One World Economy

Advertisements

Are You Living On Financial Edge?

             Are You Living on the Edge without a Financial Education?

Posted on: Tuesday, January 24, 2012|Written by: Robert Kiyosaki

When I was a young boy, the path to retirement was simpler. For the most part, if you saved your money regularly, paid your mortgage off, and lived modestly, you could retire well. This was partly because inflation was low since the dollar was pegged to gold and also because most employees could expect a company pension and health benefits until the day they died. It did not take much intelligence to have a secure, financial future.

Today, we live in a world that requires an extremely high, financial intelligence to retire well.

It is no longer enough to save money, as higher inflation and taxes wipe out your earnings. You can’t rely on a company pension because most companies don’t offer one. Instead, it is expected that you contribute to a 401(k) plan that may or may not provide you a secure retirement and that is simply a glorified, tax-deferred savings account that benefits the rich, not you.

These changes are because of two actions by the U.S. government that I’ve written extensively about, most notably in my book Conspiracy of the Rich. In 1971, Nixon took the dollar off the gold standard, making the dollar a currency instead of money. And in 1974, the Employee Retirement Income Security Act was passed, paving the way for 401(k) plans, forcing uneducated workers into the stock market, and creating the financial services industry.

It’s taken about three decades, but we’re seeing the devastating effects of those actions today as individuals and countries are living on the edge of financial disaster.

On an individual level, take for instance a young friend of mine’s father whose dad worked his whole life in an old-world industrial plant. Every time my friend talked with his dad, his dad would mention how long it was until his retirement, where he’d collect a pension and health benefits and enjoy golf a few times a week and sports on TV. There were no savings to speak of, some stock options decimated by the economic downturn, much debt, and no other plan. Unfortunately, only a few months before my friend’s dad hit the minimum retirement age, the plant went for sale, found no buyers, and closed. Now he, along with hundreds of others at that plant, cannot find a new job, have no savings, and are looking at a very insecure, financial future. For him, it may be too late.

On a national level, look at the Euro Zone. According to The Wall Street Journal, “The global economy faces a depression-era collapse in demand if Europe doesn’t quickly act to dramatically boost the size of its debt-crisis firewall, implement pro-growth policies and further integrate the euro zone, the head of the International Monetary Fund warned Monday.”

As IMF Managing Director Christine Lagarde remarked over the weekend, the Euro Zone’s efforts to stymie debt problems “is about avoiding a 1930s moment, in which inaction, insularity, and rigid ideology combine to cause a collapse in global demand… A moment, ultimately, leading to a downward spiral that could engulf the entire world.” If Europe collapses, the world goes down with it — and the jury is still out on what will happen. But the world’s financial experts are sending out the warning cry.

As you read these stories above, they probably sound vaguely familiar, have little emotional impact on you, and you may have even skipped over them.

Why?

These stories echo stories that have been shared for many years now. The news is filled with stories of people living in countries on the edge of financial collapse, and then buffered by good news here and there to keep us all from falling into complete despair.

The reality is that we have become used to living on the edge, and we’re forgetting what it means to live comfortably inland. This is not all bad, if you have the right mindset.

Living on the Edge Requires a Financial Education

Living on the edge requires alertness and intelligence, you cannot give up or be lulled or else you will fall. Each step must be calculated and taken carefully, but confidently, to get to safety. The only other option is to do nothing and hope someone will save you —which is akin to suicide.

It’s for times like these that the Rich Dad Company was formed. This website, our books and DVDs, our coaching, and financial education all exist to help equip you for the perils of our modern economy so that you can be sure to have the knowledge and practical application required to survive and thrive while others fail and fall.

For many, there is no choice about living on the edge. The die has been cast for us by people much more powerful and influential than us. But we can control our actions on the edge. It’s my hope you’ll step forward confidently and smartly, equipped with as much financial knowledge and courage as you can gain and muster. It sure beats the alternative.

To increase your financial education now, click here to find out about our free resources and online community.

Competition Towards Disaster

By Joshua Gamen

An article in the Wall Street Journal this last week titled “Fed Officials Mull Inflation as a Fix,” talks about the Fed reversing over 3 decades worth of monetary policy to fix this fragile economy and contribute to a recovery that is not happening like they had hoped for.

*(Monetary Policy is simply the regulation of the money supply and interest rates to control inflation and stabilize interest rates.)

The Fed is hoping that by lifting inflation, they will push “real” interest rates(nominal rates minus inflation) down. This would encourage consumers and businesses to save less and spend or invest more.

SAVING SUCKS

Robert Kiyosaki claims that savers are losers, and what is going on strongly supports his stand on the issue. It is absolutely insane to think that you can get ahead by simply saving dollars when the Fed is willing to speed up the printing presses to get more dollars into circulation, purposefully causing more inflation. As many know, President Nixon took the US off of the gold standard in 1971, severing the tie of our dollar to the gold standard. So for over 3 decades, the Fed has tried to keep inflation low. More dollars in circulation means the value per dollar in the existing supply goes down.

The point that the Fed is even considering inflation as an economic fix shows that they have given up on the dollar. And the world is catching on.(See value of precious metals vs value of US dollar.)

Last week, the dollar dropped to a 15-year low against the Yen. Investors on Wall Street are betting on the Yen, believing that the Fed will sacrifice our dollar to help economic growth.(Shown by a 72% increase on pro-yen votes.)

WHY WOULD THEY DO THIS?!?!?!

By weakening our dollar through inflation, US exports would become cheaper, creating export-lead growth. The dilemma with this is that EVERY nation is looking for export-lead growth, and they too, are willing to sacrifice their currencies to make it happen. China is keeping theirs artificially depressed to try and stay ahead in export wars. Thus, the US is trying to get China to let their currency appreciate, and trying to get the IMF(International Monetary Fund) to rally behind them on this. This competition is causing a race by the currencies towards disaster.

SO…????

My point is that the dollar is EXTREMELY dangerous now. All I hear is people talking about ways to cut back to save more. This is touted as a “responsible” economic strategy. The known financial voices are cheering that the people are being “wise with their money again.”(How’s that working out for anyone?…. :\ ..

I am saying this – Saving dollars is not smart. Financially, it’s actually quite ignorant. If you think saving dollars is a good idea, you are ignoring the fact that the Fed is doing everything they can to make the dollar weaker – by raising inflation in hopes of stimulating growth to the economy, and push us all into more debt.

(I know I am getting to get a lot of arguments on this here, so do your research and verify with facts what I am saying.)

GOOD DEBT VS BAD DEBT

Debt is money’s reality these days. Our economy only grows now if you and I are spending more, and more, and more. It is actually the interest on our loans that the ultra-rich are now after. (They already have everything else from us.)

Debt can, however, be good OR bad.  Good debt puts money in your pocket, bad debt is money that takes more money out of your pocket. (IE: Going into debt using leverage to buy an asset like rental property which puts money in your pocket after paying the mortgage, taxes, management, and maintenance is good debt. The tenant pays the debt down, and you get the asset, plus a little(or a lot) of spending money each month. Plus, you get the appreciation(If there is any). Bad debt would be taking out a credit card to take a vacation. This only takes money out of your pocket, and for a long time.(Thanks to interest payments.)

GOOD NEWS

There is always a good perspective that can be sought out. With all of this stuff going on, there is an abundance of opportunity. With all of the depreciation that is going on, there is a huge opportunity to acquire assets(something that puts money in your pocket) at rock bottom prices. This won’t last forever. The Fed will find a way to create inflation(sounds like they’re already working on this). When inflation hits(and it’s inevitable), savers will become losers and debtors will win.