my study began, and my eyes were opened to facts that many powerful people do not want us to see. How Does This Affect Me? In the big picture of personal finance, there are three financial forces that cause most people to work hard and yet struggle financially. They are: 1. Taxes 2. Debt 3. Inflation 4. Retirement Take a moment and reflect briefly on how much these three forces affect you personally.
For example, how much do you pay in taxes? Not only do we pay income tax, but also sales taxes, gasoline taxes, real estate taxes, and so forth. More important, to whom do our tax dollars go and for what causes? Next, how much does the interest on debt cost you? For example, how much does interest on debt cost you on mortgage payments, car payments, credit cards, and college loans?
And then take a moment to think about how much inflation has affected your life. You may recall that not too long ago people began flipping houses because prices were going up so rapidly. Many people did not save because it was smarter to spend today rather than pay more tomorrow. That was inflation in action. And finally, most people have money taken out of their checks and placed into retirement accounts like a k before they ever get paid.
On top of that, additional money is skimmed through fees and commissions. And, today, many people do not have enough money to retire because they have lost all their wealth in the stock market crash.
Prior to the Federal Reserve, Americans paid very little in taxes, there was neither national debt nor much personal debt, there was very little inflation, and people did not worry about retirement because money and savings retained their value. Here is a brief and simple explanation of the relationship between the Fed and these four forces. Taxes: America was relatively tax-free in its early days.
In the first income tax was levied to pay for the Civil War. Supreme Court ruled that an income tax was unconstitutional. In , however, the same year the Federal Reserve System was created, the Sixteenth Amendment was passed, making an income tax permanent. The reason for the reinstatement of the income tax was to capitalize the U. Treasury and Federal Reserve. Now the rich could put their hands in our pockets via taxes permanently. Debt: The Federal Reserve System gave politicians the power to borrow money, rather than raise taxes.
Debt, however, is a double-edged sword that results in either higher taxes or inflation. Inflation: This is caused by the Federal Reserve and the U. This is because those who print money receive the most benefit. They can purchase the goods and services they desire with the new money before it dilutes the existing money pool. They reap all of the benefits and none of the consequences. All the while, the poor and the middle class watch as their buck gets stretched thinner and thinner.
Retirement: As stated, in , the U. Reader Comments Living in Zimbabwe, which has had the highest inflation in the world of over 5, billion percent, I have come to understand the added advantage of not keeping money currency. Basically, the price of a good changed three times in one day and there was need to lock down the value in the morning and resell the product in the evening, which meant a nice profit.
It affects the poor and the middle class equally. The middle class pays more taxes than the poor, but everyone pays equally through inflation.
The reason this date is important is because it marked the point where debt had gone too far. The global system could not absorb any more debt.
To save the world, President Obama has to stop deflation. The primary tool he has for fighting deflation is inflation. This means he will have to employ massive amounts of debt and print more money out of thin air. And ultimately, this means higher taxes, debt, and, if he is successful, inflation. Think of the global economy as a big hot-air balloon.
Things were going along splendidly until August 6, , when too much hot air—debt—caused a tear in the balloon. As the horrifying ripping sound spread, central banks of the world began pumping more and more hot air—debt—into the balloon in an attempt to keep it from crashing to the ground and causing a depression. For some people, deflation makes these the best of times. The cost of living is going down as the prices of oil, real estate, stocks, and commodities drop and thus become more affordable.
The central banks and governments of the world, hoping people, businesses, and governments will get deeper in- to debt by borrowing more money, are pumping trillions of dollars into the economy at interest rates near zero—virtually free money.
Holders of massive pools of money are waiting like vultures for the right moment to flood back into the market and pick clean the bones of dead and dying companies. For wellpositioned investors, this is the opportunity of a lifetime to snatch up assets at a discount. For well-positioned businesses, now is the time to gain market share, as their competition goes under due to bankruptcy.
These people see abundance. For others, these are the worst of times. The cost of living may be going down, but these people are unable to reap the benefits because they no longer have a job to cover even their basic living expenses, or they are so saddled with debt that they owe more money than their assets are worth—and the assets they have are really liabilities, such as their houses.
The central banks of the world are flooding the system with money, but it is not helping these people because they cannot get loans for cars or houses. As the money supply blows up like a balloon, their access to that money shrinks. These people do not see the opportunity of a lifetime.
They do not have pools of money waiting for the right deal. They see scarcity and feel fear. The difference between those who find it to be the best of times and those who find it to be the worst of times is simply knowledge and financial IQ.
The great failure of our education system is that it does not teach people about how money really works, and what it does teach is antiquated and obsolete—the old rules of money. One wonders if the system is intentionally designed to keep you in the dark. This goes against the conventional wisdom, especially when we equate people who have highpaying jobs like attorneys or doctors with being financially and academically smart because they make a lot of money.
Always remember there is a big difference between job security and financial security, and true financial security requires a sound financial education based on the realities of the real world of money. That is why I was not surprised when our economic crisis spread wider than just the mortgage defaults of subprime bor- rowers.
The talking heads and our leaders appeared to be surprised. That is why our presidential candidates did not mention the problem during the campaign. They toed the line for as long as they could, assuring us that there was no crisis and that our financial problems were limited to poor people not paying their mortgages.
As we now know, the problem was not just poor people with too much debt. The problem started at the highest levels of government and finance. Millions have lost much of what they spent their lives working for because they have no understanding of the new rules of money and how they affect our lives. So here we come back to the question posed in the title of this chapter: Can Obama save us? The correct question should be: How can we save ourselves?
The answer, and the key to our freedom from the tyranny of our economy, is knowledge. By educating yourself about money and how it works, you unlock the potential within yourself to break free from the mentality of scarcity and see the abundance all around you.
For you, these truly can be the best of times. Personally, I do not expect government or big business to save me. I simply watch what the powers that be actually do, more than what they say or promise, and I respond accordingly to those actions.
Knowing how to respond, rather than follow, and taking confident action, rather than waiting to be told what to do, requires courage and financial education. I believe our financial problem is too big and getting bigger. It is out of control. It is a monetary problem more than a political problem. It is a global problem, not just a U. There is only so much Obama can do, and what he can do I fear may not be enough.
Worst of all, the people really pulling the strings in the financial world do not answer to the presi dent of the United States. They do not need his approval to do what they do. They are beyond the control of world governments and their elected leaders. How Can We Save Ourselves? These form the foundation for the new rules of money. This book will equip you to take control of your own financial future by giving you the knowledge necessary to understand these forces, and thus the new rules of money.
Chapter 2 The Conspiracy Against Our Education Why Money Is Not Taught in School The purpose of the foundation [the General Education Board] was to use the power of money, not to raise the level of education in America, as was widely believed at the time, but to influence the direction of that education… The object was to use the classroom to teach attitudes that encourage people to be passive and submissive to their rulers.
The goal was—and is—to create citizens who were educated enough for productive work under supervision but not enough to question authority or seek to rise above their class. True education was to be restricted to the sons and daughters of the elite. For the rest, it would be better to produce skilled workers with no particular aspirations other than to enjoy life. At the time, my family had just moved across town to a new home in order for my dad to be nearer to his place of work.
I was going to start the fourth grade at a new school. We lived in the little plantation town of Hilo, on the Big Island of Hawaii. The main industry of the town was sugar, and about 80 percent to 90 percent of the population was descended from Asian immigrants brought to Hawaii in the late s.
I, myself, am fourth-generation Japanese American. At my old elementary school, most of my classmates looked like me. At my new school, 50 percent of my classmates were white, the other half Asian. Most of the kids, white or Asian, were rich kids from well-to-do families.
For the first time, I felt poor. My rich friends had nice homes in exclusive neighborhoods. Our family lived in a rented home behind the library. My family had one. A number of those families had second homes on the beach. When my friends had birthday parties, they were held at the yacht club. My birthday parties were at a public beach. When my friends began playing golf, they took lessons from the pro at their country club.
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