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ОглавлениеPREPARE YOUR CHILD FOR THE WORST
As a child’s first and most important teachers, parents are the ones who provide the foundational building blocks of education. Parents celebrate a child’s first words and teach them new ones, teach them to count and walk and read and ride a bike. As a child grows up, many parents become sounding boards, guides, advisors, and role models. Parents interact with their kids every day and, consciously or unconsciously, have a huge and powerful impact in shaping their lives. We lead by example and when kids see parents who are open to new ideas and embrace life-long learning it makes an impression. A child’s life changes when his or her parents are teachers who will ask questions until they have a clear understanding of the answers, keep an open mind to other points of view, and encourage their children (and their spouses) to follow their dreams on the path to a rich and rewarding life.
I often see parents walk a fine line between sheltering and protecting their children from life’s harsh realities and proactively preparing them for what, in today’s world, is likely to be an uncertain future. The world of tomorrow belongs to those who can process information, see relationships and trends, and be agile and responsive to change as the world changes. And just as our world today is very different from the world in which our parents grew up, the world your child will face will be different, too. We can expect new and different challenges… as well as new opportunities.
Making the Case
Most Americans have heard references to “the 800-pound gorilla in the room.” If you have not heard the phrase, it simply means that there is something—a topic or an idea that carries some weight or needs to be reckoned with—that everyone knows about, but no one wants to talk about.
There Are Four Gorillas in Your Child’s Future
As I see it there are four gorillas—gorillas of the future—that your child will face. Few people are talking about them, but they’re out there. Few people are talking to your child about these four gorillas—gorillas of the future—and your child needs to prepare for before he or she encounters them later in life.
800-Pound Gorilla #1: The New Problem of Growing Old
The problem of growing old is a new phenomenon.
In 1935, the Social Security Act was signed into law by President Franklin D. Roosevelt. Back then, 65 was considered old age. Today, “65 is the new 45”—at least that’s what many baby boomers would like to believe. In America, people fear growing old and the loss of their independence more than they fear dying. With advances in medicine and technology, the new old for your child may be 90 or even 120. In other words, growing old is a new and escalating opportunity… and problem.
Is Age an Asset or Liability?
During the Agrarian Age and Industrial Age, being older was an asset. Older meant wiser. In the Information Age, being older is a liability.
In 2012, the U.S. government finally admitted that the Social Security fund will be bankrupt by 2033. How old will your child be in 2033? Most baby boomers will just be entering their 80s. The question is: How will governments afford to keep an aging population housed, fed, and given proper medical care?
In 2012, the Social Security Administration reported that 10.8 million Americans were now receiving disability benefits. That is a 53 percent increase over the past decade. More than 5 million people have applied for disability benefits since the economic crisis began in 2007. When unemployment rises, more people collect disability. What will happen if the economy remains flat for the next 20 years, as many predict?
Today, many governments are going bust, unable to fund the retirement pension plans of their public workers. The state of California’s pension system is a disaster.
How will governments afford tomorrow’s old people? This 800-pound gorilla will be your child’s problem.
Aging Parents and Boomerang Kids
For years the American Dream was a house of your own. Housing today has become multi-generational. Two, three, and even four generations will be living under one roof. This is why many builders are designing homes with several separate dwelling spaces, all under one roof.
Today, many American families have “boomerang kids”—kids who leave home and go to school, only to return unemployed and unable to survive in the real world.
On top of boomerang kids, many adults have aging parents who depend upon them for care. In the United States, long-term and assisted-living care can start as high at as $8,000 a month, which is more than many people earn per month.
Multi-generational survival will be your child’s problem. Will your child move in with you, or will you move in with them and their kids? Will your child be able to afford your long-term healthcare if you are lucky enough to live a long life?
The Biggest Gorilla
The most expensive problem on the horizon is not Social Security or multi-generational housing. The biggest gorilla sitting quietly in the room is Medicare. Medicare was created in 1965 and today is an unfunded liability estimated at over $100 trillion, more money than all the money in the world. Your child will wrestle with this $100-trillion gorilla, one way or another.
President George W. Bush created the most expensive social problem in recent years, and the largest Medicare liability, when he signed into law Medicare Part D.
President Barack Obama’s Obamacare sets the stage for another massive problem that your child will pay for, one way or another. I believe Obamacare is more problematic than Medicare.
Today, the first wave of approximately 80 million U.S. baby boomers has begun to collect on Social Security and Medicare. Keeping the math simple, if 80 million baby boomers collect $1,000 a month from the government, that is $80 billion each month in taxpayer money… yours and your child’s taxes.
Baby boomers will live longer than their parents and demand expensive medical care to stay alive, as long as someone (your child and his or her peers) is willing to fund their golden years. This leads to the next gorilla.
800-Pound Gorilla #2: Accelerating National Debt
Most of us have heard of the power of compounding interest. Albert Einstein is often credited with referring to it as the “most powerful force in the universe.”
A parallel concept is the miracle of compounding debt. Your child will face the tyranny of compounding debt as well as the compounding interest on that debt.
In the year 2000, the national debt of the United States was over $5 trillion. By 2012, it had risen to over $16 trillion.
In 2011, riots erupted in Greece when the government of Greece declared bankruptcy. The United States, England, and Japan may not be far behind.
This leads to the next gorilla waiting for your child.
800-Pound Gorilla #3: The New Depression
Chairman Ben Bernanke is currently running the U.S. Federal Reserve Bank. He is arguably the most powerful banker in the world, simply because he has the power to tell the treasury to print U.S. dollars.
His first profession was as a college professor at Princeton, and he particularly studied the Great Depression. He believes the reason the last depression was so severe was because the Fed did not print money, which caused the economy to collapse. Hence, he believes the way to save the economy in this new depression is through “quantitative easing,” aka printing money. That is why his nickname is “Helicopter Ben,” for reportedly suggesting he would drop money from helicopters if the economy stalled.
History records two different types of financial depressions:
1. The Great Depression of 1929 in the United States
2. The German hyperinflation in the 1920s
Summarized in simple terms, the American depression was caused by not printing enough money. The German hyperinflation type of depression was caused by printing too much money.
A few disturbing comments from the Fed Chairman Ben Bernanke, an “A” student, are:
• “The U.S. government has a technology called a printing press [or its electronic equivalent today] that allows it to produce as many U.S. dollars as it wishes at no cost.” (2002)
• “House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.” (2005)
In 2007, housing prices began crashing.
• “The Federal Reserve is not currently forecasting a recession.” (2008)
• “One myth that’s out there is that what we’re doing is printing money. We’re not printing money.” (2010)
Chairman Bernanke is a distinguished academic. Unfortunately, he is not a businessman. From my viewpoint, his statements reflect being “out of touch” with the real world.
After 2007, it became apparent to me that Chairman Bernanke favored the German type of depression, a financial crisis that, if successful, will lead to hyperinflation. He believes printing money will solve the problem of printing money. It is like an alcoholic drinking more to cure his addiction.
Q&A
Question: How long did the last U.S. depression last?
Answer: It lasted 25 years. In 1929, the Dow was at a high of 381 before crashing. It took until 1954 before the Dow reached 381 again.
If the Great Depression lasted 25 years, the New Depression could last from 2007 to 2032.
Hyperinflation is a period of rapid inflation that leaves a country’s currency virtually worthless. For people who work for money and savers who believe in saving money, hyperinflation could wipe them out. This is important to note because, during the last U.S. depression, the Americans who had jobs and had money saved were the winners.
During the German depression in the 1920s, those who produced products that were needed for survival—products such as shelter, debt, and fuel—did well. A few did very well because producers could raise their prices.
In the New Depression, savers, retirees, and fixed-income workers will be the biggest losers. Debtors and producers of food, fuel, and shelter (as well as those who hold gold, silver, and diamonds rather than cash) will be the biggest winners.
The point is, it is important to prepare your child for the possibilities of both types of depressions.
Sir Edmond Burke, who lived from 1729 to 1797, said:
“Those who do not know history’s mistakes are doomed to repeat them.”
This global financial crisis is a global condemnation because our schools fail to teach financial history, an essential element of financial education.
The Warnings of Economists
Today, many people claim that “printing money” to stimulate the economy is Keynesian Economics. That is rubbish. That is a lie told to a public that has no idea what Keynesian Economics are.
Rich Dad Lesson
Financial education must include lessons in financial history. He said, “If you want to prepare for the future you must know the past.”
This is what British economist John Maynard Keynes had to say about devaluing the currency:
“Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency… There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency… By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens… The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner in which not one man in a million is able to diagnose.”
800-Pound Gorilla #4: Higher Taxes
Every time central banks print money, two things happen:
1. Higher taxes
2. Higher inflation (Inflation is another tax)
Taxes Are Not Patriotic
Many people believe paying taxes is their patriotic duty. Here again, they are victims of a lack of knowledge of financial history.
In 1943, the U.S. Congress passed the Current Tax Payment Act to fund another war, World War II. For the first time in history, the U.S. government began taking taxes out of workers’ paychecks before the worker was paid. The workers allowed this to happen in the name of fighting for freedom and liberty. That is why many Americans believe it is patriotic to pay taxes. The problem is: World War II is over, but the United States never stopped collecting taxes.
As you know, bureaucrats running the government know how to spend money, but they do not know how to make money. They only know how to increase taxes.
Runaway spending and raising taxes is not a rich or poor problem. The rich have just as many welfare programs as the poor. The rich have corporate welfare programs, and the poor have social welfare programs. Regardless of what you call them, the taxpayer pays the price.
Welfare programs for the rich are often called “pork.” Pork funds such programs as “bridges to nowhere” and “building weapons the military does not want.” Pork is welfare for the rich because it funds projects that generate profits for rich business owners.
Today, if government welfare to both the rich and the poor were cut off, there would be a crash bigger than the subprime crash of 2007. Granted, some government programs do a lot of good. The problem is that your child will pay the price for those programs with higher and higher taxes.
One discussion a parent should have with their child as early as possible is on the subject of taxes, and explaining who pays the most in taxes—and why.
To illustrate and explain the subject of taxes, rich dad drew the CASHFLOW® quadrant for me.
The letters in the four quadrants represent:
| E | for employee |
| S | for small business or self-employed |
| B | for big business (500 employees or more) |
| I | for investor |
Each of us resides in at least one of the four sections or quadrants of the CASHFLOW® quadrant. Which quadrant we are is determined by where our cash flows come from, hence the name CASHFLOW® quadrant. A person can have multiple streams of cash flow and reside in more than one of the quadrants.
Employees in the E quadrant are people with steady jobs who rely on paychecks.
Those in the S quadrant are the self-employed who work by the hour, on commission, or on a fee basis. Many “A” students, such as doctors and lawyers, reside in the S quadrant.
The B quadrant is filled with people such as Steve Jobs and Bill Gates, entrepreneurs who start large businesses.
People in the I Quadrant are professional, active investors like Warren Buffett.
Most people are passive investors who invest in pensions, IRAs, and 401(k)s. Since they are passive investors—not professional investors—their investments are taxed at higher levels.
Most CEOs are in the E quadrant. They are known as “managerial capitalists,” employees who work for entrepreneurs. True capitalists are people like Steve Jobs, Bill Gates, or Mark Zuckerberg, entrepreneurs whose companies employ more than 500 employees and who transitioned from the S quadrant to the B and I quadrants.
Our school systems prepare people for the left side of the CASHFLOW quadrant, the E and S quadrants. That is why most parents advise their kids to “Go to school to get a job” (E quadrant) or “Become a doctor or lawyer” (S quadrant).
The differences in taxes between the people and the quadrants are extreme.
Where a person resides in the CASHFLOW quadrant—meaning where their income comes from—determines how that income is taxed. The diagram here depicts different types of income from different quadrants… and who pays the highest percentages in taxes today.
TAX PERCENTAGES PAID PER QUADRANT
Now you know why President Obama paid 20.5 percent in taxes and Mitt Romney paid 14 percent. The difference is the blended differences in income earned in different quadrants. President Obama looks at the world from the E and S quadrants. Mitt Romney views the world from the B and I quadrants.
Most socialists live in the E and S quadrants. The true capitalists live in the B and I quadrants.
As you can see, advising and encouraging your child to “go to school and get a job” in the E quadrant or “go to school and become a doctor or lawyer” in the S quadrant is advising them to work for income on which they’ll pay the highest percentages in taxes. The “A” students, the doctors and lawyers in the S quadrant, pay the highest tax percentage of all quadrants.
Whenever the masses cry out, “Tax the rich,” the taxes are raised on high-income wage-earners in the E and S quadrants, people like CEOs, doctors, and lawyers. The truly rich, the true capitalists in the B and I quadrants, pay very little, if any, in taxes. To some people, people like President Obama, this may sound dishonest and unfair. Later in this book, we’ll look at why tax breaks for those in the B and I quadrants are not only fair but also important to keep the wheels of the economy turning.
Salary: $1 a Year
Question: Why was Steve Jobs’ salary only $1 a year?
Answer: He was a true capitalist. His income did not come from the E or S quadrants.
By understanding taxes early in life, your child has time to make better life decisions about what they want to study and which quadrants are best for them. A person should never choose a quadrant just to pay less in taxes, but understanding the fundamental differences is a part of financial education. Understanding the quadrants, different types of income, and the taxes on that income, will give your child a foundation for making informed choices about money, business, and investing.
Preparing your child for the B and I quadrants takes time. Steve Jobs, Bill Gates, and Mark Zuckerberg started their journey to the B and I quadrants as teenagers. These three men all dropped out of great schools, such as Harvard and Reed College, because school, primarily, prepares students for the E and S quadrants, not for the B and I quadrants.
In preparing your child for the gorilla-wrestling that lies ahead, it is important that your child knows that there are different options open to them, options other than “go to school, get a job, work hard, and pay higher and higher taxes.”
Later in this book I will go into why the tax rates are different in the different quadrants. You will also find out why it is that when people shout, “Tax the rich!” the tax authorities tend to leave the B and I quadrants alone. No matter how hard President Obama tries, those in the B and I quadrants will find legal ways to pay less in taxes.
The lesson on Capitalism begins with the first chapter of Rich Dad Poor Dad, the lesson, “The Rich Don’t Work For Money.” Simply said, the people who work for money, those in the E and S quadrants, pay the highest percentages in taxes. Those in the B and I quadrants are capitalists. Capitalists do what the government wants done—like creating jobs and affordable housing. Hence they pay the least in taxes. This is true in all Western economy countries.
This difference in taxes will be further clarified in coming sections, because taxes are an important part of a person’s financial education.
Is It Too Late to Change Quadrants?
Question: Does a person need to be young to make the transition from the E and S quadrants to the B and I quadrants?
Answer: No. Colonel Harlan Sanders did not start his journey until after he was retired. At the age of 65, a new freeway bypassed his little chicken shop and his business collapsed. That was when he left the S quadrant and began his Kentucky Fried Chicken franchise in the B and I quadrants. The Colonel’s advantage was that he was pretty good at making chicken in the S quadrant when he started his journey to the B and I quadrants.
The B and I quadrants are demanding, which is why a strong financial education and an early start are important. Many start the journey, but few succeed. Yet for those who do make it, the rewards are immense. Success in the B and I quadrants is like climbing Mount Everest, ascending to the top of the world, the top of the financial food chain. If your child starts preparing early enough, they have a better chance of making it.
Inspiration vs. Motivation
Inspire: The word comes from Latin “ispiratio” meaning “in spirit” or “inspired by god.”
Motivate: The word comes from Latin “motere” meaning “to move.”
The good news is that you do not have to be the smartest person to succeed in the B and I quadrants. You do not have to be an “A” or “B” student, which is more important in the E quadrant and especially the S quadrant. Success in the B and I quadrants is best described as a team sport. All you have to do is surround yourself with smart, trustworthy, hardworking people. And while that may seem simple enough, it is often the toughest challenge of the B and I quadrants.
My Story
In 1969, I graduated from the U.S. Merchant Marine Academy in New York. Since the Vietnam War was on, I volunteered to serve my country rather than begin my career as a merchant ship’s officer, a profession I had prepared for with four years of schooling. I had a great job lined up as an oil tanker officer with Standard Oil, but I knew I had to serve my country.
So in 1969, rather than sail for Standard Oil, I volunteered for military duty as a Marine and went to flight school.
Driving through the gates of the U.S. Navy Flight School at Pensacola, Florida, was the beginning of a great adventure in learning.
High school was a horrible experience for me. The academy was tough and competitive. But flight school was my love affair with learning. No matter how challenging the flight school was, the love of learning never left me. For the first time in my life, I loved being a student.
Learning to love learning is important because education is a process, like the diagram below.
EDUCATIONAL PROCESS
Navy Flight School was truly a process of turning a caterpillar into a butterfly.
Flight school was more than educational. Flight school was transformational. Flight school challenged me mentally, emotionally, physically, and spiritually… and I loved the challenge. That is what education should do… inspire a student to learn more and become more.
I believe one important job of a parent is to find the educational process that brings out your child’s gifts and inspires their love of learning. It might be in music, gardening, medicine, art, or law. For me, it was flight school. As I said, learning to fly renewed my love of learning, just as the game of Monopoly® inspired me to become rich.
Unfortunately, if you motivate externally rather than inspire internally, motivation becomes manipulation.
It is most important that the educational process inspires the child and brings out their genius, rather than punishing them for not doing well on tests and making them feel stupid.
If a child has a strong financial education from home, they can do what they love and still do well financially. Using myself as an example, today I am a teacher. For most teachers, their income comes from the E quadrant. And while most teachers complain about not making enough money, I don’t have that complaint. Why? Because I am a teacher in the B quadrant. Since I am also in the I quadrant, I do not need a paycheck. Most of my money comes from the I quadrant, which is taxed at a much lower rate, often 0%, legally.
Use the Quadrants to Inspire
The lesson for parents is “The quadrant is more important than the profession.”
Much of this book is about the differences in education, skills, and experience that are required to do well in the B and I quadrants. The real question is, “Which quadrant inspires your child the most?”
The E and S quadrants did not inspire me to learn. The B and I quadrants did.
The profession a child chooses makes little difference. I am a teacher—but a teacher in the B and I quadrants, not the E quadrant.
I never dreamed I would be a teacher, I just knew which quadrants I dreamed of.
The same was true for Steve Jobs. If you read his biography, you’ll learn that he did not dream of becoming an employee or self-employed small business owner. His dreams were bigger than that.
Rich Dad Lesson
“It’s not the profession that determines a person’s earning ability. It’s the quadrant.”
My mom and dad were Es, in the employee quadrant. They often said, “The rich pay less in taxes because they’re crooks.” Although they were well educated, their education did not include the study of the quadrants, different types of income, and taxes.
Preparing for the Worst
One reason why people have trouble changing quadrants is because most people choose quadrants out of fear rather than inspiration. For example, most people choose the E quadrant because they fear not having money, a financial fear which causes them to seek job security, benefits, and a steady paycheck.
Many people gravitate to the S quadrant due to a lack of trust. It’s my experience that most S-quadrant people do not trust many people. They want to do their own thing and be their own boss, which is why they often say, “If you want something done right, do it yourself.”
The problem with the S quadrant is that you do not really own a business. You own a job. If you stop working, your income often stops. This means you own a “busy-ness,” not a business.
A business in the B quadrant, on the other hand, continues to generate revenue, whether you work or not.
Training for Life
The reason Kim and I retired at 37 and 47 is because we had income coming in from the B and I quadrants. We had no income from the E or S quadrants.
One reason I loved flight school so much was that we were inspired to face our fears every day. I was not in flight school for a steady paycheck or early retirement benefits, although I knew many student pilots who were. Career Marines are employees of the U.S. Government.
I was in the Marine Corps and flight school for the inspiration, the preparation for war. Rather than seek security, our instructors forced us to practice “emergency maneuvers” on each and every flight. Rather than hope and pray things would go right, the instructors would intentionally cripple the aircraft in some way, sometimes even killing the engine. They forced us to face our fears, keep our cool, and still fly. It was perfect training for life in the B and I quadrants.
Many people will struggle financially simply because their emotions run their lives. Rather than face their financial fears, they hide from them. Many employees in the E quadrant hide under the blanket of a steady paycheck and job security. The self-employed in the S quadrant hide behind the veil of rugged individualism, the need to be the smartest and the best.
Tell Your Children About the Gorillas
Rather than shelter your children from the real world, advising them to get good grades and a good job that will protect them from the real world, tell them about the four gorillas that loom in their future. When it comes to money, all children are smart. Let them prepare for their futures, just as my flight school instructors helped me prepare for Vietnam.
I know many experts will say that it is not good to scare kids, but this is not about scaring them. It is about preparing them for the future. By facing their fears and preparing for the worst, they have a better chance for a better life.
Then, if your child decides they would rather seek job security in the E quadrant or independence in the S quadrant, they will—at the very least—make a better-informed personal decision. If they believe their best chances for success are in the B and I quadrants, they have time to prepare. Just as Steve Jobs and Bill Gates started their process in their teens, it is best your child do the same, especially if they want to be entrepreneurs.
Your child will face a much different world than the world we live in today. The financial opportunities will be enormous, but so will the problems. The bankruptcies of entire countries have just begun. The near bankruptcy of Greece was only the beginning.
We hear people say, “The next generation of Americans will not do as well as previous generations.” One reason that may be true is because our schools are not preparing them for the real world, the world of the future. Simply said, don’t just protect your child from the future. Prepare them for it.
Final Words on Financial History
In 1971, President Richard Nixon took the U.S. dollar off the gold standard.
In 1971, the U.S. dollar ceased being real money. The U.S. dollar became currency, an instrument of debt, an IOU from the American taxpayers.
The good news is that after 1971, the world economy boomed, but it was an economy based on debt.
In 2007, the debt balloon exploded. Now we are in a financial crisis, a New Depression.
This may be the price we pay for not learning from the past.
History Repeats Itself
Mayer Amschel Rothschild, born in 1744 and founder of the Rothschild banking empire, explained the cause of this global financial crisis.
“Give me control over a nation’s currency, and I care not who makes its laws.”
In 1971, when President Nixon took the U.S. dollar off the gold standard, it made no difference who made the laws. Republican or Democrat, it made little difference. The bankers of the world took control of the most powerful country in the world, the United States of America.
Yet President Nixon was not the first American to fall to the power of the bankers.
Thomas Jefferson, one of America’s founding fathers, signer of the Declaration of Independence, and third President of the United States, stated:
“If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that grow up around them, will deprive the people of their property, until their children will wake up homeless on the continent their forefather’s conquered.”
Jefferson also warned:
“I sincerely believe that banking institutions are more dangerous to our liberties than standing armies; and that the principle of spending money to be paid by posterity… is swindling futurity on a large scale.”
In other words, the central banks, created in 1913 and of which the Federal Reserve Bank is the most powerful in history, have been stealing the future from our parents, our children, and their children’s children. That theft has now spread throughout the world, and fueled the global crisis we face today.
The U.S. Federal Reserve Bank is not a U.S. enterprise. It is a cartel controlled by the richest banking families in the world. It is no longer Federal. You and I have no control over it. It has no reserves. It does not need money because it prints money. And it is not a bank.
In 1913, the 16th Amendment to the U.S. Constitution was passed. It gave the federal government the power to assess an income tax on its citizens. The 16th Amendment led to the creation of the IRS, the Internal Revenue Service, and gave it the power to collect those taxes.
In 1913, the citizens of the United States lost control over their money. The richest people in the world took control over the soon-to-be most powerful country in the world. A cash heist began with taxes, because taxes are how the rich and powerful put their hands into our pockets, via the government they control.
This theft of our future, via the banking families of the world, is the reason I believe we have no credible financial education in our schools. And why parents must fill that void and prepare their children for the financial realities of the future.
Thomas Jefferson, born in 1743, warned of this… and this was a part of his warning:
“The banks and the corporations that will grow up around them, will deprive the people of their property, until their children will wake up homeless on the continent their forefather’s conquered.”
This may explain why our government bailed out the mega-banks such as Goldman Sachs and Bank of America and bailed out corporations such as AIG and General Motors, bailouts paid for by the taxpayers. It was not to save jobs. It was to save the rich.
The End of the Fed?
During the Presidential election of 2012, Ron Paul, a Representative from Texas and candidate in the Republican primaries, talked about his book, End the Fed. In that book he writes about the power of a central bank that works against the personal interest of Americans. In other words, who pays Fed Chairman Bernake’s salary?
He inspired an End the Fed grass roots movement.
Thomas Jefferson would agree. Back in the 1800s, Jefferson said,
“The issuing power [of money] should be taken from the banks and restored to the people to whom it properly belongs.”
Futile Effort
While it may be a noble effort, working to end the Fed is a waste of time. The entire corrupt system will probably collapse, just as the Roman Empire collapsed around the 5th Century. Will it collapse? When will it collapse? Who knows?
Rather than End the Fed, my rich dad taught his son and me to “Be the Fed.” To “Be the Fed” requires a high level of financial education, which is why he started teaching us early in life.
By the end of this book, you will learn how you, too, can inspire your child to “Be the Fed” rather than work to “End the Fed.”
By the end of this book, you will learn how I print my own money, as the Fed does, and pay less in taxes, like the country’s largest corporations do… legally. And I make this point because with financial education, the type of education that can transform lives, you and your children can “print your own money,” too.
I want to be clear here: I am not saying this is fair. There are lots of things in life that aren’t fair. What I am saying is that “freedom” is a noble concept and one for which, I believed, I went to war. It includes the freedom to make choices. It is my opinion that our school system is dysfunctional if it does not give our students the freedom of choice over education in the four quadrants. Our world needs more men and women like Steve Jobs, people who needed to leave school to learn about the B and I quadrants. But why should they leave school to do so? Steve Jobs created jobs. Our schools produce enough CEOs, the managerial capitalists who are employees who need a job and often destroy jobs.
It is not fair when our schools teach history that is selective or distorted. Why not tell kids the truth? Much of history is about money. It is a distortion of the truth to say wars are fought for freedom. Wars are fought for money. War is very big business.
It is a distortion, a single-point-of-view opinion, to say that Christopher Columbus was an explorer. He was an entrepreneur, financed by Queen Isabella, who went in search of a trade route to Asia.
Columbus was the Steve Jobs of his era. His discovery of the riches of North and South America made Spain the richest country in the world at the time.
With all the gold stolen, by the great explorers (pirates) such as Francisco Pizzaro, Ferdinand Magellan, and Hernando Cortés, Spain’s economy boomed. Spain, once a great nation, is today one of Europe’s economic basket cases along with Greece, Italy, and France. This time, Spain’s economy went boom and bust not on gold and silver but on debt, counterfeit money from Central Banks, just like the rest of the world.
The great pirates still roam the world. Today, they do not sail ships. Today they run international banks.
Mayer Amschel Rothschild’s words, from 1838, are worth repeating:
“Give me control over a nation’s currency, and I care not who makes its laws.”
Today, he might say:
“Give me control over the world’s currency and I care not who makes its laws.”
Lessons from the Game of Monopoly®
The rules of Monopoly state:
“The Bank never goes broke. If the Bank runs out of money, the Banker may issue as much as needed by writing on any ordinary paper.”
This is why rich dad used the game of Monopoly to teach his son and me about money. My rich dad often said, “Monopoly is the real game of life.”
The World Today
Today, the world runs on counterfeit money, debt, and IOUs from taxpayers.
The bankers who built this global house of cards became very rich, many receiving handouts and bonuses from the government, as millions of taxpayers became very poor.
This is not only true in America. It is true all over the world.
International Gorillas
Here are a few modern-day examples of what happens when pirates take control of a nation’s money.
Japan
Japan’s economy has been stagnant for over 20 years, although Japan has one of the highest savings rates in the world.
So much for the idea that Americans need to save more money to save the economy.
Greece
Greece went bust in 2012 and then retirees began committing suicide, unwilling to face old age in poverty. Spain, Italy, and Portugal are next. In many countries, the best and the brightest leave home in search of opportunity in other countries. This crisis is known as a “brain drain.”
Italy
In Italy in early 2012, in just one day, the price of a gallon of gas went from $10 to $16. This was because of an increase in taxes to help pay the interest on the national debt. The problem with most highly educated bureaucrats is that they think increasing taxes will save the economy. Taxes kill economies, as bankers and politicians get richer.
Three things happen when banks print money: Taxes and inflation go up and people become poorer.
France
France, the second largest economy in Europe, is deeply in debt as growth slows. Rather than work harder, the French want more to have time off, work less, and take earlier retirements. As their productivity declines, so will France.
To solve the problem, France is raising taxes on the rich… just as the United States wants to do. When you tax the rich, the rich (and their money) leave the country.
China
China’s engine of growth is sputtering as unemployment and its military power rises.
Mexico
In Mexico, America’s neighbor, drug lords have more money, guns, and influence than the government. Obviously, this is not an ideal environment in which to raise children.
Give Your Child a Financial Headstart
If you want your child to have an unfair advantage in life, teach them about money and money’s impact on history. Teach them the real rules of money and taxes.
In an upcoming section of this book, you will learn the real life unfair advantages that a financial education can give your child—unfair advantages that even “A” students do not have.
Your Child’s Future
Repeating Edmond Burke’s warning:
“Those that cannot remember the past are condemned to repeat it.”
Personally, I would rather learn from the history of money… than be crushed by the future of money.
Since 1971, it’s been reported that the U.S. dollar has lost over 90 percent of its purchasing power. It’s not going to take another 40 years to lose the last 10 percent.
Consider this: If you teach your children to be capitalists, educate them about the unfair advantages that the B and I side of the quadrant offers for capitalists, and inform them of the real rules of money and taxes there is less of a chance the four gorillas will stomp on your child’s future.
Action Step for Parents
Use money problems as opportunities to learn.
My mom and dad did their best to protect the kids from their money problems.
The problem was all four of us kids knew we had problems. Rather than learn to face our money problems, we learned to hide from them.
When my rich dad had money problems or employee problems, he would use the real-life problem as an opportunity to learn. He would take the time to explain the problem and possible solutions to the problem.
Rich dad often said, “Problems can make you smarter. Problems can also make you poorer. It’s your choice.”
When money problems occur in your home, I suggest parents use this book or other resources to seek possible solutions to your personal financial problems. Then discuss the problem and possible solutions growing smarter and bigger than the problem.
A family can use money problems—and working through solutions—as a way to grow smarter together. Later in life, when your child is faced with money problems, this habit will help them see the problems as opportunities to grow smarter about money.
If your child is too young or not yet ready to handle the sometimes disturbing real-world money problems, take them grocery shopping and discuss how you budget your money to feed the family. That will be a real world education.
We all have money problems… even rich people. What makes us richer or poorer is how we handle our money problems. I’ve learned not to waste a good money problem because every time we solve one we get smarter in the process.
