The Secret Deal That Made America Rich

0:00This episode is brought to you by Progressive Insurance. Do you ever find yourself playing the budgeting game? Well, with the Name Your Price tool from Progressive, you can find options that fit your budget and potentially lower your bills. Try it at Progressive.com. Progressive Casualty Insurance Company and Affiliates. Price and coverage match limited by state law. Not available in all states. In 1944, a deal was made. 44 countries signed it. Only one country got rich. The rest got robbed. And the worst part, most people don't even know it happened. But you have been paying for it every single day since.

0:41Today I'm going to prove it. Don't go anywhere. This is the Rich Dad Radio Show. The good news and bad news about money. Here's Robert Kiyosaki.

0:55Welcome to the Midstead Radio Show, the good and bad about money. This is Robert Kiyosaki, and today it's just you and me. And we're talking about what the rich are teaching their kids about money. Now, most people have never heard of Bretton Woods, but it's the reason your money keeps losing value every single day. and today I'm going to explain exactly what it was and what you can do about it. In 1944, 44 countries made a deal. 730 delegates, one luxury hotel in New Hampshire, and America wrote the rules. Think about that. The whole world is sitting at that table. Europe is destroyed. Asia is in ruins.

1:47But America, America is untouched. And America has something nobody else has, 75 % of the world's gold. So when America says, here's a new system, the world says, yes, they didn't have a choice. And here's what most people don't know. That deal didn't just create a new currency system, it created a new financial operating system. America owned the source code, and the rest of the world was just running the software. Here's what those other countries agreed to. The U.S. dollar becomes the world's reserve currency. Every other country pegs their currency to the dollar, and America promises to convert dollars to gold at$35 an ounce.

2:37For the rest of the world, this seemed fair. Dollars were as good as gold. But here's what they didn't see coming. America could print dollars and the world had to accept them. Every country on earth needed dollars to trade. France needed dollars. Japan needed dollars. Germany needed dollars to rebuild. Oil? Dollars. Shipping? Dollars. Debt? Dollars. The whole world needed dollars and only America could print them. Economists call this exorbitant privilege. America could run massive deficits, export inflation to the rest of the world, while every other country had to earn dollars through exports.

3:25America could just print them. Now, those two new institutions born at Bretton Woods, the IMF and the World Bank, most people learned they were created to help rebuild the world, to lift poor countries out of poverty. That's the story they tell. Here's what actually happened. They were the Federal Reserve exported to the globe. The mechanism through which American financial rules were replicated worldwide, every country that joined had to play by rules written in Washington. That's the difference between the story they tell and the system they built. Now here's where it gets interesting. There There was a problem baked into this deal from day one.

4:10An economist named Robert Triffin saw it in the 1960s. He called it a dilemma, and it was a killer. Here's how it worked. For the Bretton Woods system to function, the world needed dollars. Countries needed dollars to trade, to buy oil, to settle debts. But the only way America could supply those dollars to the world was to spend more than it earned, run deficits, import more than it exported. In other words, the system required America to go into debt. But here's where the trap closed. The more dollars America printed to supply the world, the less gold it had to back them. And that promise to convert dollars to gold at$35 an ounce was still technically open.

5:01Any country could walk up and demand their gold. The math didn't work. Triffin saw it plainly. To keep the system running, America had to keep printing. But the more it printed, the more the promise eroded. And the more the promise eroded, the more countries would demand their gold before it ran out. This is important. The Bretton Woods system didn't just have a flaw. It was designed to fail. The only question was when the rest of the world would figure it out, and they did. We just established that the system was designed to fail from day one. Coming up, what happened when the world figured it out?

5:44And I'm going to tell you about a letter I received from my rich dad, just a few lines written on an aircraft carrier. That letter changed everything I knew about money. Don't go anywhere.

6:00Welcome back. We're talking about a system designed to fail, a promise America could not keep, and the moment the world started doing the math. Now I want to tell you about my two dads, because this is where the story stops being history and starts being your life. In the 1950s and 1960s, My poor dad and my rich dad both saved money. That wasn't ignorance. That was intelligence. When the dollar was backed by gold, saving money was a rational thing to do. Passbook savings accounts paid 5 % interest or more. Bonds were safe and steady. The dollar was as good as gold because by law it had to be. My poor dad was a highly educated man, a PhD.

6:56Eventually, the superintendent of education for the state of Hawaii. He worked hard. He climbed the ladder. He saved his money. He trusted his pension. He trusted Social Security. That was the right plan for the world before 1971. Then Nixon changed the rules. And when I was stationed on an aircraft carrier, I received a letter from my rich dad. Just a few lines. It said, President Nixon took the dollar off the gold standard. Watch out, the world is about to change. I didn't fully understand it at the time, but I kept it. Because Rich Dad always said, when the rules change, everything changes.

7:41In the mid-1960s, France figured it out. President Charles de Gaulle looked at America's gold reserves and did the math. He didn't like what he saw. American was printing far more dollars than it had gold to back them. The Bretton Woods promise was already broken in practice, even if it hadn't been declared broken officially. So France did something nobody expected. They demanded their gold back, 3 ,000 tons of it. They sent ships to New York and loaded up physical gold because they understood what most people didn't. a paper promise is only worth something if the gold is actually there. Japan followed, Germany followed, Switzerland followed.

8:27Gold drained out of Fort Knox like water through a cracked hull. By the late 1960s, America's gold reserves had fallen dramatically. The numbers were visible to anyone who looked. The promise was unraveling in plain sight. America had been spending money it didn't have for decades. Exporting inflation to the world under cover of the almighty dollar and the rest of the world had finally done the math. The Bretton Woods system was collapsing, and the man in the White House knew it. He just wasn't ready to tell anyone yet. Nixon closed the gold window. But here's what almost nobody knows. He didn't just walk away.

9:12Three years later, he made another deal. This one didn't involve gold at all. It involved oil, and it gave the dollar a second life. Coming up, the replacement system and why it's coming apart right now. Don't move, it's getting better.

9:32Welcome back. As I said, the story is just getting good. We were talking about a system collapsing, gold draining out of Fort Knox, and a man in the White House who knew the promise was broken. On August 15, 1971, President Nixon went on television. No vote, no negotiation, no warning. He told the world the gold window was closed. The world woke up the next morning holding dollars backed by nothing, not backed by gold, not backed by anything real, just an IOU from the American taxpayer, issued without asking the taxpayer. Rich Dad's letter had said it plainly. Watch out. The world is about to change.

10:16He was right. After 1971, the dollar stopped being money and became debt. Every dollar created from that moment forward was born from borrowing. The more dollars the economy needed, the more debt had to be created to generate them. There was no gold. There was no limit. There was only the printing press. My poor dad didn't change. He kept saving. He kept trusting. He counted on his pension. He believed the system would take care of him. That was his plan, and the system let him down. Nixon closed the gold window, but he didn't just walk away. Three years later, in 1974, he made another deal, this time with Saudi Arabia.

11:02The turns were simple. From that point forward, all oil in the world would be traded in U.S. dollars, not gold, not euros, not any other currency. Dollars. Think about what that means. Oil is the lifeblood of the world economy. Every nation needs it. Every factory, every ship, every military runs on it. And to buy it, you needed dollars. But gold standard had given the dollar its power. The petrodollar gave it a second life. America didn't just survive the collapse of Bretton Woods, it engineered a replacement. Most people assume that when Nixon broke the system, the dollar would collapse. It didn't.

11:49And understanding why it didn't is one of the most important financial lessons you can learn. The dollar survived because the system had been built to survive without gold. A New Dealer, New Rules, Same Game. And most people still don't know the game exists. Buckminster Fuller called the whole operation grunch, gross, universal, cash, heist. His point was simple. The theft of the world's wealth didn't require force. It only required architecture. And the architecture was already in place. Remember those two institutions born at Bretton Woods? the IMF and the World Bank? After 1971, they became the enforcement mechanism.

12:37Here's what happened that almost nobody talks about. When the dollar was severed from gold in 1971, the IMF and World Bank told every country and their club to separate from the gold standard too, go fiat, or be excluded. No gold-backed currency is allowed. No nation could back their money with real money anymore. The whole world was required to shift to fake money, currency backed by nothing but government decree and faith, or faith being locked out of international trade. It wasn't a conspiracy, it was policy, written down and forced. The world wasn't trapped by a secret cabal. It was trapped by the rules of institutions it had voluntarily joined.

13:26institutions built in 1944 to serve American financial interests dressed up as global welfare. That is the gross universal cash ice, and it's still running. After 1971, three forces were unleashed on ordinary people. Rich Dadd called them the three double-edged swords, taxes, interest, inflation. They are double-edged because they cut both ways. For most people, employees, small business owners, the people on the left side of the cash flow quadrant, all three make you poor every single year. But for business owners and investors on the right side, all three can make you richer. Let me explain.

14:13Sword one, inflation. When prices go up, the person paying rent gets hurt. The person collecting rent gets richer. When inflation pushes up the replacement cost of buildings, my real estate goes up in value. When inflation drives up oil prices, my oil investments throw off more cash. Inflation is a tax on the people who hold dollars. It is a gift to the people who hold real assets. Sword number two, taxes. If you work for money, you pay the highest taxes. The harder you work, the higher your bracket. The government punishes earned income and rewards investment income. In America, an employee can pay 40 to 50 percent of their income in taxes.

15:02A professional investor in real estate or oil can pay close to zero, legally, because a tax code is written to reward producers, not workers. The system isn't broken. It's working exactly as designed. Now, the third sort, interest. Bad debt, credit cards, car loans, consumer debt, bleeds you dry. It's designed to. The bank issues you a card, collects interest while you make minimum payments for years. That's not an accident. That's the product. But good debt, debt used to acquire cash-flowing assets, works in reverse. You borrow at a fixed rate. Inflation erodes the real cost of that debt over time.

15:50You repay cheap dollars while your asset appreciates. Same three forces, completely opposite outcomes, depending entirely on which side of the quadrant you're standing on. This is what Rich Dad understood by 1973. He stopped working for fake money. He started acquiring real assets, real estate that produced rent, businesses that generated cash flow, gold and silver, God's money that no government could print into worthlessness. Not a 401k stuffed with paper assets managed by Wall Street. Not a savings account eroded by inflation year after year. Real assets, physical, cash flowing, inflation protected.

16:35That was his response to Nixon. That was his answer to the system. And it worked. Most people think this is ancient history, A story about gold windows and foreign exchange rates and things that happened before they were born. They're wrong. This story is still being written, and the next chapter may be the most dangerous one yet. Right now, a coalition of nations called BRICS, Brazil, Russia, India, China, South Africa, and a growing list of others, is actively building an alternative to the dollar-based system. Saudi Arabia has been in discussions. If that happens, we are looking at a block covering roughly 40 % of the world's population operating outside the dollar's orbit.

17:21Here's what that means in practice. Today, a significant portion of the world's dollars are held overseas. Central banks, governments, oil exporters, they all hold dollars because they need them. That demand is what gives the dollar its strength. its purchasing power, its status. If the world no longer needs dollars to trade, those dollars come home, trillions of them, flooding back into the American economy, chasing the same groceries, the same housing, the same everything. That is not a theory. That is basic economics. It is what happened in Weimar Germany in the 1920s. History does not always repeat exactly, but it rhymes with disturbing precision.

18:11Nobody knows when the avalanche starts, but the mountain is already shaking. In 1944, 44 countries made a deal. In 1971, America broke it. In 1973, my rich dad made a decision. He looked at the post-Nixon world. Dollars backed by nothing. Inflation on the rise. The rules of money permanently changed, and he arrived at a conclusion. The rich do not work for money. That wasn't just a philosophy. It was a direct, specific response to what Nixon had done. Rich Dad understood that in a world where the dollar is 100 % debt, working for dollars and saving dollars is a trap. The harder you work, the more you save, the more the government can steal from you through inflation, through taxes, through the slow erosion of your purchasing power.

19:08My poor dad spent his life on the wrong side of that equation, working hard, saving money, trusting institutions. I chose a different path. The question is which side you are going to stand on. The deal made in 1944 is still in effect. The dollar is still backed by nothing and they are still printing. That's the difference. Thank you for your time. Thank you for caring about your future. Thank you for understanding that you are the only one who cares about taking care of you. Take care.

19:52Thank you.

20:27This podcast is a presentation of Rich Dad Media Network.

20:51and affiliates. Price and coverage match limited by state law. Not available in all states.