A Conversation with Robert Kiyosaki
World’s best-selling personal finance author explains to Follow the Money why he has
cashed out of the stock market and expects a collapse to begin later this year…
In this fascinating interview, Robert Kiyosaki tells Jerry why he has recently pulled all of his money out of the stock market and provides compelling reasons why the stock market is likely to implode later this year.
He also explains how America's financial and tax systems are rigged for the benefit of the "rich." The solutions Robert offers require you to know the "rules" of the economy.
Not the "textbook" version...
Not the "ideal" version...
But the real version, in all of its crony capitalistic glory.
Modern attempts at bending natural economic law will distort and finally destroy the economy. Robert is among a rare breed of men who are able to harness power over our modern upside-down economy simply by understanding the "rules" of the game. He is the 1%... and he got there on his own.
In his books, he explains in layman's language how he and his wife Kim raised themselves up from homelessness (living out of their car) to what is now an estimated net worth of $80 million. His unique rags-to-riches story, while controversial at times, has stood the test of time. Enjoy this interview with the world's best-selling personal finance author, Robert Kiyosaki.
Read the full interview transcript below.
Jerry Robinson, Host: My next guest certainly needs very little introduction. He’s a friend of the Follow The Money program, and both he and his wife have been on before in the past talking about their favorite topic, and that is financial education, helping people understand what money really is, and how they can take control of that money. He is the best selling author of the best selling personal finance book on the planet, Rich Dad, Poor Dad. He wrote it back in 1997, and he self published the book, believe it or not, before he was finally picked up, and the book became a wild success. His name is Robert Kiyosaki, and he’s here with a shocking prediction that he made 14 years ago. We’re going to talk about that in just a moment. Robert, thank you so much for joining us on Follow The Money radio.
Robert Kiyosaki: Thank you, Jerry. It’s nice talking to sane people.
JR: Well, they’re few and far between today. It is a wild ride. As of this recording, by the way, we should state that we are recording this earlier in the week, silver is up very nicely today. I know that you’ve been a big silver investor as I have as well. Are you liking what you’re seeing on silver and gold right now? What’s your take on silver?
RK: All that glitters, I love. I just like real money. Gold and silver are the only real money in the world, and the rest is just a derivative, paper or an electronic blip on your screen that can be controlled and manipulated at will.
JR: You know, I love how you say that because I remember in one of your books, you distilled it down so well because some people get weirded out when people say derivatives and they think, “Well, what is that?” You once said that an apple is a derivative of an apple tree. It comes from a tree. I thought that was brilliant. It makes it so easy for people to understand. A derivative comes from something. It’s not really anything of itself, it’s just part of something else. It’s dependent upon something else.
RK: Correct, and apple juice is a derivative of the apple. A child is a derivative of having sex.
JR: And, your book is a derivative of you. It’s a wonderful concept.
RK: It’s no big deal. It’s just that the derivatives market, I believe, is the biggest market in world history, and it’s unregulated. I’ve seen dollar amounts of derivatives which brought down the subprime mortgage crisis, subprime mortgage derivatives, but I saw derivative markets go from $700 trillion in 2007 to today, it’s $1.4 quadrillion. And, I can’t even think about a trillion, much less quadrillion.
JR: I know, we’re just getting used to millions and billions, aren’t we? You know, Robert, one of the things I really appreciate about you, your work, the things that you’ve done is that you’ve held the name of financial education highly. You haven’t taken your fame and used it to make crazy claims that you couldn’t back up. A lot of people have ruined their name over the last several years. They’ve come out and said the market’s definitely going to crash now or it has to crash here. You’ve held off on all that, but, in fact, way back in 2002 when your book Rich Dad’s Prophecy came out, you foretold in that book that 2016, this year that we’re in right now, would be the year that the market would begin to implode, and you gave a very specific reason. Would you explain that to the audience why you believe that it’s very possible that this year could be the very beginning of the worst market crash in world history.
RK: Well, my prediction really began back around 1980 when I understood what the 401K or the ERISA Plan was. So, ERISA stands for Employer Retirement Income Security Act. Every time the government says something, you know you’re about to get screwed. They say retirement income security, and I smelled a rat. My rich dad started talking to me about it, and he said there’s a flaw in the system, and the flaw in the system is that workers put their money into Wall Street and Wall Street makes trillions off of it. Then, in 2016, the Baby Boomers, the luckiest generation in history, they have to take their 401Ks and withdraw by law. So, I based my prediction on, not fiction, but facts in the law. This year, the first Baby Boomers turning seventy and a half, are required by law to start withdrawing. As you know, the stock market is basically a Ponzi game where it needs money coming in to fund money going out. So just do the math. There is approximately 70 million Baby Boomers, 56 million have 401Ks, and they’re starting to withdraw this year. So, can the market keep going up? They’ll have to keep finding new people coming in. Plus, there’s a thousand other reasons why it’s going to come down, but I just based Rich Dad’s Prophecy, which came out in 2002, it’s just based on the flaw in the 401K system.
JR: It’s seventy and a half, the participant must begin withdrawing unless he faces tax consequences. When they pull the money out, Robert, I guess some might argue that they’ll take the money and just go back and consume in the greater economy. That may help the earnings. I guess it could counter balance, but in the end, I guess the net loss of the propping up of these stocks will actually be more detrimental than anything else.
RK: What I didn’t see was how aggressively the Fed and the Treasury would go into quantitative easing, and today, you and I know, that’s called The Great Greenspan Put. No matter what happens, the Fed and the Treasury will keep the stock market propped up. I had no idea how desperate they would get. They’re pretty desperate.
JR: They are, and as you’ve pointed out in your books over and over again, money is an illusion. You mentioned earlier that silver is money. This paper currency that we have today, in no way, shape, or form, is money in the traditional sense.
RK: Let me just say it this way. The real problem is the mantra in people’s heads. People listening right now, how many of you still believe in going to school, getting a job, working hard, paying taxes, saving money, buying a house, getting out of debt, and investing for the long term in the stock market? That’s the problem. You see, why would you save money when they’re printing money? Why would you save money when there was zero interest rates? Now there’s NERP, and people are still saving money. You’ve got to be crazy. You’ve got to be crazy! But no, they say they’re saving money. Are you nuts? And I argue with these people, but I’ve given up arguing. The guys are idiots. You can’t even think. They’re printing money. Why would you save money? They say, no, no, no, I’ve got to save money. That’s the problem.
JR: You’re listening to the voice of Robert Kiyosaki, the author of Rich Dad, Poor Dad and many, many other books including his latest entitled, “Second Chance”, a very good book, very well reviewed. A second chance for your money, your life, and our world, where he talks about the present, the past, and the future, and how you can prepare for what lies ahead. Robert, let’s talk about you. You’ve always been big in real estate. You like to invest also in oil and gas. Of course, that’s been hit pretty hard lately. You know, as you look at the stock market, and you say it looks like it’s going down in the future, how do you hedge? What do you do, especially with money the way that it is, the currency and the stock market, how is the Kiyosaki household preparing for the next decade?
RK: One of the reasons I invest in real estate is because I like real estate, but it’s debt. I just borrowed $300 million last year at 3% interest. At the same time, the village idiots that went to college are avoiding debt. Money is debt. You and I know that. Money is only created when you buy a bond. On a bond, it’s created. So, the whole banking system has, I cover this in Second Chance, has savers on one side and debtors on the other side. The world economy needs people who can borrow large quantities of money. So, I am richer and richer because I’m a debtor. Meanwhile, the savers are getting ripped off. That is the financial system, and the average person cannot hear it because their brains have been hard wired for saving money and getting out of debt. So, I love real estate because when I go to my banker and I say we have $500 million in property to refinance, they gave us $300 million of it, and that $300 million is tax free. Think about that, and you’re saving money and trying to get out of debt. You wonder why the rich are getting richer, and it’s because our schools have brainwashed us into thinking that saving money is smart and getting out of debt is smart, when it’s opposite. Getting into debt and not saving money is smart.
JR: That is so counter intuitive.
RK: I save gold and silver, physical gold and silver, no ETFs, because that’s a derivative product. Also, ETFs are as phony as they come, and I don’t trust them, so I have hard gold and silver stored in mountainside vaults that nobody knows about.
JR: There you go. So, you have gold and silver, you have real estate, of course. What else besides those two asset classes? What else do you like?
RK: Well, oil and taxes. When I invest a million dollars in oil, I get an $800 thousand tax break, day one. Try getting that with a mutual fund. You see, the rich are getting richer because they’re smarter. They’re not in school, though. When I have a tax bill coming up for my businesses, my profits, I simply call my oil and gas guy and say, “I’ve got a million to place.” He places it, and I get $800 thousand back in taxes. It’s called phantom cash flow. That’s how the game is played. Every time I talk to people who went to college, they say, “That’s illegal.” No, going to school is illegal, because they don’t teach you this stuff. It’s not that hard. The tax system is based upon incentives. It’s not that I’m cheating the system. They are legal loopholes. The government wants me to buy real estate to provide housing, so they give me tax breaks. It’s called depreciation. The government wants me to use debt, so they give me tax free money. The government wants me to finance the oil industry to keep the low price of oil, so they give me tax breaks when investing in oil. But, they don’t give me tax breaks for buying stocks in oil companies. It’s really interesting.
JR: So, the person who’s listening out there, Robert, who is working a job. Maybe you’ve identified somebody by what you’ve said. He’s working that job. He’s gone to school. He’s been saving paper currency. He’s investing in those oil stocks. He’s doing everything that he knows to get ahead, and he’s just not. He’s on the hamster wheel, and he can’t get off. Talk to him for a minute. What does he need to do?
RK: Well, I was a student of a man, it’s covered in my book, “Second Chances”, Dr. R. Buckminster Fuller, and he was considered one of the greatest geniuses of our times. He said the most powerful tools ever created was the spoken word, and he said words are tools. So, if you’ve been taught to save money, you better question that word, “save”. Until you question it, you will do as you’re told. When you save money, you just give the money to the banking cartel known as the Fed. The Fed doesn’t really need your money. They need debtors, so the reason I get rich is not because I’m a saver, but I learned to borrow. I get into debt. Now, there’s consumer debt, which is college loans, credit cards, and car loans. And, then there’s investor debt, which is called mortgages, and it was your mortgages that brought down the system in 2008. Anyway, it’s really an interesting time, but it’s a lack of financial education in our schools. They’re all like my poor dad, so that’s really the challenge, and that’s why I am always happy to be a guest on Follow The Money because, you know, follow the tax dollars is what it really is. The rich understand taxes. The poor and the middle class pay taxes.
JR: That’s very eye opening and very different thinking, obviously. It’s renegade thinking. That’s what’s required in this kind of environment. When you live in a debt based economy, then your “money” is not really money. It’s debt, and that is exactly what our guest is saying. I know it’s hard for some people. On this broadcast, you hear me talk about that all the time, but it’s still hard to swallow, isn’t it? The concept that money itself is debt. It is debt. If you look at the very top of a dollar bill, it says Federal Reserve Note. That means that it’s a note just like a car note. It is owed back to the Federal Reserve plus interest, and they get to set the interest rates. So, it is a scam. We totally agree, Robert.
RK: Well, it’s a scam for the poor and middle class. For me, personally, I love the system. That’s why I speak to guys like you. Let’s say you have ten listeners right now. I doubt if two do anything different. It’s hard to because it’s in your head already. I’ve got to save money, get out of debt, buy a house, invest long term in the stock market. Unless that is changed, nothing changes. From the Bible, “The words became flesh and dwelt amongst us.” Words make people poor, middle class, or rich, and unless you have the courage and diligence to change your words, nothing is going to change.
JR: One of the things you talk about also, Robert, over and over again, and I’ve been meaning to ask you this. I meant to ask you the last time you were on, is you talk about the necessity to find a mentor. Let’s think about somebody who’s young, just coming out of college. They’re just getting started. They don’t have a lot of advantages, and they need to find a mentor. What do they do? How do they find a mentor? What’s the best way to do it?
RK: I think the best way is to read a book, but not that garbage they put in school. I learned by reading books. I’m not a very good reader. I’ve never been a good student, but to say when the student is ready, the teacher will appear. I’ve been cruising the book stores. Many books have popped up in front of me. My friends would send me a book, and I’d read it. You know, “The Creature From Jekyll Island,” I think, is a must read for anybody who wants to understand the Federal Reserve system. That’s written by G. Edward Griffin, who you had as a guest on your show.
JR: Yes, he’s been on quite a few times, and, in fact, the last time he was on, we were talking about that petrodollar article series. He had actually read that and gave us a glowing review. He’s one of those guys who has been talking about this for a long time. There are a lot of great guys, you’re right. There’s the book, “Creature From Jekyll Island.” You, of course, have a tremendous number of books as well, that can wake up the masses. So, if they’re looking for a mentor, pick up a book. How can they find somebody, you gravitated toward some people like Buckminster Fuller you had mentioned earlier. Also, your rich dad. That was very fortunate. But, what about somebody who wants to take it to the next step? Do you recommend them going out and networking? How do you judge whether a mentor is good? Obviously, he has more money than you. That would be a good step, but what if he’s learned all the wrong things, and he’s done it that way? How do you find your kind of guy? How do you find the smart person?
RK: Do you mean financial planners and real estate brokers and stock brokers? What I’m saying to you is if you call up G. Edward Griffin, he’s going to give you, “Hello. Bye.” That’s it. If you want to understand G. Edward Griffin and him to be your mentor, I’d buy Creature From Jekyll Island and read it.
JR: There you go.
RK: And, then, what you’re better able to do is know who you should be talking to. If you call Ben Bernanke, one of the biggest criminals of our time. Did you read David Stockman’s book, The Great Deformation?
JR: Sure. Great book.
RK: Ben Bernanke is one of the biggest criminals of our time, and Nixon, and FDR, and those are the guys that the masses listen to. That’s the problem. So, when Bernanke wrote his book, The Courage to Act that was cover up. You know, justification for him ripping off millions of people. Billions of people. So, if you like that guy, go read his book and study him, but these guys like Stockman who was Reagan’s budget director, saw it from the inside. So, I would read “The Great Deformation” and then The Creature From Jekyll Island if you are a reader. Those are tough books, but at that point, you have to open your eyes up first inside your head, and then you can see your teachers. Otherwise, you’ll probably run into a college professor like Bernanke, and then you’ll get screwed. That happens. There’s an old Irish proverb that goes “If I knew where I was going to die, I wouldn’t go there.” I died in school. I don’t go back there anymore. I was told to get a job, work hard, save money, invest long term in the stock market, get out of debt, and work for money. That’s kind of like going back to school. It’s good if you want to be an employee and go broke. School’s excellent for that. Anyway, you have to open up your own mind first, change the words in your head, and see great thinkers. Edward Griffin and Stockman are incredible. The other guys are guys like Richard Duncan who wrote The Dollar Crisis.
JR: That was a great book.
RK: They’re tough books to read.
JR: They are.
RK: If you don’t read them, then just go to college and read an economics book and get lied to. You know, every time I talk to an academic, I don’t blame them. They are a product of the system. But, many academics, economists, can’t survive without a job like my poor dad. My definition of rich is when you can get rich with or without money. You don’t ever need money again. And, most of those guys like Obama and all that, they need money. Trump doesn’t need money. Bernie needs money. Hillary needs money. So, when you look at it that way, who do you want to run the country? So, the definition of rich is when you can operate with or without money. As a pilot, I flew for the Marine Corp in Vietnam. You knew you were a pilot when you didn’t care if you had an engine or not. If the engine was on, you could fly. If the engine died, you could still fly. That’s a pilot. And, a rich person doesn’t need a paycheck. They don’t need money. So, those are kinds of objectives that I put as seeds of wisdom in young people’s heads, but most of them go looking for a job right afterwards.
JR: It’s so heavily ingrained, Robert.
RK: I don’t blame them. It’s survival, got to have a job. I look at them and they say, “You’re mean, you’re cruel.” You haven’t seen mean and cruel yet. But, I just want to say this. If you understand the system, “The Creature From Jekyll Island” or “The Great Deformation” by David Stockman, you’ll understand why we’re being screwed. Look, the great bailouts exactly as Stockman and Edward Griffin say, were not to save the economy. They were to save the rich.
JR: There you go. That’s right.
RK: All of this quantitative easing and all of this hullabaloo was just to save the rich. Griffin says that and Stockman says that. Now, the reason the economy hasn’t been saved is because, if they do helicopter money like Bernanke suggests which is giving poor people money, it doesn’t save the economy because what poor and middle class people do with money is first try to save it. Second, they’ll try to pay off bills which contracts the economy, and third, they’ll buy products from Japan, Korea, and China. The only way they’re going to save the money is they’re going to have to give poor and middle class people a million dollars and tell them to borrow $5 million. That’s how you save the economy. The average person, poor and middle class, is terrified of getting into debt. That’s why it can’t be saved. That’s why we’re going down. They’re just going to print money to save the rich. So, years and years ago, I decided that I’d rather be rich than go down with everybody else. That’s my message that I’d like to leave people to think about TARP, or quantitative easing bailed out the rich. If Bernanke’s helicopter money comes true, it’s not going to save the economy. It’s going to make the rich richer because the poor will save the money or consume the money at the grocery store. The middle class will pay off debt, pay off bills, and then they’ll just consume more products from Korea and China. If the economy is to have the poor and middle class borrow money and buy stupid things like more cars and houses, but then they go broke anyway.
JR: Which may explain the negative interest rates, the new impetus to borrow. Yes?
RK: And the poor and middle class are so terrified of debt. Every time I talk to people, I go, “Look, when the market crashed in 2008, by 2010, I had borrowed $300 million. That’s why I’m a rich man.” And, the financial planners and the village idiots have just gone nuts. Now, I don’t blame them for going nuts. I say that to have an effect on them, but they can’t hear me because they’re so cowardly. They were taught to go to school, save money, get out of debt. What I’m saying is if you want to save the economy, get into debt and you’ll pay no taxes. It’s completely opposite. Am I making sense to you?
JR: Of course. Of course you’re making sense to me. I’m thinking about the audience, also, and realizing that many of them get it. Some of them are probably still scratching their heads. That’s why they need to buy your book. If they’ve never read “Rich Dad, Poor Dad”, they certainly need to read it. There they will learn that a house is a liability, not an asset, a very paradigm shifting concept if you’ve never heard that before, if you’ve never experienced that logic or that thought. It’s brought across in Robert’s first book “Rich Dad, Poor Dad”. Fantastic book.
RK: Also, in “Rich Dad, Poor Dad”, the most important thing is don’t work for money. I don’t have a job, and I don’t want a job. The moment I have a job, I have to pay taxes.
JR: That’s right. You work for assets.
RK: When I borrow money, I pay no taxes, so I get rich. Which is smarter? But, the whole thing here is that you want to save the world economy, borrow more money. The trouble is, they don’t know how to borrow. They go back to school, and now student loan debt is the number one source of income for the US government.
JR: Robert, the only reason what you’re saying makes sense is because we are upside down. Isn’t that true? Isn’t that really true?
RK: It only makes sense now because people realize what I’m saying has some validity to it. Back in 1997, when I published “Rich Dad, Poor Dad”, it was turned down by every editor and publisher. They said, “You don’t know what you’re talking about.” But, now, people kind of realize, wait a minute, they’ve got to do something different. And, it starts with the words in your head. If you think saving money is smart, just look at negative interest rates and ask yourself, “Why is that?” Question it. I’m not saying get into debt. I’m saying question it. And, the reason they want negative interest rates is that they need people to borrow money. When you borrow money, money is created. There’s credit, and the moment you borrow, it becomes debt. Once you understand that, “Creature” and Stockman’s book are important to read. If you want mentors, those are the best mentors you can get right now, or you can go talk to your financial planner and they’ll tell you to save money and invest for the long term in the stock market.
JR: The average person out there, Robert, who begins to understand and begins to wake up to the economy, and sees how topsy turvy and how upside down things are, if they take action, often get away from the stock market. They don’t want to be long term in the stock market because they see the writing on the wall. But, often times, they go even a further step, and they start fearing that everything will lose value, and they go overboard with gold and silver. Many of them even point to real estate and say that is a huge bubble. They want to stay clear of real estate, too. You, of course, have a lot of real estate. Are you concerned about real estate in this scenario that we’ve talked about here? Do you think real estate is a dangerous place to be for the next several decades as all of this begins to work itself out and the system begins to break down? And, should new investors move into real estate, take out loans? Do you feel that with the problems that face America, that investors and real estate will have some insulation from them unlike stock investors?
Talk about that just for a moment.
RK: It’s not real estate, it’s education. I take real estate courses, stock courses all the time. I’m always educating myself. Am I concerned about real estate going down? Obviously! That’s why I study. The village idiots say, “Oh, Robert Kiyosaki invests in real estate, Donald Trump invests in real estate, so I think I’ll go and buy an office building in downtown Manhattan.” Well, you don’t do that. That’s the stupid people. It’s not real estate. It’s what you know about real estate. It’s how much experience you have, and I’ve been doing this since I was a kid. It’s kind of second nature to me, but I still take real estate courses. I still study. I still read books. I’m constantly observing the market. I understand taxes. I understand debt. It’s not real estate, and I would never say to somebody to go out and buy real estate. I have family members that say “Oh, you made millions in real estate” so they went out and bought some. That’s nuts, but they all have master’s degrees, but these family members have never taken a single real estate course. When you hear that, you’ll understand my frustration. Most people are idiots when it comes to money. They think it should be easy when it’s really a very tough game. I want the smartest guys, the brightest minds, and a lot of experience when I invest in my education. Most poor and middle class people go to school, but they don’t invest in their education. If I could leave you with that, Jerry, that’s my message. Why would you take courses from poor people? I just don’t understand it. Most school teachers are good people, but they’re poor people like my poor dad. So, thanks for the time, Jerry.
JR: I sure do appreciate it, Robert.
RK: Thank you.
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