3 Things Will Lead You to Financial Ruin
In 2019, my book FAKE was released. The subtitle says it all: Fake Money, Fake Teachers, Fake Assets.
Simply put, the Universal Cash Heist of our wealth, via our money, could not occur without all three components: fake money, fake teachers, fake assets.
Since 1971, the year President Richard Nixon took the U.S. dollar off the gold standard, the world has been running on fake money.
For fake money to be accepted as real money, the world needs fake teachers. This is why there is no real financial education in our schools. Our teachers know very little, if anything, about money.
In 1903, The General Education Board was formed. Many of its founders were infamous Robber Barons such as JP Morgan, JD Rockefeller, and others, who hijacked the education system to fulfill their needs. Their mission was to find the best and brightest minds in America, then train them to run their companies. Their mission was not to develop or train entrepreneurs who would compete with them, but employees who would work for them.
Today, the stock market is higher than it’s ever been. The question is how high will it go and how far will it fall? Because that is nature. Markets rise and they fall. Today, those falls could be bigger than ever before.
When the next crash comes it could cause financial ruin for the middle class and the poor. And it’s all because of fake money, fake teachers, and fake assets. I want to save as many of those people as possible.
#1 Fake Money
When Nixon took the dollar off the gold standard it created a virtual explosion in credit and liquidity. The sheer amount of liquidity around the globe is incalculable.
This excess fake money causes people to feel rich and almost everything to be more expensive. Today, stocks, real estate, automobiles, and gasoline become more expensive as the dollar becomes cheaper.
While some people do become richer in this system, fake money actually punishes working people who save money. It devalues the value of your work and your savings, even though you may feel wealthier.
In overly simplistic terms, China and many countries in the world today lend us billions of dollars to buy their goods. They send us products like computers, televisions, cars, candies, and wines, and we send them funny money in return.
Since they can’t spend those dollars at home, they simply lend them back to us so we’ll buy more of their products. That would be like me going to my local grocery store and asking them for a loan so I could buy their tomatoes. A logical person would say, “That makes no sense.” Yet it’s exactly what happened after 1971, and to many highly educated people — bankers and politicians, for instance — it somehow does make sense.
#2 Fake Teachers
What did school teach you about money? For most people, the answer is “nothing.” Most teachers are great people. But, our educational system is broken, obsolete, and fails to prepare students for the real world.
Instead of guiding students into the light, our education system is leading millions of young people into financial darkness and the worst type of debt: student loan debt.
Student loan debt is over $1.2 trillion and is the number one asset of the U.S. government. In the criminal world, this is called extortion.
Worse yet, these teachers teach knowledge that is false and damaging, such as the merits of going to a good school, getting a good job, buying a house, saving money, and investing in a balanced portfolio of stocks, bonds, and mutual funds. All fake financial truths.
After graduation, there are whole industries of gurus, advisors, and brokers who reinforce these fake financial truths while getting rich along the way.
#3 Fake Assets
First, we need to define and understand the difference between an asset and a liability. Assets put money in your pocket. Liabilities take money out of your pocket.
What most people believe are assets — like their house and 401k — are really liabilities.
A 401(k) is a fake asset because cash keeps flowing out of your pocket… for years. An Individual Retirement Account, or IRA, is a fake asset because it takes money out of your pocket… for years.
A government pension is a fake asset because it is taking money out of your pocket… for years.
A house that is a primary residence is a fake asset because it is taking money out of your pocket in the form of a mortgage for 30 or more years. You also have to pay for all the repairs and taxes, out of pocket.
A mutual fund is a fake asset. So are stocks, bonds, ETFs, and savings. They are all derivatives. Mutual funds are loaded with fees, fees that make the rich richer and you poorer. Insiders know, mutual fund investors, put up 100 percent of the money, take 100 percent of the risk, yet receive less than 20 percent of the profits.
Remember: Assets put money in your pocket. Liabilities take money from your pocket. By following this simple formula, you can always tell the difference between a fake and a real asset.
One reason Kim and I were able to retire young is that we invested in our own assets, not Wall Street’s financially engineered, fake assets.
What You Can Do
The rich do not invest in fake assets and they do not work for money. Rather they know the rules of the game now that money is debt. Their financial knowledge and intelligence allow them to invest in real assets that put money in their pockets each month and make them richer.
If you want to get off the hamster wheel of giving your money away to the rich through fake assets, you must first start with financial education. You must increase your financial intelligence to invest in real assets that provide cash flow and understand the following:
- How to use taxes to acquire assets.
- How to use debt to acquire assets.
- How to reinvest gains without paying taxes.
- Why it makes sense to save gold and silver, not fake money.
By increasing your financial education and knowledge, you too will be able to invest like the rich and easily spot fake assets when you see them… and invest in real assets like a pro.
Play it smart,
Editor, Rich Dad Poor Dad Daily