Unfair Advantage -The Power of Financial Education

A Message from Robert

This book is dedicated to those who step up

and become part of the solution.

A Message from Robert It’s Not Cool

I thought long and hard about sharing with you our financial success, especially during times like these. I know that millions of people have lost their jobs, their homes, and their businesses. I also know that, in most situations, it is not polite to talk about financial success. Bragging is never cool, especially about money.

Yet, I decided to write about real-life investments. I want you to understand how we gained our financial education, how we use that education, and why it is an unfair advantage, especially in a declining economy. I write not to brag. I write to encourage people to learn, study, practice, and possibly see the world differently. In 2011, there is a lot of money in the world. There are trillions of dollars looking for a home because governments of the world are printing trillions in counterfeit money, aka fiat currency. Governments do not want the world to go into a depression, so they print more funny money. This is why the price of gold and silver go up and why savers are losers.

The problem is that this phony money is in the hands of only a few people. So, the rich get richer, the poor and middle class grow poorer, the economy worsens, and the problem grows bigger.

According to the U.S. Census Bureau, poverty in America increased to nearly 15 percent of the population in September 2010. This means over 4 million people moved from the middle class into poverty, just as Donald Trump and I predicted in our book Why We Want You To Be Rich. This is dangerous. This is not healthy.

At the risk of sounding like a braggart, I decided to write this book about real-life investments. I believe it is uncool to know something and not share what I know. That would be greedy. I write because I believe we need real financial education before the world economy can truly recover. Ultimately, I write because I believe it is better to teach people to fish than to give people fish.

Robert Kiyosaki

My rich dad said,

“
Choose your teachers wisely.”

Introduction - HOW DO YOU CATCH A MONKEY?

Natives of Africa and Asia have used this technique to catch monkeys for thousands of years: The hunter finds a tree with a small hole in the tree trunk and places fruits or nuts inside the hole. A monkey comes along, puts their fist in the hole and grabs onto the fruit or the nuts. The monkey’s fist, now clenched and filled with the fruit or nuts, cannot be withdrawn from the hole, trapping the monkey. Rather than let go of the fruits or nuts, the monkey twists and turns, pulls and tugs, but refuses to let go. The native returns, and at their leisure, kills or captures the monkey.

Humans are similar to monkeys. Rather than cling to fruits or nuts, humans cling to job security, their possessions, and money. Due to a lack of financial education, like the trapped monkey, most people will spend their lives as wage slaves of their employers and tax slaves of the government.

When the global financial crisis began in 2007, many people clung even more tightly to their jobs in the hope of not being one of those who were laid off. Millions held on tightly to their homes, even though they could not pay the mortgage. Most cut back on their spending and saved more, even though the federal government was printing trillions of dollars, destroying the purchasing power of their savings. Workers stuffed even more money into their retirement plans, even though the stock market had crashed, wiping out their prior gains. And school enrollments boomed, as more people headed back to school, even though unemployment was soaring.

Most People Do Not Know What to Do

By 2010, most people knew there was a global financial crisis. Unfortunately, most people do not know what to do about it. Rather than let go, most people clench their fists tighter and wait for the crisis to pass, praying that their political leaders can solve this global crisis and that happy days will return.

A few know they must make changes. Yet without a strong financial education, they do not know what to do or how to change.

A Decade of Crisis

The problem is that the coming decade, the years from 2010 to 2020, will prove to be the most volatile world-changing decade in world history.

Unfortunately, the people clinging to the relics of the past—relics such as job security, savings, a home, and a retirement plan — will be those who are most ravaged by the global financial storm approaching. I can make this statement with certainty for the following five reasons:

1. It is the end of the Industrial Age.

The Industrial Age began around 1500 and ended around 2000.

In 1945, at the end of World War II, the United States was the world’s most powerful nation, the biggest of the few remaining empires of the Industrial Age.

During the Industrial Age, countries with industrial technology, factories, great schools, and weapons ruled the world.

During the Industrial Age, the auto industry, airline industry, radio and television industry, and the weapons industry dominated the world of business.

During the Industrial Age, a worker could find a high-paying job for life, be protected by a labor union, and receive a retirement paycheck for life.

Financial education was not important in the Industrial Age.

In 1989 the World Wide Web was born. The Industrial Age ended and the Information Age began.

In the coming decade, more jobs will be replaced by technology as our factories are dismantled, shipped, and rebuilt in low-wage countries. The idea of a high-paying job for life and a retirement paycheck for life is an obsolete idea.

Today, the United States is the biggest debtor nation in world history. The United States cannot afford social programs such as Social Security and Medicare.

In the Information Age, the age where job security and a pension for life are not guaranteed, financial education is essential.

Unfortunately, like a monkey with its fist caught in a tree, millions of workers cling to Industrial-Age ideas such as going to school, job security, steady paychecks, medical benefits, early retirement, and government support for life.

In this book, you will find out what kind of education is best for preparing you for the Information Age.

2. The rules of money were changed in 1971.

In 1971, President Nixon took the U.S. dollar off the gold standard, and the rules of money changed.

In 1971, the U.S. dollar stopped being money and became an instrument of debt. After 1971, savers became losers.

Since 1971, the U.S. dollar has lost 95 percent of its purchasing power. It will not take another forty years to lose the remaining 5 percent.

Tragically, like a monkey with a clenched fist in a tree, millions of people still cling tightly to their savings in a bank.

In this book you will find out why saving money is foolish and what you can do instead.

Since the banks can print money, why can’t you? You will find out how you can in this book—but it takes financial education.

3. After 1971, bank bailouts increased in size.

By 2010, most people were aware of the subprime mess and the trillions in bank bailouts all over the world.

Today, many are angry that the governments bailed out the rich bank owners and passed the bill on to the taxpayers.

Unfortunately, few people are aware that these bailouts have been going on for years and have increased in size since 1971. In the 1980s, the bank bailouts were only in the millions. By the 1990s, the bank bailouts were in the billions. After 2007, the bailouts became international and are now measured in the trillions.

Unfortunately, due to a lack of financial education, most people think debt is bad. Like the monkey, they are hanging onto their dollars and doing their best to get out of debt.

Most people without a sound financial education think debt is bad—and it is if you do not know how to use debt to make you richer.

In this book you will find out how debt makes bankers, and the financially educated, very rich.

4. Inflation is rising.

On January 4, 2000, an ounce of gold cost $282.

Ten years later, on December 30, 2010, the same ounce of gold cost $1,405 an ounce.

In the last decade, when measured against gold, the U.S. dollar lost 398 percent of its value.

On January 4, 2000, oil was $25 a barrel.

By December 31, 2010, oil was $91 a barrel.

In 10 years, the price of oil has gone up by 264 percent. Yet the government still claims there is no inflation.

A smart person would ask:

• “What will an ounce of gold cost at the end of the next decade, on December 31, 2020?”
  

• “How much will a gallon of gasoline cost in 2020?”
  

• “What will food cost in the next 10 years?”
  

These are questions most monkeys do not ask. Instead, monkeys go back to school, work harder, pay higher taxes, pay higher prices, do their best to live below their means, and save, save, save.

As you can tell, you should have invested in gold in 2000 when gold was only $273 an ounce. In this book you will learn what to invest in before the thundering herd gets into the market.

In this book you will learn how to predict the future and how to reduce your risk from the changes that are coming.

5. I see more poor people.

In the coming decade, the years between 2010 and 2020, the gap between the haves and have-nots will increase. Many in the middle class today will slip into poverty in the next 10 years.

In other words, there will be more poor people, although they live in rich, first-world countries like the United States, England, France, and Japan.

When the governments chose to bail out the owners of the banks, governments chose to spare the rich at the expense of the poor and middle class. In the coming decade, the rich will get richer and the poor and middle class will grow poorer due to taxes and inflation.

The following are events that will make the next decade tougher for those with limited financial education:

• Baby boomers will retire. In the United States alone, there are 78 million baby boomers. It is estimated that 52 percent of baby boomers do not have enough retirement savings or investments to live on. Social Security and Medicare are broke. Financing these programs will require more taxes from generations born after 1964.

• More jobs will be lost. National, state, city, and local governments are short of money. Many are technically bankrupt.
  

• From 2007 to 2010, most of the job losses were in the private sector, in large corporations and small businesses.
  

• The next job losses will come from the public sector. Millions of government jobs will be lost in the coming decade.
  

This means higher taxes, fewer services, and more unemployment.

For example, in January 2011, Camden, New Jersey, the
second most-dangerous city in the United States,
cut its police force by 50 percent. Camden also reduced the number of firefighters and government workers.

Who wants to live in Camden if crime and fire losses increase? What does a loss of government services do to property values?

In spite of rising unemployment and the loss of traditionally safe jobs, like a monkey clinging to his fruits and nuts, people are returning back to school to train for a new job, higher pay, benefits, and a good pension plan.

This book presents you with some new ideas on what types of education will better prepare you for the future.

In 2010, the U.S. debt was $14 trillion. In reality, according to the National Center for Policy Analysis, the United States owes $107 trillion when Social Security and Medicare are added to the bill. This means the United States is bankrupt.

The United States has three basic options. They are:

1. Default on our debts, aka declare bankruptcy. This will change the world economy.
   

2. Cut spending, increase taxes, and pay bills. This will change the world economy.
   

3. Print more money, kill the dollar, and pay the bills with counterfeit money. This will change the world economy.
   

The average person, like the monkey with its fist stuck in a tree, has no idea what is going on with the U.S. dollar or the world economy. All the average person cares about is making enough money to put food on the table and keep a roof over their head.

Like a monkey clinging to what they have, the average person actually believes the money in their grasp is real money. The average voter actually believes their elected officials can solve this global financial crisis. Few people realize the global financial problem is bigger than any one leader or one country.

In this book you will discover how the rules of money are different in the Information Age and how to adapt to the new global rules of money.

In 1972, President Nixon opened the door to China. Today, China is a very poor country rushing to become the world’s next superpower.

In the coming decade, China will continue to grow economically but will also grow more unstable as they battle inflation, position for more world political clout, and push for an international reserve currency outside of the U.S. dollar. Additionally, the economic growth will cause trouble internally as the divide between the rich and the poor grows. Their instability will cause financial ripples, economic booms and busts that will be felt throughout the world.

Like most monkeys, the average person can see the trees but not the forest. Americans are probably in a worse condition, however, because they live in a fishbowl where the world looks in at us, but we cannot see the world outside the fishbowl.

In this book you will learn how to think, act, and do business globally. There is a world of opportunity today—but not for those who think only about the tree they are clinging to.

The Most Exciting Decade in History

The next 10 years, the decade from 2010 to 2020, will prove to be the most exciting decade in world history.

The next 10 years will mark the end of the American Empire. The U.S. dollar will prove to be a fraud, and a whole new world economy will emerge. This borderless world, powered by low-cost technology, will unleash the world’s genius and reveal the massive ignorance that ran the old world economy.

For those who are financially educated, prepared, flexible, and adaptable, the next 10 years will be the best of times.

For those who are waiting for the happy days of the past to return, the next 10 years will be the worst of times.

Trapped by Going to School

The key to the new world is education. The problem is that the current school system is trapped in the tar pit of the Industrial Age.

In the Information Age, a person’s education and lifelong learning is more important than ever before. Unfortunately, going to school alone will not prepare you financially for a rapidly evolving and expanding world. Simply said, schools change too slowly, and the world is changing too rapidly.