Why School Keeps You Poor: The Money Lessons They Don't Teach

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1:19Get ready for the best of Rich Dad Radio. This is the Rich Dad Radio Show, the good news and bad news about money. Here's Robert Kiyosaki. Hello, hello, hello, Robert Kiyosaki. You know, that saying, may you live in interesting times. I think this is interesting, spooky, and empire changing. I think we're watching the end of the American empire. And there's a law called Gresham's Law. And Gresham's Law says bad money drives out good money. So this is bad money here. It's called the U.S. dollar. I call it toilet paper today. And this is good money here. This is silver, and this is gold. So what happened in 64 and 71, they took the gold out of this paper, toilet paper right here.

2:15And in 64, they took it out of our silver coins. So Gresham's Law is in action today. America has been kind of a bully because we had the reserve currency of the world. So this is emergency podcast number two. This number one, please go to it, is burning up the airwaves right now. Our special friend and always at the right time is Andy Sheckman. And he is adding so much dimension to my thoughts. And I think his wisdom and his experience and his foresight as to what's happening in the world is crucial. So this is emergency podcast number two. The thing we're going to be talking about today is what happens if and when Mexico joins the BRICS.

3:03What are the repercussions? What are the shockwaves? What's going to happen? Or as they say in Hispanic, que pasa? What's going to happen? So welcome once again, Andy. This is number two, number two in a couple of days. Well, it's good to be here, Robert. It's good to be here. Thank you for having me. Yeah, there's a lot to talk about. I mean, the BRICS formation is something that I have been singularly focused on for the last few years, certainly. And I know you wanted me to just briefly describe what the BRICS are to your listeners. And for those that haven't been following this information, I think it's really very, very, very important.

3:46And, you know, I'd like to first throw out that so many things are happening all around us. And while they're significant, these individual events in and of themselves have less significance than when you put them all together. And the things that are happening inside the blunders, if you will, that are happening inside the United States only exacerbate the consequences that are happening and the realities that are happening outside the border. In other words, the U.S. blunders, I believe, are inspiring the rest of the world, the international community, to unite in opposition to it and in joint establishment of mutually beneficial platforms of politics and economy and trade and currency and finance and culture and education and international security and all of these things that, as you mentioned, the bullying and the sanctions and the hegemony and the hypocrisy of the West.

4:48I believe is coming to an end. Kim met my rich dad, you know, she's going, what is real estate? What is real estate? So we moved to Portland. Yeah. And she cut her teeth on a little place called East Moreland. Yeah, there's a golf course there, a great golf course. East Moreland Country Club, my East Moreland golf course. And so she started buying her first little house there. The market, interest rates were like nine or 10%. Okay. And she bought a little two-bedroom, one-bath house. She put almost nothing down, and she got 25 bucks a month or 50 bucks a month. It changed her life. She says, I can make money with nothing.

5:30You're right. And now, you know, Kim's a frickin' monster. In a good way. But it changes your mind. You go, I don't have to spend the rest of my life working. and interesting her father was a Mr. Stocks and Bonds guy he goes what are you doing you're investing in real estate and she had to fight her dad and thank god she had met my rich dad and my poor dad and so she had three dads to contend with yeah and she she she today I mean like you know we we bought the biggest I'm invited you to come and Kenny and I are in the biggest gold mine in the world, we paid nothing for it. We get in for nothing.

6:15But that's the infinite return, which Kenny is having a couple of weeks from now. Yeah. What was fascinating, going back to that last event that we did in Dallas that you referenced, is we did a property tour, and we saw a lot of Kenny's properties there in the Dallas-Fort Worth area, some of his apartment complexes. And after he took the group around... 100 % debt. Well, he actually had a whiteboard. Did he tell you that? No, no, no. Yeah, so he had a whiteboard. We did a tour, and he took that whiteboard, and he put it in the office. And then he had all of the people in our mastermind group.

6:48He walked through the numbers, when he bought it, how much he paid for it, how he paid for it, and then all the refinances that he's done through that forced depreciation, and how that equals these infinite returns. Yeah. We have no money in the deals. Yeah, yeah, that's right. And it's hundreds of thousands a month in income, tax-free. Yeah, right. Because of depreciation, amortization. Yep, yep. But that's what we teach. So you invested in property. Where were your property? In Kansas City. Perfect place. Yeah, and my objective might help some people kind of think about real estate or assets in a different way.

7:27the first goal that I had when I retired is just to look at my monthly expenses and say, how can I get my money to cover those expenses? You see? And so how can I get my cash flow to cover these things? So then I know that I'm never drawing my savings down. And I think it sounds easy and it sounds commonsensical, but very few people just kind of connect those dots and realize that if they can create enough cashflow with their portfolio to cover their monthly expenses, that is when you're financially free. Yeah, that's a cashflow game. Out of the rat race, all this stuff. You know, you got 10 ,000 a month coming in, you got 7 ,000 expenses, 3 ,000 net, you're free.

8:10Yeah. And there's tax breaks for it. Mm-hmm. But in school, they get a 401k. I'm going, are you kidding me? Right. But this is the challenge for that company. They like listen to Dalio and all the very smart guys, but they're all stock. They always say get a diversified portfolio of stocks, bonds, mutual funds. I don't have any. I mean, I've companies I took public myself. I own the stocks and silver companies, it's a public. My stocks I control. And then we make most of our money from Kenny, not most of it, but you know, we get income from 13 ,000 or 14 ,000 rental units with no equity in them.

8:54It's pure debt. And we pay no taxes. And then we invest in oil wells. And we don't invest in oil companies, oil wells. And so when Biden took the Keystone XL pipeline, they cut that project. Oil went from$30 a barrel to$130 a barrel, 400 % raise in one day. actually liked Biden for about 20 minutes. But unfortunately, as you know, George, the problem is higher oil prices cause higher fuel prices, higher food prices, which is going to wipe out the poor and milk. Yeah, because they're the people that get disproportionately affected because a higher percentage of their income goes to those things that are going up in price.

9:42And they want to tax the rich, but there's too few rich. Yeah, well, what they don't... They don't pay taxes anyway. Bitcoin has also been tied to other assets, but only in various times. To get just a brief summary, Bitcoin was pretty much tied to the S &P 500 for a little bit. And then as the oil crashed in March, I believe, everything got liquidated. So Bitcoin is considered a risky asset because it is volatile. And then it was not shielded away from all the capital being taken out of the markets. So I just want to make sure that people realize it's not really correlated with any asset. I'd say it's like a hedge or actually insurance to any other assets that you're holding.

10:19Yes. And that's exactly the term I use. You see my last tweet, I talk about, I don't consider Bitcoin, gold, or silver investments. I concern them insurance policies against the idiots running the Fed, the Treasury, and Wall Street. And they're a bunch of criminals as far as I'm concerned, because they're printing trillions and trillions of dollars at the same time, causing billions of people to go unemployed. Are you nuts? Are you nuts? I mean, this is like heaven. But I know for people sitting at home, they're going, oh, I've lost my job. I can't pay my mortgage. And I understand. You can't pay the car payments and all this.

10:58But the name of this program is the Rich Dad Radio Show, the good news and bad news about money. So if you're sitting at home contemplating your navel saying, well, can I get my cocktailing job back or what restaurant am I going to work for next? I think you missed the biggest opportunity in world history. That's my point of view. We'll be right back.

11:44Ultra, you can reflect that pride of culture you have inside on every wall of your home. Available at Lowe's. Still waiting in line? Again? That's time you'll never get back. Save time and money with Stamps.com. Over 4 million businesses have skipped the line with Stamps.com. Join them to save up to 90 % off carrier rates from your computer or phone right now. Print postage for certified mail, registered mail, and packages in seconds. Then schedule a pickup right from your home or office. For a limited time, go to stamps.com and use code podcast for a free welcome gift. Taxes and fees apply. So, okay, let's go back and say, I'm going to go take you through a history lesson.

12:27Good. And then we'll get to today. That's my point. I'm going to tell you why I'm concerned. Yeah. So why World War II? World War II was a fascinating period because like COVID, the entire world had basically been stuck at home or been on battlefields. Everyone came back. There was no supply of commodities and goods. Global supply chains were broken, and everybody came back and started consuming again. And guess what? Inflation went up to 13 % or something, maybe even higher. And that period was fascinating because interest rates went up. And the first thing that happened was the economy went straight back into recession and inflation went negative.

13:15Because it was a massive tightening of monetary conditions. You raised the cost of goods on people and didn't raise their salaries enough. People couldn't get the goods that they wanted, exactly like now, and everything collapsed. So we went back into recession, and then eventually some better times. And I'll come back into the 1940s and 50s, because I think it's a really important parallel that most people misunderstand. The next time we saw anything remotely like this was 1974. A lot of people tell you it's the 70s again, inflation, inflation. Well, the inflation episode we had in the late 70s was driven by demographics.

13:56That was the baby boomers entering the workforce all at the same time. It was the largest demand shock the world had ever seen. And we had a supply shock of this oil crisis of the Arab oil embargo. That's not repeating now. What is actually more similar is 1974. 1974 was the Arab oil embargo. The price of oil tripled and interest rates went up. Inflation shot up. And the immediate effect was the economy went down the toilet. Almost do not pass go. The stock market fell 50%. And the ISM survey, which is a good guide to the business cycle, it's the Institute of Supply Manager survey. Anytime it crosses below 50, suggests the economy is getting weak.

14:42A recession comes at about 47. It hit 30, which was the lowest in all history. And it happened in a space of four months. It went from roughly where it is today, which is around 55, and went to the lowest level in four months, based on exactly the same kind of setup we've got now. So are you saying that the 70s are now pretty close? Yes, and inflation fell in 1974 afterwards. People are still thinking inflation goes on forever. It did not, and it did not in the 1940s either. Then the next one up is 1984. 1984, we saw an issue where global trade, there was a huge amount of trade disputes. The dollar was pretty strong, like it is now, interest rates were going up, and inflation was high.

15:30Everybody was fearing, looking back and saying, oh, we don't want the early 80s, late 70s again, the inflation, inflation. Volcker was tightening rates too much, and the economy collapsed. It didn't go to recession because the Fed quickly started cutting rates, but the dollar went up a lot more and created a lot more problems. We ended up with the Plaza Record in 1985 when everybody had to stop the dollar going up from destroying the global economy. Then the next time we see something similar was 2008. 2008, if you remember, the oil price was at$147. Inflation was 6%. The Fed had been cutting into that because the economy was imploding.

16:192018 exactly the same oil prices high inflation high the fed were hiking rates trying to tighten the balance sheet and what happened is the economy rolled over really quickly again okay so what's going on here why does this phenomena keep happening everyone extrapolates inflation out forever. What actually happens is that consumption falls because we've tightened monetary conditions. So tightening monetary conditions to ordinary people means the cost of your mortgage has gone up at the fastest pace in history. Over a one-year period, mortgage rates have never risen this fast. So any money you've borrowed has suddenly got much more expensive.

17:03Your wages haven't kept up with the cost of just basic services like food. So you're actually feeling poorer. So you can't consume as much and you start not consuming other things. People overextended on housing because they rushed into housing in 2020 and 2021 and the rates have gone up for them. Also, just the rise in things like the cost of oil has meant that gas prices, all of this stuff, and then the rise in the dollar, which is a monetary tightening. All of these things get together would suggest, and I put them on a chart, it suggests that the ISM is going back to 30, which is as it was in 1974, which is a terrifying fall.

17:47Now, what does ISM stand for? Institute of Supply Management. It's the survey of buyers at corporations who buy goods and services. They ask them, what is your read in the economy? How much inventory have you got? What are prices paid like? That kind of stuff. And they create these surveys. And they're readily available online. And you can have a look at them. And they go up and down with the economy. They tend to lead the economy. And it's suggesting that if we're not careful, we could have a very sharp, nasty recession, meaning kind of a negative 5 % GDP recession. It might be short, depending on what the Fed does.

18:28and we'll come on to that in a bit. So we've got the setup that we've seen many times in the past. We've got the forward-looking indicators, this monetary tightening, suggesting we've got some real pain to come. Then the anecdotal evidence, we're seeing all the tech companies who were bulletproof laying off stuff and giving earnings warnings because everybody can't raise prices enough. So their margins are falling and people have overextended. Amazon said, we've hired too many people. They're one of the biggest employees in the United States. Okay, this is not good. But the answer to higher prices is higher prices.

19:09And that's what's happened. And everybody's looking around you themselves saying, well, what's going to break when stuff like this happens, the market goes down, something's going to break. we're now a credit-based economy in other words we print fake money and we spread it throughout the world but the rest of the world is actually producing the food the gold the silver the machinery and all this so finally the rest of the world said enough's enough so i remember years ago because i operate in south africa a lot i love south africa but they joined the bricks brazil Russia, India, China, South Africa.

19:48That was the original BRICS. And now they're gaining force and momentum. And I think people have heard the word BRICS, but very few people know. Kepasa, what caused the BRICS to form, Andy? But what does it mean to us? Because otherwise, so what? Right. Well, and I think by the end of this discussion, people will certainly understand it. But you're right. Brazil, Russia, India, China, South Africa comprise the BRICS. And these are countries that are uniting in common interests and doing it without the bullying, if you will, of the Western hegemony. And they're beginning to set themselves apart from the rest of the world.

20:37And, you know, it started, what really started me, my awareness to this was the rise of the Chinese Belt Road and Rail Initiative, which is the largest infrastructure and human project. Go back to the BRICS. What does it mean? Because we go into the Belt and Road, we're going to lose a lot of people right now because that's a whole nother discussion. But what does a BRICS, what does it mean? Why do you think they're so important today? I mean, they're the most powerful force in the world today. Well, and that's kind of what I'm getting at. talking about the Belt Road is this coalition of countries standing up against the Western hegemony.

21:17And that's really what it is. You know, it's not just Brazil, Russia, India, China, and South Africa. You have well over a dozen countries that have already applied, such as Algeria and Argentina and Iran, the United Arab Emirates, Nicaragua, Turkey, Indonesia, Senegal, Nigeria, Afghanistan, Egypt, Kazakhstan, and the biggest one of all, Saudi Arabia, has formally applied to the BRICS nations. And so when you talk about this growing cohesion of countries, there are others that they're already set their eyes on. And in Brazil's backyard, you have Argentina. In Latin America, you have Nicaragua.

22:03In Central America, Algeria, you have Egypt, excuse me, near South Africa, you have Algeria, Egypt, Iran, Saudi Arabia, as we just talked about, the United Arab Emirates, Nigeria, Senegal, Afghanistan, Kazakhstan, India, Indonesia, Thailand, all of these countries and their neighbors that are growing together, are forming a massive, massive, very imposing, not only from a GDP, but you put all these countries together and their military might is very, very strong as well. And those are the BRICS plus. Now they're talking about adding more countries, including Costa Rica, El Salvador, Guatemala, Honduras, Panama, Bolivia, Chile, Cuba, Ecuador, Peru, Uruguay, Venezuela, Azerbaijan, Mongolia, Kazakhstan, Turkmenistan, Uzbekistan, Pakistan, Sri Lanka, and Vietnam.

23:01The list goes on and on and on. And what is this? So what that means is right now they're dealing in this. Correct. In 1944, this became the reserve currency of the world right after World War II at the Bretton Woods, New Hampshire. Like I said, this is toilet paper today because this is now fake money. So the rest of the world is saying enough of you sending us your toilet paper. That's exactly right. You take our materials, you take our production, you take this, and you send us this trash here. So that's what Andy is talking about. It's so crucial. An average person can't see it. So now can you go into the Belt and Road project?

23:45because that's the right. And equally as important to being forced to take the dollar is if you are on the wrong side of the Western, on the Western ideology, then you get sanctioned, you get kicked out of SWIFT. And this, the weaponizing of the dollar, I think is what has accelerated the union of all of these countries. And when you talk, Andy, can you explain what the SWIFT is? because guys like me do. The SWIFT system is basically the oxygen that is needed for cross-border payments to breathe. In other words, you're not allowed to send your money from one country to another unless it routes through the SWIFT system, which is basically a computer system, if you will, or a message board system that allows banks to trade money back and forth and clearing through a US settlement bank system.

24:38So in order to trade dollars, you have to have access to the SWIFT system. And if you are kicked out of the SWIFT system, you cannot trade dollars. And if you can't trade dollars, you can't buy oil and you can't sell your goods globally. In essence, it isolates you. Well, unless, of course, you're trading your Iran and you're trading your oil to China for the Petro Yuan bond, which is immediately convertible. But didn't America exercise SWIFT? SWIFT, I mean, they punished a whole bunch of countries just recently. Absolutely. And no better example than what they did with Russia kicking them out of SWIFT.

25:16And you saw what Russia did in retaliation. They are selling their goods in gold and in rupee and for ruble and in for yuan. And they are sidestepping. It is this bullying, as you said at the beginning. It is this hypocrisy that is making everyone come to the table. And before I talk about the Belt Road, I want to mention one thing that's really very interesting. We talked about the glue, right? The glue that makes all of this stick is the backing of a new system with commodities such as gold. I was really good at making money, but I didn't understand this financial system. Like, what the heck just happened to me?

25:55The WTF. Exactly. The WTF happened to me. I was good at making money, but I didn't realize there was these forces that had control over my life that I wasn't really paying attention to. The macro. The macro. And so for the last 12 years, I've studied the macro. I learned a concept called wealth transfers. Money doesn't disappear. It transfers. And so when I lost my wealth, somebody else got that. I didn't like that. That's a very good point. I didn't like that. And that's happening today. And it's happening today. And so I realized there's certain times and conditions where these wealth transfers happen.

26:26And so I spent the last 12 years studying these wealth transfers to figure out how do I get on the receiving end instead of being on the receiving end of those things. So where'd you grow up? Yeah. So I grew up in Southern California. Where in Southern California? In Orange County. I lived in Texas until I was in junior high. And then I moved to California with my parents. My dad had to, we had to leave California because the real estate market crashed. He was in construction. California was booming. So we went out there and grew up on the beach surfing a little bit similar to your upbringing, right?

26:54on the beach, which is a good life. And so, yeah, so I live in Southern California, have a family, have a couple of kids that I'm trying to raise up the right way. My daughter's going to be splashing on the scene here pretty soon. You'll be seeing and hearing from her soon. I think that's a great idea that, you know, we educate our kids, not the teachers. Yeah. And if we don't do that, we're in trouble, big trouble. Anyway, thank you. I'm glad you're doing that. And so how did you get into the education piece and kind of getting, trying to figure out what's going on today and we're going to get into what we can do to turn this thing around.

27:27Yeah. So after making a bunch of money and then building a couple of businesses and then losing a bunch of money, I was like, I got to figure this out. And so, you know, when you're paying as high enough, you'll figure out a way. And so I just started digging into what was I missing in my education? We talked about that. I vowed to my family, like this, my wife and my young daughter at the time, I'm like, this will never happen to me again. I'm going to figure this out. Trust me. And so I just started pouring into that about I started investing in or buying all these investment newsletters. And, you know, I became a gold bug.

27:56And we'll come back with a final word from Rich Dad.