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Robert Kiyosaki Why the Rich Get Richer

Robert Kiyosaki, Why the Rich Get Richer

How the Financial Crisis Was Built Into the System

by Robert Kiyosaki

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Posted on Monday, November 24, 2008, 12:00AM

How did we get into the current financial mess? Great question.

Turmoil in the Making

In 1910, seven men held a secret meeting on Jekyll Island off the coast of Georgia. It's estimated that those seven men represented one-sixth of the world's wealth. Six were Americans representing J.P. Morgan, John D. Rockefeller, and the U.S. government. One was a European representing the Rothschilds and Warburgs.

In 1913, the U.S. Federal Reserve Bank was created as a direct result of that secret meeting. Interestingly, the U.S. Federal Reserve Bank isn't federal, there are no reserves, and it's not a bank. Those seven men, some American and some European, created this new entity, commonly referred to as the Fed, to take control of the banking system and the money supply of the United States.

In 1944, a meeting in Bretton Woods, N.H., led to the creation of the International Monetary Fund and the World Bank. While the stated purposes for the two new organizations initially sounded admirable, the IMF and the World Bank were created to do to the world what the Federal Reserve Bank does to the United States.

In 1971, President Richard Nixon signed an executive order declaring that the United States no longer had to redeem its paper dollars for gold. With that, the first phase of the takeover of the world banking system and money supply was complete.

In 2008, the world is in economic turmoil. The rich are getting richer, but most people are becoming poorer. Much of this turmoil is directly related to those meetings that took place decades ago. In other words, much of this turmoil is by design.

Power and Domination

Some people say these events are part of a grand conspiracy, and that might well be. Some people say they represent the struggle between capitalists, communists and socialists, and that might be, too.

I personally don't participate in the debate over a possible global conspiracy; it's a waste of time. To me, the wider struggle is for power and domination. And while this struggle has done a lot of good — and a lot of bad — I just want to know how to avoid becoming its victim. I see no reason to be a mouse trying to stop a herd of elephants from fighting.

Currently, many people are suffering due to high oil price, the slowdown in the economy, loss of jobs, declines in home values, increased bankruptcies and businesses closings, savings being wiped out, the plummeting stock market, and rising inflation. These realities are all direct results of this financial power struggle, and millions of people are its victims today.

An Extreme Example

I was in South Africa in July of this year. During my television and radio interviews there, I was often asked my opinion on the world economy. Speaking bluntly, I said that South Africans had a better opportunity of comprehending the global turmoil because they're neighbors to Zimbabwe, a country run by Robert Mugabe.

In my interviews, I said, "What Mugabe has done to Zimbabwe, the Federal Reserve Bank and the IMF are doing to the world." Obviously, my statements disturbed many of the journalists. I did my best to comfort them and assure them I was not an anarchist. I explained, as best I could, that Zimbabwe was an extreme example of an out of control power struggle.

After they were assured I was only using Zimbabwe to illustrate my point, I said, "If you want to understand the world economy, take a refugee from Zimbabwe to lunch." I advised them to ask the refugee these questions:

1. How fast did the economy turn?

2. When did you know that you were in financial trouble?

3. When did you finally decide to leave Zimbabwe?

4. If you could do things differently, what would you have done?

Three Approaches to a Crumbling Economy

I spoke to three young couples from Zimbabwe while I was in South Africa. Two couples were recent refugees now living in South Africa, and one couple still lives in Zimbabwe. All three couples had interesting stories to tell.

One couple said that they would have quit their jobs earlier. Instead, they hung on, hoping the economy would change. Then, virtually overnight, the value of the Zimbabwean dollar dropped and inflation went through the roof. Even though they received pay raises, the couple couldn't survive and soon depleted their savings. They left Zimbabwe by car with almost nothing. If they could've done something differently, they told me, they would have started a business in Zimbabwe and began exporting products to South Africa, so that they would have had South African currency and a bank account there before they fled.

The second couple that fled the country said they saved money and paid off their house and other debts even as the Zimbabwean dollar fell in value. Looking back, they say they would've saved nothing and gotten deeply in debt in Zimbabwe, allowing them to pay off their debt with the cheaper dollars. Instead, they fled after they lost their jobs, leaving behind their house and owning $200,000 in nearly worthless Zimbabwean dollars.

The third couple still lives in Zimbabwe. When they saw the writing on the wall, they set up a business in South Africa and, with the profits, began acquiring tangible assets in Zimbabwe. Often, they'll buy an asset in Zimbabwe and pay the seller in South African currency. They believe that once Mugabe is gone and order is restored, they'll be in a strong financial position.

Many Problems, Few Solutions

There are three major problems with the events of 1913, 1944, and 1971. The first is that the Fed, the World Bank, and the IMF are allowed to create money out of nothing. This is the primary cause of global inflation. Global inflation devalues our work and our savings by raising the prices of necessities.

For example, when gas prices soared, many people said that the price of oil was going up. In reality, the main cause of the high price of oil is the decreasing value of the dollar. The Fed, the World Bank, and the IMF, like Zimbabwe, are mass-producing funny money, thereby increasing prices and devaluing our quality of life.

The second problem is that our economic crises are getting bigger. In the 1970s, the Fed faced and solved million-dollar crises. In the 1980s, it was billion-dollar crises. Today, we have trillion-dollar crises. Unfortunately, these bigger crises mean more funny money entering the system.

Apocalypse Soon

The third problem is that in 1913, the Fed only protected the large commercial banks such as Bank of America. After 1944, the Fed, the World Bank, and the IMF began bailing out Third World nations such as Tanzania and Mexico. Then, in 2008, the Fed began bailing out investment banks such as Bear Sterns, and its role in the Fannie Mae and Freddie Mac debacle is well known. By 2020, the biggest of bailout of all will probably occur: Social Security and Medicare, which will cost at least a $100 trillion.

Even if we find more oil and produce more food, prices will continue to rise because the value of the dollar will continue to decline. The dollar has lost over 90 percent of its value since the Fed was created. The U.S. dollar will continue to decline because of those seven men on Jekyll Island in 1910.

Granted, the funny-money system has done a lot of good — it has improved the world and made a lot of people rich. But it's also done a lot of bad. I believe somewhere between today and 2020, the system will break. We're on the eve of financial destruction, and that's why it's in gold I trust. I'd rather be a victor than a victim.

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1299 Comments

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  • Lucy - Thursday, September 17, 2009, 11:52AM ET  Report Abuse

    • Overall: 1/5

    This article was vague, poorly written, and offered nothing to back up his ideas. Thanks to the person who posted this info on the author: http://www.johntreed.com/Kiyosaki.html#financialgenius

  • Bertram - Saturday, August 22, 2009, 9:22AM ET  Report Abuse

    • Overall: 5/5

    There are so many here already but I had to add one. This is an excellent explination of what is happening even if it were not true. I think it is and will be doing some of my own research. I bookmarked it so I can find out about the things I want to. I am a conspiracy buff that does not believe everything that is labeled conspiracy is. I just like to inspect for myself.

  • JosephZ - Tuesday, August 18, 2009, 3:11PM ET  Report Abuse

    • Overall: 5/5

    A brief, concise understanding of the "Monopoly" money. Makes me want to start a website: FunnyPaper for Gold.com No, just checked....it's taken.

  • Leo - Wednesday, August 12, 2009, 11:37AM ET  Report Abuse

    • Overall: 3/5

    A Visionanry,a person with great foresight.

  • weebles - Monday, August 10, 2009, 2:58AM ET  Report Abuse

    • Overall: 1/5

    Kiyosaki, Take the money you've made and go away. Quit scamming people with your "love yourself is the key to life/visualize it and it will happen" mickey mouse fraud. Be ashamed of yourself.

  • Yahoo! Finance User - Friday, July 24, 2009, 11:58PM ET  Report Abuse

    • Overall: 4/5

    GS US Govt we = cattle It's time to wake up.

  • Bubb - Wednesday, July 8, 2009, 10:06PM ET  Report Abuse

    • Overall: 1/5

    For some very good reasons not to read RK see http://www.johntreed.com/Kiyosaki.html#financialgenius

  • Yahoo! Finance User - Tuesday, June 30, 2009, 3:20AM ET  Report Abuse

    • Overall: 4/5

    good

  • Yahoo! Finance User - Friday, June 26, 2009, 12:04AM ET  Report Abuse

    • Overall: 4/5

    nice one

  • Jody - Tuesday, June 16, 2009, 6:13PM ET  Report Abuse

    • Overall: 5/5

    The Federal reserve needs to be audited so we can finally can see the truth. Then the Fed needs to be abolished! Please support HR 1207 !!! Kill the beast!! www.EndTheFed.US

  • CS - Friday, May 15, 2009, 12:12AM ET  Report Abuse

    • Overall: 5/5

    Be cautious of those who do not recognize the truth of what Robert K. is saying! What Robert Kiyosaki is writing about is well known among those who study economy and the literate. You will not find this type of exposition in the corporate media because it is the naked truth! Congratrulations Mr. R. Kiyosaki!

  • Thomas - Monday, April 27, 2009, 9:36AM ET  Report Abuse

    • Overall: 1/5

    The worst of many unjustified opinions expressed is the equating of the Fed, IMF and World Bank with what Mugabe has done to Zimbabwe. Mugabe made a naked power play to eliminate democracy, property rights and the rule of law in his country for his own personal gain and with disasterous results. The worst that can be said about the monetary institutions discussed is that they have made mistakes in trying to regulate the growth of world economies. As bad as the current economic problems are, they are are nothing compared to Zimbabwe, which has over 1 million percent inflation and over 90 percent unemployement. Other problems with the points of view expressed: - the author conveniently ignores the great depression when saying that economic crises have been getting worse. - no evidence is given for why abandoning the gold standard was a bad idea. Mainstream economists do not agree. - although the author says he does not believe in contributing to conspiracy theories, he goes on to do exactly this, providing a list of meetings of the rich and powerful, suggesting that they were organized purposes of wrecking the world economy (as conspiracy theories go, this doesn't even make any sense - forget about evidence or realism, where is the logic?) This article is not only somewhat ridiculous, its irresponsible.

  • Yahoo! Finance User - Sunday, April 26, 2009, 11:05PM ET  Report Abuse

    • Overall: 2/5

    It's quite frankly ridiculous that this man is suggesting that us moving off the gold standard was a bad thing. The cause of this crisis is that we have given too much power to the Fed and similar bureaucratic organizations, yes. But that power doesn't lie in the fact that they can create money "out of nothing", it lies in the fact that they are not checked nearly as often as they should be. They are the supreme authority on the money supply and, because they are not directly associated with the government, do not have to undergo the same system of checks that government agencies have to go through. Regulation is in order. Not regulation of the economy, but regulation of those that regulate the economy.

  • Yahoo! Finance User - Tuesday, April 14, 2009, 5:07PM ET  Report Abuse

    • Overall: 2/5

    This is the only article I have ever read by this man that makes any sense at all. It is also the only one that does not continually push his "financial education", which of course means buy my useless books, cds, etc.. Kudos to Kiyo for actually putting a little thought into something instead of repeating a bunch of trite phrases and meaningless nonsense. The fact that he does know Africa exists is impressive. The fact that one may not agree with him is really irrelevant in my mind considering his past.

  • Yahoo! Finance User - Wednesday, April 8, 2009, 9:50AM ET  Report Abuse

    • Overall: 1/5

    I think Robert Kiyosaki is a successful man but has mislead people that eventually lead to the housing bubble, people buying and selling houses they can't even afford, bankers cashing in as well which loosened up the regulations. I know he only meant well and was making money selling books and advices which he was successful in (Mostly related to Real Estate, mentioning that Real Estate will only go up in a best selling book I think mislead the readers, not mentioning that Real Estate corrects itself every couple years I think was wrong. As history repeats itself, you will see that housing prices go up in a bull market then down in a bear market, 2008 was a year when housing prices crashed and after years of advice from Robert Kiyosaki on Real Estate Value and Rental Properties). I didn't find his books amusing although I do agree with him on some points like people should be more responsible about their financial future and maybe find a rich dad who will mentor them.

  • Mike - Tuesday, April 7, 2009, 10:32PM ET  Report Abuse

    • Overall: 5/5

    jim h - Monday, April 6, 2009, 12:48AM ET Report Abuse Irrelevant??? Really? As long as there is a Federal Reserve and IMF this will never be irrelevant! Inflation is a "tax" on our labor that must be stopped.

  • jim h - Monday, April 6, 2009, 12:48AM ET  Report Abuse

    • Overall: 2/5

    what are we reposting articles written in November. It wasn't exactly insightful back then, now its just irrelevant. Jim

  • Yahoo! Finance User - Wednesday, March 25, 2009, 7:09AM ET  Report Abuse

    • Overall: 1/5

    I have a hard time listening to or reading anything this guy says. His history is that of a con-man, selling snake oil and bad advice to feeble minded people (at least according to the bio and analysis of his advice that a money magazine did on him a few years back. ) This guy is an expert at erroneously using metaphors and analogies to characterize situations improperly yet in seemingly convincing ways. Anyone who reads his books or articles for something other than amusement is very mis-guided. I can't believe Yahoo pays him money to write this stuff.

  • ZacharyL - Sunday, March 22, 2009, 9:12PM ET  Report Abuse

    • Overall: 1/5

    Money, be it gold or fiat, is of no use unless it is used to buy goods. If it is not used in this way, it is of no good to anyone. As Bertrand Russell puts it "There was supposed to be some mystic virtue about gold that made it worth while to dig it up in the Transvaal and put it underground again in bank vaults in America. In the end, of course, the debtor countries had no more money, and, since they were not allowed to pay in goods, they went bankrupt. The Great Depression was the direct result of the surviving belief in the magical properties of gold."

  • Yahoo! Finance User - Tuesday, February 17, 2009, 11:37AM ET  Report Abuse

    • Overall: 4/5

    My, my. I'm seeing a lot of name calling and one word comments that don't clarify much or just seem like pure angry emotion. When I see that kind of thing, it shows me that the subject matter bothers them because it strikes a nerve and they are desperately trying to make the thoughts go away.

  • Jidderbuggy - Tuesday, February 17, 2009, 11:21AM ET  Report Abuse

    • Overall: 5/5

    This article started sparking an interest in researching the Federal Reserve, Rothschilds, Rockafellers, and the illegality of it. Really, right on and good to know. Twaddlefree needs to do a little more history to find that the Fed was not created during the great depression, but rather helped cause it, move it along and prolong it.

  • Jon O - Wednesday, February 11, 2009, 5:01PM ET  Report Abuse

    • Overall: 5/5

    Idiots believes kiyosaki makes money by selling books? hahaha Obviously, that's an idiot comment from an idiot employee and does not know marketing or running business at all.

  • MyoM - Wednesday, January 28, 2009, 11:54AM ET  Report Abuse

    • Overall: 4/5

    Better start building a financial ark if you haven't done so already.

  • jenniferkenngott - Thursday, January 22, 2009, 9:39AM ET  Report Abuse

    • Overall: 3/5

    I recommend that the previous commenter learn a bit of history. Fed created in 1913, stock market crash 1929, Great Depression through 1940 directly caused by banks that created too many paper bills with no gold to back them and a credit bubble. Though Kiyosaki speaks the truth, he does tend to follow a money trail, saying and doing whatever works at the time. Real estate investment on LEVERAGE is the perfect example of his previous money-making teachings. Then again, most of those who understand what is coming are making money off of it up to the moment is happens. Many who understand the role of gold as money are trading it to make what is used as money in the real world, i.e. fiat currency. Expecting people to live a philosophy instead of opportunity is exactly what the Jekyll Island crew knew that the ignorant people would do while handing over our country’s wealth to them! Let’s just say that I would never follow any advice of Kiyosaki unless I was paying him to tell me when that advice expired.

  • Yahoo! Finance User - Wednesday, January 21, 2009, 2:30PM ET  Report Abuse

    • Overall: 1/5

    This article is total nonsense. If fractional reserve is so bad, how is it that the biggest economic crisis, the great depression happened before fractional reserve accounting? And this whole point about bailing out Tanzania and Mexico, should we have just let them starve to death from their economic woes? With all due respect, the author comes off as selfish and trying to promote his own line of "get rich quick" schemes or whatever other random books / paraphernalia he is trying to sell. One at the very least should look up a couple of Wikipedia entries about Brenton Woods and Great depression, and the bailing out of Mexico to see that guy is just sensationally rambling

  • MarietaY - Wednesday, January 21, 2009, 4:44AM ET  Report Abuse

    • Overall: 5/5

    This man is not an idiot. He is totaly right. There is many ways to get rich not only real estate. We have to open our minds to understand it. However most people prefer NOT to understand it. This is the reason why there are more poor people than rich people. I always say if you want to do something you will find a way, but if you do not want to do something you will find an excuse. Thank you very much Mr. Kiyosaki for keeping educating us. :)

  • ClaudiaM - Tuesday, January 20, 2009, 11:00PM ET  Report Abuse

    • Overall: 1/5

    The man is an idiot. Until recently he has been advocating buying real estate and leveraging it. He has gotten rich by writing books with ever changing mantras. He should write a book about gold and silver. Listen to Marc Faber, a trained economist and not a writer of fiction.

  • FantasyFanBaseCom - Tuesday, January 20, 2009, 10:06PM ET  Report Abuse

    • Overall: 5/5

    Finally a Yahoo based article that dares reach out and touch the truth. Well done Robert.

  • builder - Tuesday, January 20, 2009, 6:56PM ET  Report Abuse

    • Overall: 5/5

    If your a typical upper middle class citizen of the USA you have your home, 401, savings and other assets worth 1,000.000. or more. To spend 50,000. to 100,000. on gold & silver bullion, the down side is minimal but the protection it buys you if things really hit the fan would save your azz. HOLD GOLD

  • Yahoo! Finance User - Tuesday, January 20, 2009, 5:58PM ET  Report Abuse

    • Overall: 5/5

    Yes. It's been said again, in another way: We will one day have a just government and financial system solely dependent upon the volition and knowledge of the people who, taking responsibility for themselves and insisting on a strong republic by the people and for the people, guided by our God given rights and a sense of human family that still regards national sovereignty, renounce control abrogated to a select few who are hapless and greedy.

Showing comments 6-35 of 1299<< PreviousNext >>
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