How to ‘Print’ Money for Yourself, Legally
As I write this, many people are worried about the stock market and the economy.
“Is the crisis really over? Is the economy coming back?”
My reply is, “No, the economy as we knew it is not coming back. The economy has moved on, and the people asking if it’s coming back are being left behind.”
The fact is, the central banks of the world are printing trillions of dollars, which will be paid by us via debt, taxes, and inflation. Assets are in a giant debt bubble—some say it’s the largest in the world’s history—bigger than 2007.
Governments don’t want the world to go into a depression, so they print more fake money, destroying the purchasing power of the savings of millions of people. This is why the price of gold and silver goes up and why savers are losers.
And as the United States continues to print trillions of dollars, our kids and grandkids will pay for this mess by raising taxes. Taxes often punish producers and reward the crooked, lazy, or incompetent.
How Much Do You Trust the Government?
Just as humans have evolved, money has evolved. “Money” was originally in the form of barter, such as chickens or milk, then shells and beads, then gold, silver, and copper coins. They were physical objects that were deemed to have tangible value and thus were traded for other items of a similar value.
After 1971, when the dollar was no longer backed by gold, the U.S. economy could only grow by increasing debt, and that’s when the bailouts started.
In the 1980s, the bailouts were in the millions; in the 1990s, they were in the billions; and today they are in the trillions and growing. This change in the rules of money, one of the biggest financial events in world history, allowed the United States to print money at will by creating more and more debt, known as U.S. bonds.
Never in the history of the world had all the world’s money been backed by one nation’s debt.
Paper money is worthless in and of itself. It is simply a derivative of the value of something else. In the past, the dollar was a derivative of gold; now it is a derivative of debt. It’s no longer a tangible object like chickens, gold, or silver.
Today, modern money is simply an idea backed by the faith and trust of a government. The more trustworthy the country, the more valuable the money, and vice versa.
Don’t Fight the Fed. Profit From It.
The Federal Reserve was formed in 1913. It’s not American, it’s not federal, it has no reserves, and is not a bank. It is controlled by some of the richest and politically influential families in the world. The biggest problem with the Fed is that it has the power to create money out of thin air.
Once the Fed was in place, there were two sets of rules when it came to money: One set of rules for people who work for money and another set of rules for the rich who print money. The rules of money were completely changed and heavily tilted in favor of the rich and powerful.
Some people want to abolish the Federal Reserve System. My question is, What would replace it? How much chaos would that cause? And how long would that take? Rather than rail against the Fed, you should ask, “How can I minimize the effects of the Fed on my personal financial situation?”
Personally, I decided to study the game of the rich and play the game according to my rules. In 1983, after reading Dr. Fuller’s Grunch of Giants, I took what I had learned from my rich dad and applied that knowledge to playing the game of the rich differently.
If I had not begun preparing years ago for this crisis, I, too, might have been an aging baby boomer watching my pension dissolve and my home decline in value, fearing I would soon lose my job, my pension, and my health insurance. And worst of all, I might have become dependent upon the government via Social Security and Medicare, just like my poor dad.
Beating the Fed
New Rule of Money #1: Learn how to use debt
After 1971, the U.S. dollar switched from being an asset to being a liability—debt. Debt exploded because the banks could create more money by creating more debt. Obviously, both the poor and the rich need to learn to use debt better.
Debt is not bad. Misuse of debt is bad. Debt can make you rich, and debt can make you poor. If you want to get ahead financially, you need to learn to use debt, not abuse it.
New Rule of Money #2: Learn to control cash flow
After the dollar became debt in 1971, the name of the game was getting you and me into debt. When you are in debt, your cash flows from you to others. Today, many people are in financial trouble because they have too much cash flowing out of their pockets and very little money flowing into their pockets. If you are going to be financially secure, you need to learn to have more cash flowing into your pockets.
New Rule of Money #3: Prepare for bad times and you will only know good times.
My generation, the baby boomers, have only known good times. Many are not prepared for the bad times. I am doing well today because I began preparing for bad times over 20 years ago. By preparing for bad times, I do well in good times.
New Rule of Money #4: The need for speed
Money evolved from barter to digital money as the world’s financial system picked up speed. Today, slow people are left behind. A well-positioned person can transact business 24/7. Rather than making money by the month, people can make money by the second.
New Rule of Money #5: Money is knowledge
This is the most important rule of all. Today, traditional assets do not make you rich or financially secure. You can lose money on businesses, real estate, stocks, bonds, commodities, and even gold. Knowledge makes you rich and a lack of knowledge makes you poor. In this brave new world, it is your knowledge that is the new money.
Print Your Own Money Legally
Printing your own money is one of the greatest secrets of the truly rich. By simplifying and understanding the definition of a financial derivative, you can easily tap into the power of that word. You, too, can print your own money.
A very simple example is an IOU with interest.
Let’s say you have $100, and your friend wants to borrow that money for one year. So you have your friend sign an agreement to borrow the $100 at 10% interest. In other words, your friend agrees to pay you back $110 in one year. You have just created a derivative. The derivative is the $10 in interest you receive in one year. You just squeezed $10 out of your $100.
Now, let’s take the derivative to the next power. Let’s say you do not have the $100 your friend wants to borrow. So you go to your parents and ask to borrow $100 for one year at 3% interest. Your parents agree, and you then turn around and give your friend the $100 at 10% interest. A year later, your friend pays you $110. You then take $103, pay your parents back, and all is fine.
You make $7 for your efforts. You have now made money without having money, by creating a derivative of a derivative.
We can all create money out of thin air—derivatives of our thoughts. We all have the power to print our own money if we train our minds to think in terms of derivatives. In other words, money can be a derivative of financial knowledge. This is why financial education is so important, and why I believe it is not taught in schools.
Once I understood the power of the word derivative and put my knowledge into practice, I knew I would be a free man and would never need a job again. I did not need to buy shares of a mutual fund and hope I could retire someday.
Once you learn how to create derivatives, money becomes infinite.
Editor, Rich Dad Poor Dad Daily