The Next Financial Crisis Is Already Here

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1:25and fresh cut fruits to go. Celebrate mom with Whole Foods Market. It's the exact same thing. They're just garbage loans that never should have been made to people who can't pay them back.

1:40Hello, Robert Kiyosaki, the Rich Dad Radio Show. The good news and bad news about money and oil and everything else in the world right now. There's so much going on, man. I can't ask for much more. and today, like I always say, I'm in Phoenix, Arizona. It's either heaven or hell. Right now it's heaven, soon to be hell. And a dear longtime friend who used to live here in Phoenix, George Gammon, but he wimped out and he went down to Columbia or someplace where the women are gorgeous. And anyway, he's been a longtime friend, but he's one of my go-to guys. is what I really want to know the bigger picture.

2:22And the other thing I like about George is he's an American, although he looks at the world from outside of America. So with that said, George, welcome to the Rich Dad Show. When I first met you, you were talking about inverse yield curves. Yeah. And today's issue is... Private credit. Yeah, private credit. Yeah. And it's private equity. and this private credit, plus you have the national debt, plus you have, what do you call that, office real estate tanking because they can't pay the loans on those things. So let's get back to private credit. See, back in 2008, it was mortgage-backed securities.

3:12They were derivatives. What is private credit, George? Well, let's actually go back really quick. You said something interesting. You said mortgage-backed securities. That's right. But remember, Robert, what did we call the crisis? We called it subprime, didn't we? Yeah. Called it subprime. But what is the private credit crisis that we're dealing with in 2026? It's subprime. It's the exact same thing. They're just garbage loans that never should have been made to people who can't pay them back. yep but i also want to i also want to point out before we go any further the first thing you talked about was the yield curve and the inversion of the yield curve that i've been talking to you about on forums like this and in and in private and in our private discussions that we have at dinner whenever we're able to meet or whatever um you know i've been talking about that for probably two and a half years and not just the inversion of the yield curve, but the un inversion of the yield curve.

4:18And what's really fascinating is the yield curve and what's happening with private credit. It's one in the same. It's one in the same because the yield curve predicted this. George, George, you're messing with my brain now. Come on, give me a break. Okay. First of all, first of all, I want to say every time I hang out with Georgia, you're having an event in Orlando coming up. Yeah. Yeah. The Rebel Capitalist Orlando? In May, the last week in May. Yeah, hopefully we'll have you there. I plan on being there. I go there to learn, to listen, and all this. But for those of you who really want to get a pulse on what's going on in the real world, it's George's events.

5:00And he puts these words out like private credit versus private equity. And then you have subprime, you have mortgage-backed securities. collateralized debt obligations and derivatives. And the average person has no idea what they mean. Yeah. And each one of them, especially derivatives, have the power of a thermonuclear device to blow this whole place apart. So when I saw private credit come up, it says the same thing. private credit means they lend money to people who can't get credit. Is that what you're saying? Basically. It's basically what happens, Robert. You're going to love this. You're going to love this.

5:50Basically what happens is let's just say, and we'll just use an example that everyone can easily understand. Okay. Well, let's say you've got someone with a 500 credit score. All right. and they go to the bank and they say, Hey bank, I need to borrow$500 million. And they say, do you have a job? I say, no, no, no job. Okay. Um, have you had a job in the last 10 years? No, no. Actually I just got out of jail. Oh wow. Okay. And then what's your credit score again? Um, right around 500, maybe 490, something like that. And they said, let me get this straight and you want to borrow$500 million. Yeah.

6:32They said, yeah, I don't think so. We're not going to lend you 500 million. So then what happens is you have a quote unquote shadow bank. So these are these private credit institutions that go out there and try to sell their investors on this guaranteed risk-free 10 or 12 % return. So what they do is they go to that exact same bank and they say, hey, we'd like to borrow$500 million. And the bank says, oh, really? Well, what's your credit score? They say 780. This bank says, oh, my goodness gracious. And you went to Harvard? And you went to Yale? Oh, my goodness, wow, you guys are fantastic. We would love to give you$500 million.

7:15So then the bank lends the$500 million to the private credit guys, like, let's say, Larry Fink. And then Larry Fink calls up the guy with the 500 credit score that just got out of jail and says, hey, guess what? I've got great news. I've got$500 million with your name on it. All you have to do is pay me 14%. And the guy says, sure, I'll pay you 400%. It doesn't matter because I'm not going to pay you back anyway. That's private credit. And that's what's it. And from, George, because you know a lot more about this than I do. But that private credit where they got guys with good credit lending to guys with bad credit.

7:57Yeah. And that's what's going to bring the banks down this time. It could. It could. Robert, what I want you to do for me for a moment is I want to go through a visual for your audience. And what I'd like you to do is visualize a motor. We all know a car engine. And what is required in that car engine is for oil to circulate, right? So, Robert, what happens if the oil, you take it all out of the car, or the oil stops circulating in the motor? It freezes. Yeah, you walk. It seizes. Yeah, you walk. You start hitchhiking, right? So the global monetary system, our financial system, and therefore our economy is dependent on not oil circulating, but money and credit.

8:52See, money and credit circulating in our economy is exactly like oil circulating in a motor. And what happens is that circulation of money and credit is dependent on risk. risk. So if risk increases due to that phenomenon, we just call it a scam or ruse or whatever you want to call it, that we just described, then that is definitely going to impact banks because they are dependent on that circulation of oil or the circulation of money and credit is heavily impacted by risk going up due to these bankruptcies. So I have, let's say I got to George and myself two smart guys went to Harvard. We have good credit scores.

9:41We borrow private credit, and then we lend that money to people who are less credit-worthy. And George knows a lot more about it than I do. But I hear when those guys who are less credit-worthy stop paying, that's when the whole engine seizes. And that's our banking system this time. Yeah, and it's exactly what happened in 2008, Robert. Remember? They stopped paying back the home loans because no one could afford it. What's the difference between not paying back a home loan and paying back a private credit loan? It's the exact same. Well, that's why I wanted you on this program because there are slight distinctions, but the end is the same.

10:19We all start hitchhiking. We'll be right back. For decades, Robert Kiyosaki warned the system was fragile. Most people laughed. They aren't laughing anymore. $39 trillion in debt, inflation that won't quit, a dollar that has lost more than 90 % of its purchasing power since 1971. That's not instability. That's a collapse in slow motion. Robert's been saying this for 30 years. Savers are losers. Not because saving is wrong, but because saving paper money in a system that keeps printing more of it guarantees one thing. Your money buys less. The rich don't save paper. They own real assets, gold and silver.

11:02Things governments can't print. Things that have survived every financial crisis in history. Gold was$35 an ounce in 1971. Today, it's over$4 ,500 and still climbing. The biggest banks in the world are calling for$6 ,000 and higher. Most people ignore this. They stay in paper. They will pay the price. You have a choice, but the window won't stay open. Robert has spent 30 years teaching that financial education is the greatest asset you can own. That's why he's partnered with Priority Gold to bring that education directly to you through the Rich Dad Gold Playbook. Call 866-703-9895 or text Sky to 24999 to get your free copy.

11:50Learn how to move your IRA or 401k into physical gold and silver tax and penalty free. with up to$10 ,000 in free silver on qualifying purchases. Call 866-703-9895 or text Sky the 24999. Don't say the thing that they keep printing. Own the thing they can't. I'm Serena Williams, and I'm healthier on Roe. I've lost 34 pounds in a year with GLP-1's Diet and Exercise. On Roe, you can access GLP-1 options, including the first FDA-approved GLP-1 pill for weight loss. Go to Rowe.co slash journey to see if you qualify. 14 to 20 % average weight loss in one year in non-diabetics with obesity or overweight with a weight-related medical condition versus 2.2 % to 3.1 % in placebo arm.

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12:48Welcome back. Robert Kiyosaki, our guest today is longtime friend George Gammon. He used to share the office with me in downtown Scottsdale. And he now lives in Cuba or Greenland. One of those places. One of those places. Wherever Trump's going to bomb, George is going to move there. Yeah, right. So anyway, George is one of the smartest guys I know. And we're talking today about this thing called private credit. So I'm a neophyte. I'm just cruising around. I hear this term called private credit. And there's a lot of concern about private credit, whereas 2008, it was mortgage-backed securities, which was derivatives, college debt obligations, MBSs, all these terms, and they all went bad.

13:38So today we have private credit. So my question to George is, what the heck is private credit, and how much of a concern is it? So George, what is private credit one more time? Sure. So private credit is just money that is lent by what they call a non-deposit institution. So a deposit institution is a bank, right? They take deposits, they lend out money. Well, a non-deposit institution is what we'd call like a shadow bank or something like that. But if your viewers are familiar with BlackRock and Larry Fink, that would be an example of effectively a shadow bank or a non-deposit institution that's lending out money.

14:29A shadow bank, you don't have a passbook with them. you know they just yeah so you would not have an account uh with a shadow bank uh right so what they would do is let's just say you and i run a private credit fund we'll call it the rich dad uh private credit fund and so what we would do is we would actually go to a bank and we would borrow 10 billion dollars from that bank and we would we would get equity as well uh like kenny does from his investors, but we're just focusing on the debt component of it right now or the credit component of it. And so then what we would do is we would go out to all of these businesses, let's say software companies that can't get a loan from a bank because by definition, they're too risky.

15:22And then we would say, Hey, we just borrowed this$10 billion from the bank. we'll go ahead and lend it to you at an exorbitant interest rate. So then we can go ahead and promise our investors they can get a risk-free 10 % or 12 % return, while they could only get, let's just say, a 4 % return buying a U.S. Treasury. So this is the ruse. Now, if we go back to 2008, everyone knows that the main component there was a result of lending to subprime borrowers. These borrowers just happened to be people that couldn't afford a house, that had a job at McDonald's, and somehow they owned five million dollar mansions or whatever it was.

16:09And it's the exact same thing here. Instead of an individual borrowing money to buy 10 houses, this time it's an entity like a software company that has no prayer, no chance of actually turning a profit, borrowing, let's say$50 million from Blue Owl or BlackRock or Rich Dad private credit. And so you can keep kicking the can down the road as long as they're able to roll over the debt. So let's just assume for a moment that a subprime borrower that we were talking about earlier with the 500 credit score, this guy borrows uh you know 50 million dollars and can he pay it back absolutely not but when he has to pay it back in two years let's say he goes back to the private credit entity and says yeah i just want to roll over the debt and they say okay so then on their books that loan is still valued at 100 cents on the dollar when in reality that loan should be valued at zero cents on the So you can keep kicking the can down the road and play this game, but at some point in time, the music stops, right?

17:24The music stops, and there aren't enough chairs for everybody to sit down, and that's usually when the stuff hits the fan. This is my question. How close are we for musical chairs to end, and when it ends, what happens? so the timing of these things is impossible to to know but what we can do is look at history and we do know that these going back to the yield curve we talked about that you know it inverted maybe two years prior and what what why that's important robert is because that is an indication of risk and it's actually very easy for people to understand so if i asked you if, let's say I asked you to borrow a million dollars and you said, okay, for how long?

18:19And the first time I came to you, I said, oh, I just want to borrow it for a week. You'd say, okay, I'll charge you a 5 % interest rate. But then let's say I come back the next day and I say, oh, actually, Robert, I want to change the term of the deal here. Instead of borrowing it for a week. I want to borrow up for 10 years. You'd say, okay, well, I've got a lot more risk there, so I can't charge you the 5%. I've got to charge you 10%, let's say. So that's how normal interest rates should work. The longer the loan, the higher the interest rate. So that's why an inversion of the yield curve is so bizarre.

19:01It should not happen. And that's when the longer term interest rates are actually lower. So imagine if I said, Hey, I want to borrow money for 10 years. And you said, Oh, fantastic. I was going to charge you 5 % for a week, but now I'll only charge you 3%. So the reason that happens is because of risk. And then we see this risk starting to bubble up to the surface. You know, Warren Buffett talks about the tide going out. All right. He says, when the tide goes out, you can start seeing who is swimming naked. Right now, the tide's going out, Robert. And what I do know for sure is that if history is a teacher, it tells us that the tide doesn't go out and then come right back in.

19:43When the tide starts to go out, it continues to go out further and further and further and further. And you see more and more people swimming naked until you get the stuff hitting the fan, like I said earlier. So I would say right now we're probably in inning four or five. Does this play out exactly like the GFC? Probably not because no two events just happen in the exact same way because there's just millions and millions of different variables. But we will very likely have a credit event, let's say. So what you're saying, another 2008 possibly? Possibly, possibly, but it's not, it wouldn't play out.

20:30It's very unlikely for it to play out the exact same way, but the cycle. There's going to be something you call an event. That's, I think that's what people are watching for. Yeah. What's the event and what's the trigger. So you look at Ormuz, I mean, how many more triggers can you wait for? Well, that's a great point, Robert. That's a great point because let's remember what was the trigger and the catalyst in 2008. it was high oil prices that was that was the trigger we talked about that before we went live that back in 2008 uh oil got up to 140 dollars in nominal terms so in today's dollars that would be probably you know 200 or something and that although the conditions were prime for a gfc in my view that was the catalyst that was the straw that broke the camel's back So let me give you one more wild card sitting out there.

21:26Yeah. In 2008, we didn't have AI. Yeah. And now we have AI. Yep. And unemployment is going to keep going up now. I just saw that law schools are having trouble because they don't need lawyers. Yeah. And they have all this fixed debt and things like this. So you have all these wild cards coming in on this GFC, you know, 2008 to 2026. So when you have AI kicking in, do you, have you followed that very much? I mean, what's it going to do for employment? I have. And do you still have that, that hot air balloon? You do right there in the corner. Yeah. Yeah. Yeah. Yeah. Back there. Yeah. So the reason Robert has that hot air balloon is because one time I gave him a visual an analogy of our economy, where I said that in a healthy economy, the top of that hot air balloon should be the economic output of the individuals and entities in that economy.

22:31And the basket is the asset prices. Let's say the S &P 500. So the basket should follow where the economy goes. But now what we have is the opposite. We have the asset prices really leading the economy. So if asset prices go down, so goes the economy. Why is that important? It's exactly what you just said, Robert, exactly what you just said. The reason the stock market is at nosebleed levels and at these levels, it makes absolutely no sense whatsoever is because of passive investing. So what happens is when people get their paycheck, just 10 % of it, because they listen to Dave Ramsey, goes directly into a passive index fund, right?

23:15So then that's because - And that's like a 401k on IRA. Yes, yes. Actively managed deal. Exactly. So you have all this money just flowing into the stock market, flowing into the stock market. But that's only because unemployment is low, right? Because if unemployment goes up, then people don't have a paycheck. So what money do they put into the stock market? they don't have any money to put in the stock market. So what happens is if unemployment goes up, regardless of why, even let's say it goes up because of artificial intelligence, what that means is less money going into the stock market. So instead of a net inflow, you have a net outflow.

23:58And that means the stock market goes down dramatically. And that - You're scaring the crap out of me. i mean well i i'm not trying to scare people no no no no it's you're verifying what i'm afraid of that's what i'm saying i'm not saying you're doing it to me i sit there looking at that thing i go okay what's the worst what's the worst scenario now you know well you're verifying everything everything i've been concerned about did you see do you know michael burry is he's the guy with okay your audience i'm sure probably knows who michael burry is due to the the movie the big short and whatnot um i actually subscribed to his sub stack and he had a post the other day which was very extensive where he goes through and he analyzes going back to like the 1920s as far as when you get a drawdown in the stock market how how far it usually goes down based on the the pe multiple which we don't have to discuss here but the the bottom line there is his uh base case was the stock market is overvalued by 40 or 0 percent and he said that his um base case for a trough in the stock market if history is a teacher if it's a in um in uh court and it's if it's happening at the same time as a recession would be a decline of 70 percent 70 70 percent that's not george gammon saying that that's michael burry and it's not like he was just saying that off the cuff he had decades he's a smart boy he's a very smart boy of data uh to back up his position so now is that likely you know again it's all a matter of probabilities Um, it's a low probability, but it is still something that people should be aware of.

26:01As I've said on your show many times, uh, burying your head in the sand, like an ostrich is a very, very poor investment strategy. Yeah. The other thing I was saying, I'm going to say this really quickly. This is my great, I wrote a book called the, uh, who stole my pension. My concern, George, this is what my concern is. my generation the boomer generation 1974 was ERISA employee retirement income security act led to the 401k and the IRA so I was just getting out of the marine corps in 74 and Charles Schwab and all these stock brokerage companies after you too can be a financial planner so I went down this is a little I went down and all this guys being financial planners I said oh, this is going to be a train wreck in the future, you know what I mean?

26:53Because most of the financial planners are schoolteachers, and they know nothing. So they're going to tell people how to run their lives in 1974, but also 74 was a petrodollar. Remember that? So now we have Hormuz. We have the stock market, the S &P at all-time high, and I think you have 80 million U.S. baby boomers set to retire. You know, what they say in Hawaii is called aloha. You know, it's going to be like in Peanuts, the cartoon character, where Charlie Brown, Lucy holds the football, and Charlie Brown winds up. She says, I know you're going to pull that football away. And Alicia says, I promise I won't pull it away.

27:42So Charlie Brown winds up. She pulls the football away and he falls down. This is my prediction. And I'm saying what Michael Byrne, what you're saying, what I'm saying is that my generation, the Boomer generation, there's going to be no retirement. That 401K is going to toast because it's going to be the biggest crash in history. And that's what I've been predicting for a while. And somebody said to me, it says, what if you're wrong? I said, I could be, but what if I'm right? Yeah, but think about what you've been doing in your own personal situation, Robert. You always talk about buying gold and silver.

28:24Yeah. And so far, let's just be clear, right? So far, you could say, oh, Robert, you've been wrong. We have not had this catastrophic crash or blah, blah, blah. But you could also say that, oh yeah, but I forgot gold is up 100 % in the last two years or whatever it's up. You know, silver's up, what, three times? I haven't checked the price lately. But so my point here is that if you're educated about this stuff and you position yourself strategically, even if you're wrong, and let's hope we all are wrong. I mean, none of us want a catastrophic crash. So even if you're wrong, if you do it strategically, you're still going to come out ahead, just like you have.

29:13And so that's why my concern is I look at the homeless that's spreading all across the world. And I think a lot of it goes back to 1971 when Nixon took the dollar off the gold standard and the dollar became fake. And so every time we got into trouble, we just printed more money. so that's my concern that's why you know and um i'm gonna give you one more chance to plug your show rebel capitalist show because i'm gonna go to your show i you know hopefully you let me speak without my pessimistic viewpoints but i might i might be able to find a slot for you robert yeah i i go there to listen to the different points of view do you know i mean i go out there I sit there, well, Guy said this, Guy says that.

30:03I don't know if anybody knows exactly what's going to happen, but a composite's going to happen. You just cannot keep making money. And if I could use you as an example momentarily, Robert, how old are you? 79. You're 79? Yeah, just yesterday. Congratulations. Happy birthday. Happy birthday. You don't have to disclose your net worth, but I think the audience can safely assume that it's pretty high, right? I've been in your private jet. Very nice. So what I want to highlight for your audience is that every time Robert has been to Rebel Capitalist Live, which is the live event that he's referring to.

30:55At his age, with his net worth, with his brand, with his global notoriety, he is still the first person or one of the first people to show up in the morning for that 8 a.m. speaker. And Robert is sitting right in the front row, right in the front row, every single time with a notepad. And he's listening diligently to every single word that that speaker has to say, even at 8 a.m. And then he stays there the whole day, you know, if he's feeling up to it. And he stays there the whole day. And then he'll go back in the green room. And if he has any questions based on his notes, he'll try to find that speaker in the green room and get them to answer his questions.

31:48So if Robert Kiyosaki is doing that, what are you doing? And why aren't you doing the exact same thing? I ask that question all the time, George. I ask that question all the time. Because people say, well, what if you're wrong about this? The boomers being the first guys without a retirement plan at 80. What if you're wrong? I said, what if I'm right? Baby boomers are the first generation without a pension. And look at the homelessness going across the country and the world today. It's shocking. I think, George, we're staring down the barrel of a gun right now. You got Hormuz. I remember 1956 with Suez and the English Empire collapsed in 1956 with the Suez Crisis.