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Robert Kiyosaki Why the Rich Get Richer

Robert Kiyosaki, Why the Rich Get Richer

As Capitalism Crumbles, U.S. Taxpayers Pick Up the Pieces

by Robert Kiyosaki

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Posted on Tuesday, September 23, 2008, 12:00AM

As we all know, the world changed drastically on Sept. 11, 2001, when the twin towers of the World Trade Center fell.

This year, on the eve of Sept. 11, the twin towers of Fannie Mae and Freddie Mac crumbled. Then, on Sept. 15, Lehman Brothers and Merrill Lynch disappeared. Actually, that was a triple-tower collapse if you count AIG.

In a few years, the biggest pair of towers will collapse: Social Security and Medicare. Even today, they're looking shaky. How many ground zeros can we as people, a nation, and a world withstand before we admit something is very wrong with our global financial systems? What will it take to wake us up?

Government Can't Fix It

Personally, I believe the biggest it's a problem that so many Americans are looking to this year's presidential candidates, Barack Obama and John McCain, to save our financial system. How did we become so financially weak that we surrender our economic independence to politicians? Where does it say in the Constitution that the government should solve our financial problems?

And why have so many people throughout the world come to expect financial life-support from their political leaders? It seems most people will vote for anyone who promises a chicken in every pot and a guaranteed mortgage payment.

We're in the midst of a problem neither candidate can solve: A lack of comprehensive financial education in our school systems. What else explains the economic blunders committed by our political and financial leaders? Or why so many consumers are in debt up to their eyeballs? Or why millions of people expect a quick government fix of some kind?

Under Water

A few months ago, a friend of mine from Hawaii asked me if I wanted to buy his new powerboat with twin motors. Apparently, in late 2007, he purchased it brand new for approximately $85,000. His plan was to refinance his house when it appreciated in value and use the difference to pay for the boat.

Failing to obtain new financing, he called to ask me if I would buy the boat from him -- just take over the payments and it was mine. I passed, and the bank eventually repossessed his boat. Later, his wife called to tell me he's now having problems making his mortgage payments. Apparently, my friend planned to pay for his house the same way he planned on paying for the boat, by refinancing his debt.

I mention this story because it illustrates the problem Obama or McCain face: Limited financial education and diminished financial common sense. Apparently, my and the nation's business leaders all went to same school of finance.

A Cynical Aside

If you want to know why the towers of American capitalism are crumbling, I recommend reading "The Creature from Jekyll Island" by G. Edward Griffin. It's not an easy book to find, but once you start reading it's to put down. In fact, in many ways it's a murder mystery about the financial "murder" of the middle class.

A very important lesson in the book is how political leaders use financial spin to deceive the public. The very, very rich use the system to legally steal from the rest of us by appealing to our sense of patriotism. When our leaders say, "We're bailing out Fannie Mae and Freddie Mac because we want to protect the American people," they really mean "We're saving our rich friends."

All the bankers and politicians have to do is wave the red, white, and blue, play a few bars of "Yankee Doodle," and the masses get teary-eyed and pledge greater allegiance to legalized robbery. Yes, it's true that ignorance is bliss -- but ignorance is also expensive, and it cost us our freedom.

Freedom at Peril

A bailout can be different things. First, printing more money is a kind of bailout that leads to higher inflation. Rather than protecting people, it makes life for the poor and middle class more expensive. The other kind of bailout is protection for our rich and incompetent friends. If you or I fail at business, we fail. If we cheat and fail, we go to jail. But if you're rich and politically connected, your incompetence may be protected by a government bailout.

As a former Marine and a Vietnam War veteran, it saddens me to see some of the freedoms I thought I went to war to protect being stolen from us by bankers and politicians. Unfortunately, few Americans know the difference between the words "nationalize" and "socialize." Socialize means we turn more of our personal powers over to Big Brother, not free enterprise. It means we as a people grow weaker and need a higher power -- the same power that got us into this mess -- to protect us.

In short, when the towers of Fannie, Freddie, Merrill, Lehman, and AIG came crashing down, more came down than just money. What we're losing is the very freedom this country was founded on, and what most of the world yearns for.

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1426 Comments

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  • ash - Tuesday, July 7, 2009, 12:35PM ET  Report Abuse

    • Overall: 4/5

    nice one

  • RUDOLF - Tuesday, June 23, 2009, 5:21PM ET  Report Abuse

    • Overall: 5/5

    Well I read quite a few comments, and everone of them missed your point about "The Creature from Jekyll Island". Everyone sees and comments on the drying and dying leaves of the tree of capitalism, and all want to address this obvious problem by giving the leaves some finacial bail out mousture. My point is the real cause of the problem is hidden and we must go deep down to the root of the problem, which is buried in our financial and political hitory. People, please read the true story of what happened in Jekyll Island in about 1909. You sure won't find this being taught in our school history class', and it is not an isolated story either because, it is still being repeated even as I write this. Further on this I saith not at this time

  • Phil G - Sunday, May 24, 2009, 7:13PM ET  Report Abuse

    • Overall: 1/5

    where did he get the title and what does it have to do with the article. Capitalism is not crumbling. To call our system "capitalism" is a misnomer. What is true is that a great economic system has been hijacked by politicians pandering to the will of voters and special interests some are very rich some are academic elites. you want free no doc mortgages vote in politicians. you want to live large on the card then blame the "greedy " bankers on your largess vote in the politicians that will give you what you want.Let union and management live large for years then not let them fail when they have made mistake after mistake vote in a politician that will protect a bad business plan. As a Nation we are no longer tough enough to be a free and truly capitalistic system we have given it away. The day we began allowing gov't to solve our problems was the beginning of the end. Once on the public teat the addiction is too great to break!

  • WilfredE - Wednesday, April 1, 2009, 9:23PM ET  Report Abuse

    • Overall: 5/5

    It doesn't take a rocket scientist to know that for years not a dollar our government has printed has been worth the paper it's been printed on. We've just had a rude awakening, from a soporific induced (credit) sleep.The time has come to anti up and the pot is empty No matter, the printing presses keep rolling on. So, perhaps we'll take another soporific, and dream ourselves out of this mess. Or keep making what professional gamblers refer to as ASS BETS, and hope for better fortune... on.

  • Lee - Wednesday, March 25, 2009, 9:46PM ET  Report Abuse

    • Overall: 1/5

    I agree that our freedom is in peril and it is the bloodsucking special interests, lobbyists and the politicians who can be bought, but that does not mean that government is bad. So far, even though the McCains and Kyles and there brethren are trying to discredit them, the bulk of the liberal Democrats seem to be doing the right thing and hauling the financial ashes to prop up the system. If the twin towers of social security and medicare come down, revolution will come next. BOTH CAN BE FIXED, by taxing the thieves who are threatening our system. increasing social security taxes on earnings of up to 100,000 or even 200,000 would fix that system and increasing the medicare tax rate slightly would suffice. But the biggest fix would be to go to "medicare for all", like most of the other industrialized societies. We are paying more and less of us are covered by the crazy patchwork of mismanagement where 3/4 of all the money going into health care goes for advertising, sales commissions, executive salaries, bonuses, stockholder dividends, and the costs of administering 1400 different plans sold by 400 different insurance companies. Since most of us change jobs and insurance policies more than 4 times by age 50, who knows what pre-existing conditions on our current policies will be used for denial of services. Simple single payer insurance like in Japan, England, France, Canada, etc. does not have denial of services. If people are sick, they should get health care!!!

  • Vlad - Tuesday, March 10, 2009, 8:38AM ET  Report Abuse

    • Overall: 1/5

    Kyosaki was peddling his empty-headed drivel before the crash "BUY BUY BUY Real Estate, etc...." and now it's "The politicians have deceived you. The masses blah blah blah." He is an absolute idiot and fool, and only benefits from hanging around people who are intelligent and parroting a few truths betwixt his otherwise complete BS. He is a disgrace to Yahoo Finance, but Yang has other larger problems...

  • James - Monday, March 2, 2009, 9:29PM ET  Report Abuse

    • Overall: 5/5

    Well RK you got it . I served as a contractor during Mr. Richard Nixon's private war and wanted to serve again when the towers went down. But we have to remember that there is only one era that I feel no one has looked at. When FDR was in office we had WWII with millions of men and women all joined together to fight against an evil person / country. When our proud armies came home and the women / men came back from the factories all wanted something... a family, a Levitt Town.. a car.. schools ... it all snowballed from there. Now here we are 60 plus years later with mom's and dad's working to keep up with what... and their children well who knows where they are... The point is this has not happend over night. This great country of ours is under a great deal of pressure... We as people not all but some have forgotten what our great fore Fathers gave us to protect, to grow, to enjoy, all our great freedoms that people all over the world want but just don't understand the sacrafices our families had endured to maintain these freedoms for us. I wish that people in general would step back to smell the roses. But they won't! Why, the lack of understand of our problem... yes because all they have to do is look at their families. All we have to do is look at president's that thought with their zippers and then stated to us the American people and the world... "I did not know that this would be considered sex...???" When my son asked me with a statement "dad that is lying isn't it..." he was only 8 years old at that time. We as people of a Great and MIghty Country must take stock in who we are and we must ask ourselves these questions, what do I value most, my freedom or my money, what do I believe in god or sex.. what can I do to save this great nation you support the man in office regardless of who you voted for... use the system to our advantage and that was built by our fore fathers speak up, be heard.. take action call your senator ask the company ownerif he or she is doing their part.. Believe in God We Trust, because 30 some years ago I learned very quickly that GREED was the reason why my partner and I were left behind in Cambodia for dead... GREED.. As contractors we were paid a salary and bonus but they never told us if we came home alive!!! GREED!! If we didn't come home our boss got our money. We walked out of Cambodia and in 1976 were finally pulled out of a Thai POW camp. Believe to Never Give Up!! Our Government regardless of what we say is the greatest in the world... if you don't think so why is it that so many people are immigarting here legally /illegally... If you think this place is worst than hell no one is holding you back you can leave now! One more point: next time you are driving and someone tries to get in front of you slow down and let them through.. next time someone opens a door for you say thank you.. When someone asks for help reach out... and next time your are in a stadium look around you and think and I ask you to think real hard... if over the loud speaker system the announcer asked this question "how many of you would die for this flag raise your hand... think about all those who gave thier lives for you to be in that stadium and FREE!! Thank you RK for this article I hope you will be able to hit main stream, America.. with such thought provoking articles..

  • KAY - Wednesday, February 18, 2009, 5:02PM ET  Report Abuse

    • Overall: 4/5

    Thank you, simply the rich are not taking from the poor. I believe that the educated are taking from te UNeducated. I believe in my country, not all is perfect, but I have food, shelter and clothing and most of all HOPE!

  • Mike C - Monday, January 12, 2009, 12:37AM ET  Report Abuse

    • Overall: 5/5

    robert is one of the only financial writers with any sense of how the world of money works. Too bad most of his knowledge is wasted. No one under the age of 50 will have any idea why the current financial problems will doom their futures even if they are now doing well. Eventually the debt burden will cause a collapse and all money will be essentially worthless. I hope I am gone by they, but being 66 I dought that will happen.

  • Artrell - Tuesday, December 16, 2008, 8:38PM ET  Report Abuse

    • Overall: 5/5

    This article is very sound. I have read the Creature from Jekyll Island and have found it to be very true. I hope this spurs many to open their eyes and see what's really going on.

  • Yahoo! Finance User - Monday, December 15, 2008, 12:38AM ET  Report Abuse

    • Overall: 5/5

    Great Article.

  • S C - Saturday, December 6, 2008, 11:17AM ET  Report Abuse

    • Overall: 5/5

    A lot of folks near retirement are very worried about this situation and should be. As one of the Gen-X, we are used to being handed the problems of other generations (pollution, radioactive waste, social-security plummet, etc.). It doesn't mean we're going to solve it for the seniors (that will be you baby-boomers). But, it does mean that we, along with the next few generations, have to deal with the ripple for the next 30-40 years. Most of us "Gen-Xers" already know, and accept, that medi-care and social-security will be non-existant in 30 years. We know that, if employed by someone else, our average retirement age will be in the early 70's rather than mid-60's. So, as RK has said, why would you think that the Fed will be able to save the country from this situation? If we would let the dying corporations fade now, instead of a meager attempt at financial CPR, the ripple would be less impactive in 30 years.

  • Muhanguzi - Friday, December 5, 2008, 10:04AM ET  Report Abuse

    • Overall: 5/5

    this is one of the few individual that eagages his mind to find solutions for the general good of all.

  • Jerry - Thursday, December 4, 2008, 11:41PM ET  Report Abuse

    • Overall: 5/5

    i 100% agree with you ... the rich...is sucking money from the middle class by an inflation made by them for their incompetence... well.... the system we had create legal superriches... you can't make everybody a super rich by the system right.... but i don't mind i don't become a super rich as long as i don't get more poor...

  • Yahoo! Finance User - Sunday, November 30, 2008, 7:29PM ET  Report Abuse

    • Overall: 3/5

    The Treasury is being looted by the Federal Reserve. Where are the trillions going? Remember - Wealth is never lost, it is just transferred. This is the biggest transfer of wealth in history

  • Yahoo! Finance User - Thursday, November 27, 2008, 8:59PM ET  Report Abuse

    • Overall: 5/5

    Very good analysis. I just wish he would get a proof reader. I not good at this but I don't get published. He does and needs someone to put in the missing words he leaves out.

  • Yahoo! Finance User - Tuesday, November 25, 2008, 3:35PM ET  Report Abuse

    • Overall: 1/5

    At least he's been cut back to once a month. It's a start.

  • DelJ - Tuesday, November 25, 2008, 1:35PM ET  Report Abuse

    • Overall: 5/5

    EXCELLENT article RK, your readers seem to have more of a "love/hate" relationship with your journalistic skills than any other writer that I know of, but I think even the most die-hard detractor of yours will have to agree that this is very well written. On a more somber note however, it saddens me deeply, beyond most superficial U.S. citizen's ability to comprehend, that this nation's days are numbered, due to the complex web of deceit and lies spun by our "leaders" for many decades, since that fatefull day on Jekyll Island, when our future as an independent nation was sold down the river. Alas, I'm afraid that there are too many "sheep" in today's U.S. citenzenry, too concerned about their next line of credit to purchase that new big screen plasma TV to replace that 3 year old 48" big screen, too busy "keeping up with the materialistic Joneses" to worry about what's truely important; the future of our children in the U.S.

  • Lindeman - Tuesday, November 25, 2008, 1:29PM ET  Report Abuse

    • Overall: 5/5

    RK is right on. We are headed to what the founding fathers warned us of: a bigger federal government. Google search: Ezra Taft Benson Proper Role of Government. The former Secretary of Agriculture saw many of the problems and even saw the solutions. My hope is that Generation X & Y has enough courage to restore this country to the way God established it: by the Constitution.

  • Yahoo! Finance User - Tuesday, November 25, 2008, 12:38AM ET  Report Abuse

    • Overall: 5/5

    The fundamental intent and rationale of this article was excellent...and to be honest, I was surprised to see this level of sophisticated analysis from Kiyosaki. On the other hand, I was surprised by the number of spelling and grammatical errors in the text. Not sure whether this adds authenticity to the piece, or detracts from its credibility--maybe both. In either case, the points made are valid. I'm certainly not a "kill all the rich people" type--but I do believe that all too great a portion of these bailouts is based on personal relationships--not what is best for the United States or its citizens. Way to go, RK.

  • mike m - Monday, November 24, 2008, 10:48AM ET  Report Abuse

    • Overall: 5/5

    Excellent points Robert! Keep up the good work!

  • Chuck - Saturday, November 22, 2008, 9:57AM ET  Report Abuse

    • Overall: 5/5

    This article was excellent. However, I do not feel that 11% interest loans to these financial institutions, by the fed, qualify as a taxpayer funded bailout, without a return on our investment. This is almost all I have read or heard in the media, on how we taxpayers are footing the bill, (with no benefit mentioned),to bailout these failing institutions. My next question is, does the fed plan to reimburse the money to the taxpayers, when the loans are repayed. If so when and how? Another economic stimulus package, or how about reimbursement by the company stock base on a percentage of taxes paid by the individual taxpayer. Buy the time the company recovers, we should have a nice little nest egg.

  • TomO - Friday, November 21, 2008, 10:43AM ET  Report Abuse

    • Overall: 5/5

    Never thought I'd say it but the Goofball wrote a pretty good column. We are sufferring from having had it so easy for so long, we have lost sight of what made the country as great as it was. Thanks to our Political and Business "Leaders" we are no but a shadow of our formal selves? Will people wake up? Of course, but too late as usual.

  • Yahoo! Finance User - Thursday, November 20, 2008, 10:38AM ET  Report Abuse

    • Overall: 5/5

    A real voice of reason. Unfortunately, this is advice that the masses will never follow.

  • Rob Shaw - Wednesday, November 19, 2008, 10:02PM ET  Report Abuse

    • Overall: 1/5

    My one star rating was for Kiyosaki's financial advice doled out in this column. Most readers of this column know all of what he says in this article already. If you are looking for REAL stock insights, look at http://bapcha.com - which has no adverts. He also should have mentioned that once a company is "nationalized", the stock is worth ZERO - as the equity holders are usually wiped out. After all, it is the lack of EQUITY in the financials that has led to this melt-down. SG

  • 1 Wild and Crazy Guy - Wednesday, November 19, 2008, 3:51PM ET  Report Abuse

    • Overall: 5/5

    Robert, Were are you, we need advice on how to get through this financial meltdown.

  • Go For Broke - Tuesday, November 18, 2008, 12:52PM ET  Report Abuse

    • Overall: 1/5

    I cant believe Yahoo! did not fire this guy yet. Real estate is a bust, gold is a bust, silver is a bust, market is frozen, and nobody can afford your lousy books after they listened to your phony advice and lost thousands from the real estate bust. You are one of the culprits of this housing bubble Mr. Kiyosaki. What shame. What shame. Making people think that you have a "rich dad" when he is really an imaginary person like Harry Potter in which you did say on one of your interviews with Hawaii Business. You were never rich and only did so by writing phony books about being rich. Tough luck, the tide has changed and phonies like you are now going to work at McDonald's scrubbing toilets since all your properties are in negative equity. Harry, Honolulu, Hawaii

  • Albert - Monday, November 17, 2008, 2:54PM ET  Report Abuse

    • Overall: 5/5

    I think he is right If company failed - it should fine the way to survive or live the market. About the silver question: buy low - sell high (low $6 high $19)

  • Hyrum - Sunday, November 16, 2008, 4:55PM ET  Report Abuse

    • Overall: 4/5

    Robert why aren't you more vocal about how evil the Federal Reserve is and how they are stealing from all of us? And which third party candidate did you vote for for President?

  • jay - Sunday, November 16, 2008, 2:29PM ET  Report Abuse

    • Overall: 5/5

    I work in the financial industry dealing with subprime deadbeats. My thoughts are if you are not disciplined enough to pay your bills on time or you spend excessively, then you deserve high interest rates because you are a higher risk to the lender. If you save money, pay your bills on time, live within your means, and invest (like I do) then you shouldn't have to bailout these deadbeat dummies who don't know how to read or pay their bills. I agree people who have had rough life events such as death, sickness or jobloss deserve a break, but the other subprime deadbeats (you know who you are) DO NOT. Lets face it, if your credit score is not above 700, then you are subprime and deserve what you get. Just remember subprimers your days of easy credit are over- back to the pawnshops and rent to owns for you.

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