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Why the Rich are Getting Richer by Robert Kiyosaki

This subject, “wealth and income Inequality” are the biggest moral crisis, and I’ll also say it’s a spiritual crisis in America today, all around the world. This gap between the rich and everybody else is reaching critical proportions. I think one of the biggest crises of the young people, today’s young unemployed become tomorrow’s unemployable; they lose valuable jobs training skills. I’m going to show, as a picture is worth a thousand words, I’ll just show you some pictures about how rapidly this inequality as well as the opportunity inequality is growing.

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What’s happening in America today is savers are losers. Most parents say the kids go to school, save money, and work hard, but in 1970, when I graduated from school, 1 million dollars at 15% interest earned me 150,000 a year. Now, you could live on 150,000 dollars a year back then. But in 2016, do this thing called quantitative easing, I called it the Greenspan Put.

It’s one million dollars at negative 0.05%, it’s going to cost you a million dollars to save a million dollars.

That is how deteriorated our financial systems have become, and this is one of the causes of the gap between the rich and the poor. Another thing is that fewer and fewer families are receiving middle-class incomes; it’s going down. Every time we shop at Walmart, we ship dollars and jobs over to China, and Pakistan, and all the other countries.

That’s capitalism. Another thing that’s happening when people’s incomes go down: they become dependent. Now, the US government tells us that poverty has been beaten in America. Maybe poverty has been beaten, but what has increased is the entitlement mentality. The attitude that the government and other people should take care of me. As I said, it’s a moral crisis as well as spiritual crisis. I learned in Sunday school “Give and you shall receive,” and too many people today think they should receive. This is another crisis here: social security. Being Japanese, the Japanese call it, “Ah, social security.” (Laughter) I’m a racist, I know. (Laughter) But anyway, I’ve met so many people my age – there are about 75 million baby boomers on the top of the baby boom chain. We expect the government to take care of us; that’s a lot of highly educated people.

 Cashflow Quadrant: How to Make More Money

That’s a crisis. In 2002, I published this book “Rich Dad’s Prophecy.” Fourteen years later, the prediction was that in 2016, there will be a global financial crash. We’re in 2016, and here we are in 2016, you can see it coming. In the first ten years of this century, we have had three major crashes: in 2000, with the dot.com crash; followed by the 2006 real estate subprime crash; and then in 2008, the banking crash.

The question is, “Is this next?” This is “the giant crash of 1929.” Every time I listen to those guys on CNBC- I call it bubble division – they keep talking about the “giant crash of 1929.” I tell you what: nothing compared to this one coming. That’s why I write, and I speak, and I’m very concerned about our futures, our well-being, and the state of the economy. I’m going to talk today about why the rich are getting richer.

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“Commercial Message”, my next book coming out. But I’ll explain some of the tricks of the trade, why guys like me get richer, and everybody else is not. This is quite interesting. This is one of the reasons the rich are getting richer. These are the Bush tax cuts, the biggest tax cuts go to the top 1/10th 100%. Thank you, George. I appreciate that. (Laughter) They have no morals, those guys, man, I tell you! I’m the author of the book “Rich Dad Poor Dad,” Maybe I should see a show of hands. How many have read “Rich Dad Poor Dad”? Oh, good. Some of you have. Who has not yet read the book here? Good, there are some customers out there; I can see that. (Laughter) As I say to the Publishers Press, I’m a best-selling author not a best-writing author. But anyway, for those who haven’t read the book “Rich Dad Poor Dad,” it’s a true story on my two dads.

The story begins when I was nine years old, growing up in a little town, a little sugar plantation town, called Hilo, Hawaii. I raised my hand in the fourth grade – and I went to a very rich, basically, all-whites school – and I said, “Mrs. Jarrell, when will I learn about money?” She said, “Why? Don’t you know the love of money is a root of all evil?”

I said, “Not to me.” (Laughter) But she said, “You’re here to get a job.” I said, “I don’t want a job.

That’s why I want to get rich.” She said, “Go ask your dad.” That’s where “Rich Dad Poor Dad” started. My poor dad was the Head of education for Hawaii, a very smart man, PhD., went to Stanford, the University of Chicago, Northwestern. I went home, and asked dad, I said, “Hey, Dad. When are we going to learn about money?” He said, “Never.” I said, “Why not?” “The government doesn’t allow us to teach you that.” That’s kind of interesting. So he said, “If you want to get rich, go talk to your best friend’s father. He’s an entrepreneur, and someday, he’ll be a very rich man.” That’s how the story of “Rich dad Poor dad” starts.

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When I was nine years old, I crossed and went to my rich dad’s office, Being an entrepreneur, he started teaching his son and me about why the rich get richer. That’s how my financial education began. So I wrote this book in 1997. So far I sold about 41 million copies in 50 languages throughout the world. I’ll give a little bit of my background. Thanks.

I don’t do it for the applause. Send me cash. But anyway… (Laughter) This is Hilo, Hawaii to New York City. I didn’t do well in school; I was a straight C-minus student – having the old man as the Head of Education wasn’t easy. So, anyway, I got two congressional nominations: one to US Naval Academy at Annapolis, Maryland, one to US Merchant Marine Academy at Kings Point, New York. I took New York because they were the highest-paid graduates in the world. This is me at Kings Point, here.

Our starting salaries, for most of us, were about 100,000 dollars a year, back in 1965. So that was pretty good back then, not much today, but it’s pretty good back then. And then, when I graduated, I got a job as the 3rd Officer on a standard oil tanker sailing in the world. It was a great job except for one thing – the Vietnam War was still on, and my moral conscience kind of got to me; I said, “Maybe I should go fight a war.”

So I joined the Marine Corps, and I took a cut in pay from about 6,000 a month down to 200 a month as a Marine Lieutenant. It was a great decision. I went to a flight school in Pensacola, Florida, it was right up the street here at Camp Pendleton, and straight to Vietnam. It was really a great experience. Loved the Marine Corps; Loved the guys who I had worked with. It’s a band of brothers; a very spiritual organization. When I came back, that’s when my business career started. My first business, the Surfer Wallets business, and all of this.

 Cashflow Quadrant: How to Make More Money

Everybody thinks, “Yeah, when you start getting successful, life’s easy.” Well, no; success is expensive. I started selling these silly wallets, and all soon, they took off, and I spent more time raising capital to buy more inventory so l could sell more. But it was a great learning experience. I learned to make a lot of money selling wallets. My life changed when I met this man here, Dr. R. Buckminster Fuller. This here is what Fuller is noted for: he’s considered a futurist and a friendly genius. This is a geodesic dome at the Montreal World’s Fair in 1967. In 1967, I hitchhiked from New York City all the way to Montreal to go see the dome, and it was a mind-blowing experience. I never thought I’d ever meet this great genius. John Denver calls him “the planet’s friendly genius.” In 1981, I had a chance to study with him up in Kirkwood, California, near Lake Tahoe, for five days.

I made the mistake of sitting down next while he sat down next to me really. It was called “The future of business” seminar, and he sits down next to me, and said, Robert, what is your life’s purpose? What is your mission in life?” I said, “Oh, to get rich.” Wrong answer! He chewed me out. He said, “Robert!” (gesturing a reprimand) It’s a waste of a good mind. Why don’t you do something that changed the world?” I said, “Changed the world? I just want to get rich.” Finally, I got it. As he said, I’m not here to work for me, I’m here to work for everybody else. That was a pretty cathartic event once I realized how greedy I was. Then I studied with him for three years. Every time, he kept asking the same question that he asked himself, “What can I do, I’m just a little guy?” “What can I do, I’m just a little guy?” He was tiny, too. So I ask all of you what can you do? We’re just little people in many ways. I studied with him for three times in ’81, ’82, and ’83.

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And then, he passed away July 1, 1983. He left this book behind; it was called “The Grunch of Giants” and it stands for “gross universal cash heist,” G-R-U-N-C-H. It’s how the ultra-rich rip us off. Fuller is a friendly genius, he never wrote finance books or economic books. He’s a math, science, art, design man; he’s an architect. I read “Grunch of Giants” and I understood it because it is exactly what my rich dad was telling me; the rich are ripping us off. So at that point, I said, “What can I do, I’m just a little guy?” I decided that time I would take on grunch; and for those who wonder who grunch is, you may just notice that those crashes we just had, we got bailed out, the rich got bailed out.

Let me tell you, ladies and gentlemen, Bernanke and the President Paulson stand up there, and they say, “This was a mistake, we had to save the economy.” That’s a lie. I hesitate to tell you that; it’s a lie. They bailed out the rich. It is part of the business plan; it goes on all the time. So, ladies and gentlemen, I said in 1983 I got to do something about this, and what can a little guy do is take on the biggest banks, the Federal Reserve Bank – which is not a bank, not federal, no reserves – (Laughter) not American. Get the hint? I could take on Wall Street, I could take on government, but I could also take on the school system. See, ladies and gentlemen, those crashes, these bailouts are not accidents, and neither is it an accident there is no financial education in school. But my research found since 1993, it is premeditated. Just as prior to the Civil War, it was illegal to educate a slave, we’re not allowed to learn about money in school.

When I found that out, I said, “OK, it’s time for me to get on with my life and start teaching.” So I become much like my rich dad and my poor dad, I started teaching. It was not too far from here, my wife and I were homeless in San Diego, doing our best to teach, because we can’t go inside the school system, and nobody wants to listen. That’s how it started, and so I’m going to tell you what financial education really is. I’ll start by telling what it’s not.

Financial education isn’t saving money and investing for a long term in the stock market and getting out of debt; exactly the opposite of that. My financial education began with the game of Monopoly. We all know the formula: four greenhouses, one red hotel. When I was nine years old till I was about 20, rich dad and I, and his son would play Monopoly. That’s how I learned to become a rich man. The reason that works is this is the cone of learning.

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It was created by a man named Professor Edgar Dale. In 1969, he came up with the cone of learning, and he said this is how human beings are designed to learn. Noticed the worst way to learn is by reading, and the second worst way is lecture, listening to the boring teachers – that’s why I was never at school; anyway, I was there, but anyway… (Laughter) What you guys are doing is you’re looking at pictures, watching movies, that’s why TED Talks works. Also, the second best way is called simulation. Simulation is where you get to make your mistakes, you’ve got to make your mistakes after mistakes after mistakes, So human beings learn by making mistakes; except in school: you make mistakes, you’re considered stupid. In business, you make a mistake, you’re fired, you’re a failure.

So, a person has got to find a place to make mistakes. And for scientists like Edison, it was the laboratory. The reason I learned a lot was I made mistakes playing Monopoly. That’s how I learned so much. Today, I play Monopoly in real life. My wife and I have over 10,000 units, several hotels, golf courses, and oil wells. But that’s the game. Once you learn in your brain by playing games, simulation is a little way you learn, so you practice, practice, practice, practice, practice. You make mistake after mistake after mistake like a golfer makes a mistake after mistake after mistake. Then they are turning pro. But the reason a lot of people are not rich is they think mistakes make them stupid.

 Cashflow Quadrant: How to Make More Money

It’s criminal: a baby cannot learn to waffle less they fall down. You can’t learn to ride a bicycle until you fall off the bicycle. So that’s where our school systems are letting us down. I loved the military because they taught us to make mistake after mistake after mistake. Every day when we flew, we practiced emergency procedures, and every day I killed my engine to fly my aircraft without an engine. This here is me doing the real thing. I went down three times in Vietnam. If not for practicing crashing, I wouldn’t be here today. All five of my crew came home alive. What I did was, after Bucky kind of chewed me out with “What can I do, I’m just a little guy?”, my wife and I created this board game called Cashflow.

This is the key to the Cashflow game here. This is called a financial statement. Add a financial statement to Monopoly, you have Cashflow. This is financial literacy: how do you understand numbers? So the beauty of the Cashflow game is today we have thousands and thousands of Cashflow clubs all over the world; people teaching people without having to go through school and getting a student loan debt. Now, you have to go to school to be a doctor, a lawyer, an engineer, but you don’t have to go to school to be rich. So all over the world today I asked what Dr. Fuller asked, I started empowering people to learn. So all of over the world, today, every day, in different languages, people are teaching people the same lessons my rich dad taught me. This here is a financial statement: income, expense, asset, liability. The beauty of this here is this: this is your report card when you leave school.

My bank was never to ask my grade point average or what school I went to. My bank wants to see my financial statement. The reason most people can’t go loans is they don’t have a financial statement. They don’t even know what it is when they leave school; even college graduates. The reason I can borrow hundreds of millions of dollars: I have a strong financial statement, this financial literacy. This here is very simply; it’s income, expense, asset, liabilities. Poor dad always said to go to school and get a high-paying job.

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The problem with education is they teach you to be employees. Rich dad taught me to be an entrepreneur acquiring assets: four greenhouses, one red hotel. Assets are very simple: you can plant an apple seed, that apple seed goes into a tree, harvest the apples, you sell the apples, you then reinvest your profits, and you keep building an orchard; that’s how you get rich. Or a friend of mine, when he was in high school, his grandma gave him some chickens, those chickens lay eggs, he sold the eggs and reinvested it. When he was 45 I think, he sold this business, he was selling ten million eggs a day to Costco and Walmart. You don’t have to be a rocket scientist to build assets. It’s buying a couple of chickens. (Laughter) It’s kind of funny, really. So the power of words – financial literacy begins with words, because words affect your brain.

As my poor dad always said, “I can’t afford it.” In Sunday school I learned “the word becomes flesh.” Every time you say you can’t afford it, and you say I’m a poor, I’m a loser, I can’t do something, I’m helpless, the government should take care of me. Disgusting! Rich dad taught me, “How can I afford it?” So when I had no money, my wife and I just kept thinking, “How can I afford it?” Pretty soon, your mind opens up, and that’s when intelligence comes in. Most important words and money are basic, there’s only four: [income], assets, liabilities, cash flow, that’s it. That’s where financial literacy says: income, assets, liabilities, and cash flow. You understand those four words basically, then you can build your vocabulary. Money has a language, but it’s not taught in school. It is taught job security versus being an entrepreneur. Look for job security, instead of go for financial freedom. If somebody should take care of you and said, “I’m going to take care of other people.” As an entrepreneur, I have thousands of employees. That’s my job;to create other jobs, to give them a safe life.

So number one is assets, number two is liabilities, cash flow; these are liabilities. The reason the poor middle-class grow poor is because they think their house is an asset. If you read “Rich Dad Poor Dad,” I said several things: savers are losers, and your house is not an asset. This came out in 1997. In 2007, the subprime market crashed, and tens of millions of people throughout the world found out their house was a liability. If you use the wrong word to describe the wrong issue, you will always be stupid and broke. So don’t call a liability an asset, and that’s why so many people are broke. They are using the wrong words, and the words become flesh.

 Cashflow Quadrant: How to Make More Money

Financial literacy – change your words, change your life. Never say, “I can’t afford it.” Ask yourself, “How can I afford it?” Work to acquire assets not liabilities. Ladies and gentlemen, we have thousands of Cashflow clubs around the world: people are teaching people. You don’t have to go to school to learn to be rich. The thing is, as Bucky Fuller challenged me, “What can I do, I’m just a little guy?”, I stopped making wallets, and I started making sense. My wife and I created this Cashflow board game that’s played throughout the world today. Every day, tens of thousands of people are teaching themselves. That’s how you change the world. But if you change your words, you change your life. So the best news is words are free. It doesn’t take millions of dollars to change the world. Just change your words.

Thank you very much.

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