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Robert Kiyosaki Why the Rich Get Richer

Robert Kiyosaki, Why the Rich Get Richer

Welcome to Turbulent Times

by Robert Kiyosaki

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Posted on Monday, November 26, 2007, 12:00AM

The Sunday, Sept. 30, edition of the New York Times featured two articles that should be cause for alarm.

"What Makes a Monk Mad" was about civil unrest in Myanmar, formerly Burma, led by Buddhist monks. This past summer, the monks led huge demonstrations in part because the government tried to suppress protests against high gas prices.

The second article, on the same page, was titled "Costly Fuel Is Never Far from a Match," and featured a photograph of a gas station in Tehran that was burned this summer by rioters. Again, the issue was high gas prices.

The Center of Our Lives

Both articles emphasized that oil and gasoline prices are causing unrest all over the world, even in oil-rich countries. Governments have had to choose between allowing prices to rise, as they did in Myanmar, or subsidize fuel costs to keep prices low, as in Iran.

It costs governments money to keep fuel prices low. Oil-rich Yemen, for instance, devotes 9 percent of its GDP to making sure its people don't riot when oil prices rise. But the problem with cheap, subsidized fuel is that it creates more demand, and thus costs the governments more money. Countries like Iran, Yemen, Colombia, and Nigeria could go broke if they keep providing cheap gas to keep people happy.

Fuel prices are at the center of our lives. They affect our ability to travel, stay warm, and feed ourselves. That's why governments the world over have done their best to dampen the effects of oil prices that have tripled over the past four years. As David Goldwyn, an assistant secretary of energy in the Clinton administration, said in one of the Times stories, "Some countries are hiding the realities of high fuel prices to keep political peace." If oil prices continue to rise, as I expect they will, there will be more events like the protesting monks in Myanmar and the match-throwers in Iran. It seems that world peace depends on cheap oil.

Life Isn't Fair

Meanwhile, the effects are also felt closer to home. I recently had a conversation with Gilbert, a loyal employee of my gym for more than 15 years. He's always well-groomed, punctual, and cheerful, even at five in the morning. After my workout, Gilbert came up to me and said, "Can I ask you a question?"

"Sure," I said. "What's on your mind?"

"How's the economy?" he asked cautiously. "You know a lot about money. What do you think is going to happen?"

"What do you think?" I replied. "How does the economy look to you?"

"I think it looks bad. The gym froze my wages a year ago. Two days ago, they asked us all to take a ten percent cut in pay. They say they have to cut our pay because the expenses to run this gym are going up. They say if they raise prices, members like you will go to another gym."

"And do you believe them?" I asked.

"Yes, I do," said Gilbert. "My wages are going down and I can see prices for gasoline and food going up. I think the economy is in bad shape. I'm using my savings to live. I'm very worried."

"I'm very worried, too," I said softly.

"So is everyone in financial trouble?" asked Gilbert.

"No," I replied. "The rich will get richer, even in a bad economy."

"How can that be?" Gilbert said. "We all live in the same country. How can the rich get richer while my family becomes poorer? Are you getting richer?"

I slowly nodded my head.

"That isn't fair," Gilbert said.

"I agree," I said. "It isn't fair."

All of us know people like Gilbert. He's in trouble, and so are the rest of us, regardless of how much money we have.

More Expensive to Live

That's depressing news, but are we headed for a depression?

I believe the world economy will continue to inflate, which means prices will keep going up. Whether we enter a depression or -- more likely -- a recession, there will probably be hyperinflation and life will become very difficult for the Gilberts of the world.

Not only will fuel costs continue to go up, so will food costs. As our dollar drops in value, countries like India and China import more food from the United States. This is bad news for Gilbert, although I've done very well investing in companies that produce and export food to the developing world.

The Turbulence Is Here

To make matters worse, the Iraq war is costing the United States $500,000 a minute. At the same time, President Bush vetoes health insurance coverage for the children of people like Gilbert. Something's very wrong with a nation that would rather spend money on war than take care of its children.

But life is about to become very expensive for all of us. Former Federal Reserve Bank chairman Alan Greenspan recently warned that an "age of turbulence" will begin around 2010 or 2011, when baby boomers begin to retire.

To me, if even the normally peaceful monks of the world are mad, the age of turbulence has already arrived.

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397 Comments

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  • Kelly - Saturday, January 19, 2008, 10:21PM ET  Report Abuse

    • Overall: 1/5

    t costs governments money to keep fuel prices low. Oil-rich Yemen, for instance, devotes 9 percent of its GDP to making sure its people don't riot when oil prices rise. But the problem with cheap, subsidized fuel is that it creates more demand, and thus costs the governments more money. Countries like Iran, Yemen, Colombia, and Nigeria could go broke if they keep providing cheap gas to keep people happy.,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,SInce 2000 the value of oil in Iraq has gone from 1.5 trillion to 11 trillion and the value of oil in iran went from 1.8 trillion to 13 trillion .....In other words enough to buy all the to buy all the residential real estate in the US. ...........................Oil countries are NOT GOING BROKE.........Many have free Healthcare ,Free College and free money,almost no taxes at all....and financially more liberal than any communists even dreamed.......Dubai overflowing with cash...Kuwait makes more on investments that it does on Oil now....Ask citbank and some others how broke the oil countries are....Dont you have to know anything to write a column :{

  • Shannon - Monday, January 14, 2008, 9:54AM ET  Report Abuse

    • Overall: 2/5

    comment about health insurance for childeren is unfair. Give us details, attacking Bush on this issue sounds to easy when there are many details involved. Typically I like your articles; not this one.

  • Jeff - Friday, January 11, 2008, 4:58PM ET  Report Abuse

    • Overall: 2/5

    A better rating than I would normally give Ol' Bob. The comment about running a war and vetoing health insurance was completely irrelevant though.

  • DAVID - Thursday, December 27, 2007, 10:16PM ET  Report Abuse

    • Overall: 3/5

    RK's articles on yahoo are much too brief to be able to cover all aspects of each topic he delves into. Though I am no John the Baptist disciple of RK I think he does bring brilliant insights to these articles. His readership is probably one of the biggest on yahoo and most anticipated. Some of his ideas tho not original are refreshing and not just the hackneyed old stuff. His detractors as well as his disciples look forward to Robert's articles with equal passion. His detractors on yahoo, level a lot of unwarranted personal attacks. His other critics like John T. Reed devote tons of web pages to save us from Kiyosaki and then proposes at the end you buy books from him; Mr Reed. Mr Reed is at once brilliant himself and self serving. He vociferously criticizes other hucksters in some cases deservedly so. His education and bonafides are imrpessive but his personal gain in this critical enterprise sullies his sometimes petty and ranting soliloquy. Whether Rich Dad is real or not real is terribly not important. It is my conjecture that Rich Dad probably was but that Kiyosaki might have embellished a little in some of his metaphorical allusions in his book writin. But so what if he had embellished I have no proof of that neither does John T Reed. It certainly does not make him diabolically evil as Mr Reed would have us believe. In fairness I love Mr. Reeds books and have learned a lot from his more technical way of writing things. Kiyosaki's formulaic math can be weak at times. But he has claimed not to be much of a scholar in school. Though not as good as Harvard University that John T. Reed attended. RK did attend a great military maritime university in New york and graduated. Look, its better to have education today but there the Bill gates of the world out there who didn't finsh college and still turned out ok. With regard to How many properties Mr Kiyosaki owns thru a public record search. Last I checked thoroughly two years ago he had 7 to 9 corporations with his wife Kim which I shan't name for their privacy in which he carries his ownership of his various real estate transactions. Apparently per the advice of his CPA and laywer teams these are better entites to carry ownership for tax purposes and liability. We of the educated classes can debate the merits or demierts of these entites till the cows comes home but thats the advice he is using for better or worse. These entites are all currently perfectly legal. Somebody is bound to challenge their efficacy some day for gaps and vulnerabilities but in the meantime they are legal. As for whether he made any money before writing his books. Rk was apparently initially successful with his wallet business before going bankrupt through a series of novice business mismangement of that now defunct company. However one wants to minimize his success as an author it remains a fact that most of his fame stems from the book series Rich Dad, Poor Dad and the compenduim of ancillary products from that book like his Board game. Other than expanding his brand with the Rich Dad series Mr.Kiyosaki has done a very good job of maintaining and build his wealth further by investing in real estate some more. He is no Donald Trump but he does have above average portfolio of apartment buildings, commercial developments and a smattering of residential buildings including his primary residence at the Biltmore in Az. He is married for over twenty years with no children which certainly doesn't hurt when one is in the pursuit of wealth. His wife and him are very steeped in the same enterprises and equally devoted to their goals of wealth building. Kiyosaki is well known for assembling teams, each of whom he says is generally smarter than him. Mr Reed implies that one cannot really utilize advice from people smarter than them. Though in some cases, this can be accurate, in other cases it is not correct. Especially, when people are able to compensate their handicap with brilliance in other brain aspects.

  • Yahoo! Finance User - Thursday, December 27, 2007, 12:44PM ET  Report Abuse

    • Overall: 1/5

    It really is quite amazing to me that Yahoo! even has Bob Kiyosaki as an expert. Having him as an expert must be a complete slap in the face to Suze Orman and Ben Stein. Bob is a complete phony. In his December article, he says, As a result, between 1997 and 2000, I radically altered my thinking, my businesses, and my investment strategies. This is completely laughable. What Bob Kiyosaki did from 1997 to 2000 is write fantasy books such as Rich Dad Poor Dad. It is well known that he did NOT make money by being an investor in real estate, stocks, gold, currency, etc. Rather Bob made his wealth as an author. Only now is he able to be invited into real estate syndication deals because he has a few bucks in his pocket from convincing the masses that he is some type of investment guru. Please Yahoo! spare us of this fraudulent expert.

  • suavamente - Wednesday, December 26, 2007, 6:44PM ET  Report Abuse

    • Overall: 1/5

    http://www.thesimpledollar.com/2007/01/26/deconstructing-robert-kiyosaki/

  • Yahoo! Finance User - Monday, December 24, 2007, 10:43AM ET  Report Abuse

    • Overall: 5/5

    like a voice in the wilderness or the legendary canary in the coal mine, this guy is worth listening to.

  • KevinP - Monday, December 24, 2007, 12:01AM ET  Report Abuse

    • Overall: 1/5

    Great information as usual Mr. Kiyosaki... I love your articles...normally. The health insurance "for the children of people like Gilbert" would bring this great country one step closer to all-out socialism. You have written about the dangers Capitalism faces before... are you growing soft on us? I still think you are great... but if you keep preaching on favor of socialism I'm afraid I won't be reading any of your new stuff much longer.

  • Janette - Sunday, December 23, 2007, 8:23AM ET  Report Abuse

    • Overall: 4/5

    can i have more copy of your previous article because it encourage me a lot

  • Yahoo! Finance User - Saturday, December 22, 2007, 12:30PM ET  Report Abuse

    • Overall: 1/5

    Uh, Jesse S, it's the fact that so many of us here understand Kiyosaki that makes him such a laughing stock. Where, for example, is the recession he was so confidently predicting by Christmas? Not only hasn't it materialized, but it was just reported the retail sales increased in November by the largest amount in 3 1/2 years. If a recession happens at all, it definitely won't be on Kiyosaki's time line. That makes his financial advice worthless for any thing other than a little comic relief.

  • JESSE S - Saturday, December 22, 2007, 7:30AM ET  Report Abuse

    • Overall: 5/5

    Your book rich dad poor dad is one of the best books I've read. Sorry these people don't understand you. Thanks for all your advice.

  • Yahoo! Finance User - Saturday, December 22, 2007, 12:33AM ET  Report Abuse

    • Overall: 5/5

    There's no recession or depression in our future. People should stop listening to negative statements. Go out, spend money, enjoy life, buy Hummers, buy plasma TVs, shop til you drop and have a Merry Christmas.

  • Gee - Friday, December 21, 2007, 5:19PM ET  Report Abuse

    • Overall: 1/5

    Hypocracy! RK can't decide whether he is a capitalist or a socialist (or liberal "progressive?) Or, is he just too ignorant to figure out how it all ties together? In his books he preaches self-reliance and that a person can do well if he works at it and makes his opportunities -- while others sit and wait for someone (or the government) to give them an opportunity. He also criticizes the impact of excessive taxes. Now he chides Pres. Bush for vetoing the new version of SCHIP. Pres. Bush's administration CREATED the SCHIP program, and encouraged its enactment into law. As initially created, it would provide health insurance to poor children. The REVISED version of SCHIP recently passed by Congress would DIVERT money from poor children to families making as much as $83,000/year. It would also DIVERT money from children to adults. It would drastically expand a Medicaid-like program to cover all the new recipients. However, the revised plan does NOT provide for adequate funding on an ongoing basis. It would require major tax increases if it were adequately funded. Medicare, Medicaid, and other health programs already consume more than ONE THIRD of the national budget. This new program could DOUBLE that if fully applied. Families making $80,000 per year CAN afford health insurance -- IF they have the right priorities. MOST families can't even take medical expenses (including health insurance) as itemized deductions on their tax returns, because their total medical expenses (insurance premiums AND bills) do not exceed the minimum threshold of 7% of their income. Why should taxpayers that DO buy health insurance pay additional taxes to subsidize other families making as much as $83,000/year because those families DON'T set the right priorities?

  • El Viejo - Thursday, December 20, 2007, 4:28PM ET  Report Abuse

    • Overall: 1/5

    RoKi is not the worst columnist here, we all know who that is .... but his kooky style does leave him open for lots of criticism ... and yes, why did he just nod and not stop to give the poor guy a hand eh ? .... what a snob some rich people are !

  • rkisanidi0t - Monday, December 17, 2007, 11:02AM ET  Report Abuse

    • Overall: 1/5

    Bobby wastes half his article on a little story about how being poor is unfair. Then he does his political plug. The 5-star raters think this is genius! Whoa.

  • BellumT - Saturday, December 15, 2007, 10:16PM ET  Report Abuse

    • Overall: 3/5

    Wakee Wakeee !!! USA , don't be just like Singapore , we always think we are Nos 1 in everthing till we travel to another country and shock to find that other country is doing better than us. There is AWAKING issue going on in Asia that is why even the Monks are involve. USA have been our great leader all these whilst and we have look forward for US to lead us.But it turns up that US is either unreluctance to lead or unable to lead.Now Asia have taken some steps and move on. RK have the foresight to see where US is heading to. RECESSION in 2009 -2012 as he stated in one of his book publish in 2005.Eversince US have shown strong sign of heading that way.For the past couple of years there are great changes taking place in Asia.Even we are so near to China and India the fastest growing economics in the world we cannot keep pace with their progress ,we are sure the average US citizen don't know what is going. Over here in Asia except Japan our real estate is rocketing to the sky whilst the West is collapsing all over.We are expecting more Western people to seek job in Asia in the next couple of years. Comparing the amount of job created in US in November in US you are cheering over it. Imagine in a small city like Singapore with 4.5millions people we have created 75,000 jobs in Novmenber itself.So to compare apple to apple USA have nothing to cheer. Guess recession is just round the corner for USA as what RK have predicted. For those who are talented and knowledge to contribute you are welcome to Asia. We need you.IF you are to be RIch , head for the EAST instead of the WEST.

  • B. - Friday, December 14, 2007, 5:52PM ET  Report Abuse

    • Overall: 2/5

    What Robert doesn't seem to realize is that stocks just about always rise eventually. It doesn't matter if you lost 10 percent of your money in a week, because in three years you'll still almost certainly have a very good gain. This 'recession' as it is starting to be called, is just a big stock sale for long-term investors. Just buy now when the stocks are cheap, hold on a few years, and you'll be fine. This also has the added benefit of reducing the loss in the stock market, because people will be buying stock.

  • Raymond - Friday, December 14, 2007, 3:53PM ET  Report Abuse

    • Overall: 5/5

    I just wish he would give some advice on the best inverse funds out there to take advantage of a potential recessionary period, instead of just buying silver. Any ideas?

  • Jason Slipcheck - Friday, December 14, 2007, 12:21PM ET  Report Abuse

    • Overall: 2/5

    This guy is a joke...mean while while we all try to do the right thing and help out others...Robert is ripping people off all over this country with his rediculous educational classes that cost more than many manke in a year. Robert gets richer because he is ripping off the hard working people of the US.

  • World Trader - Friday, December 14, 2007, 1:14AM ET  Report Abuse

    • Overall: 4/5

    I think Robert is always right on target with his articles. As they say, "A word to wise is sufficient."' I think most readers has the knowledge and sense to understand what he is saying. For others they are afraid of the truth. We have to accept the fact the U.S. and possibly the world enter a recession. This is not a bad thing for those who prepared. We have a enough time to cut down our expenses and get our economic houses in order. Another way prepare is to study and learn how to invest in a bearish or recessionary economy. Robert, Jim Rogers, James Turk, and other authors have praise the benefits of investing in gold, silver, and commodities. Please read their books and learn how to responsible and safe investments in these markets. It is said that by just investing 5% of your total assets in gold can be enough beat the effect of inflation on your purchasing power.

  • LAURA - Thursday, December 13, 2007, 9:31PM ET  Report Abuse

    • Overall: 5/5

    For most people this article goes right over their head. It's too bad, but most people are like ostriches. Stickin' their head in the sand. Robert is a no-nonsense guy. Practicle and consise!

  • Yahoo! Finance User - Thursday, December 13, 2007, 9:26PM ET  Report Abuse

    • Overall: 1/5

    I've read many of Robert's books and respect his knowlege of business. His columns here are always negative. It's seems that if things are so bad here in the US that he would take up residence elsewhere. Come on Robert, show us your brilliance not your political leanings.

  • Sam - Thursday, December 13, 2007, 9:10PM ET  Report Abuse

    • Overall: 5/5

    He is right.

  • edem - Thursday, December 13, 2007, 2:59PM ET  Report Abuse

    • Overall: 5/5

    This is really true, only for those who are living in the real world. For those who are living in fantasy, Tuff

  • Yahoo! Finance User - Thursday, December 13, 2007, 2:11PM ET  Report Abuse

    • Overall: 1/5

    I read this guy's books and his articles online. I read them because they're entertaining to me, but some people might actually think he knows what he's talking about. He never offers any quantified data, numbers or sound theories, he just makes stuff up. I know he's being paid to write his opinion, but this is crazy. I can't believe you pay him for this.

  • Yao - Thursday, December 13, 2007, 1:37PM ET  Report Abuse

    • Overall: 5/5

    It is much better to deal with the truth and what is coming....

  • Troy - Tuesday, December 11, 2007, 8:14PM ET  Report Abuse

    • Overall: 1/5

    all problem oriented ---where is the financial advice?

  • Josh - Tuesday, December 11, 2007, 5:12PM ET  Report Abuse

    • Overall: 1/5

    More hype from people who do not have a basic understanding of macroeconomics. Gas prices are not that high! They are not at historical highs and we spend less of our money today on energy than we ever have in the past. See my blog post here: http://joshuasaunders.com/2007/11/13/why-you-shouldnt-be-concerned-about-the-economy-how-the-media-is-lying-to-you/

  • farfel - Tuesday, December 11, 2007, 3:32PM ET  Report Abuse

    • Overall: 4/5

    you can bash RK all you want for his self-marketing, but concerning our economic situation right now, the question is whether RK is a leader or a follower, and i suspect he is the latter. nonetheless, RK is correct. especially when he's saying much the same things that a master investor like Jim Rogers has been talking about already for the past few years. and how about Puru Saxena, or Peter Schiff (THE Dr. Doom), who is regularly made fun of when he's on with the other talking heads on Fox, CNN, and CNBC? look, when you start to hear similar negative sentiments by many otherwise nameless commentators on a mainstream business radio channel like Bloomberg, then you know something is seriously up.

  • Corey - Tuesday, December 11, 2007, 12:21PM ET  Report Abuse

    • Overall: 5/5

    Its funny I was talking to a guy who believes that the market should just always go up, he believes it can only go up and inflation, US dollar, etc is just all a big myth. Does not understand anything about the economic system. And then I start reading these comments about RK being wrong about knowing if we are in a recession or not by xmas and him saying the jobs numbers are up to 94k or whatever. The fact of the matter is that the economy has to be in a tail spin just because things don't feel or look right. Look at all the foreclosures, high energy costs, etc. I'm sure we will pull through the whole fiasco eventually, but when is eventually and how will my life look when eventually comes. I recently bought my second home. I tried to sell my first which I got for a good deal but was forced to rent it out. Thats when I learned that my perceived monthly loss was not a loss because of the tax benes and everything that goes along with owning the home. Its funny though I had no trouble renting the home out. About two months after renting the house out I noticed my check from the prop management company was extrememly late. Know what their reasoning was, it was that they had gained so many new landlords and tenants, that their business had tripled in that short amount of time. The main reason that 90% of the new customers coming to them, can't sell a house and can't buy a house, same as mine, although I knoew I could still buy despite the credit crunch. anyhow my point is that yes RK predicts doom, and I believe he is right. There is always doom, the economy will always be bad and good. The point is that alot of welath is changing hands right now (alot of people are being forced to rent and they are giving that rent money to a lot of landlords who are forced ot rent to them, in the end when it all comes back the landlords would have taken all that money from those tenants resulting in a change in welath). I believe this to be true in pretty much everything we do. The recession/depression is coming, but so is the boom. So why not take the advice of our elders (I too am a gen-xer) and prepare for the boom in recession. Or prepare for the recession while in the boom. Seems to me that if we are logical in this regard we will all do better.

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