Collection: Financial Literacy - #9 Robert Kiyosaki 'Work Hard & Save Money, But Still Poor?'
[Transcript]
ROBERT KIYOSAKI 00:00
The reason work hard is obsolete advice is because 1943 the U.S. government punish anybody who was an employee.
After 1943, there was a thing called Current Tax Payment Act, at that point, anybody who was an employee, the government got paid first. How many of you ever opened up your paycheck and gone; "What happened to my money?!"
That was 1943. So the problem with being an employee and working hard is the more you work and the more money you make, you go up in tax brackets. So you don't get ahead.
These guys here ['E' & 'S'] are taxed heavily. These guys ['B' & 'I'] have all the tax loopholes, that's why I can make a lot of money and pay zero taxes legally. The difference is I'm on this side here, but our school system teaches us to be on this side.
In 1986, they passed '86 Tax Reform Act and they tax all doctors, lawyers, all the A students they nailed. (Laughter)
And so – well, the attorneys I don't mind but anyway – (Laughs) – but what happened here is this is that guys like me, you know, the C students, we can make more money and pay less taxes than A students which proves there's a God somewhere. (Laughter)
The next thing is save money. The reason save money is an obsolete idea is because in 1971, a man named President Nixon took us off what's called the gold standard or the Bretton Woods Agreement.
And at that point, what happened in 1971, money turned into a...
Currency. So what you started to save after 1971 was not money, but a currency. And the problem with a currency is a government can print it faster than you can save it.
And the other thing about this, if you understand economics, especially Keynesian economics, is that when you look at a dollar, a currency, let's say this is one dollar (y) and this is 40 years here (x).
A currency is designed to go down to five cents over 40 years – a currency is designed to lose money, so the government can keep running up debt. That's the reason so they can print it faster than you can save it. That's the big problem with it.
The next thing is this, if you look at the real stats is this, that's the reason I don't save money. If you look at this last few years like I said, 1995 to 2005, what's happened is a dollar has gone this way.
And the way, you know, how much is lost is gold went from $250 up to $500 in the same time, that means your dollar loss 50%, it lost 50% of its buying power. And the banks are paying you one percent interest. Tell me that's smart to save money.
That's why the debtor started to win because what was happening is this was going up and all this. And the reason this happens is for one very big – well, this is not the only thing, it's not just gold because I can hear the economist going, "he doesn't know what he's talking about."
Well, I'm not saying I'm an economist, I'm saying, just look at the price of gold, it takes twice as many dollars to buy the same amount today. But not only that my father's house which he purchased in, I think 1965 or something, he paid 50,000 dollars for it. And today, it's worth 1.5 million, it's the same house.
So it means the purchasing power of the dollar went where?
Down. The house didn't go up in value, your dollar went down.
And the other thing the economists, "well, that's not really a good indicator." But look at this, in 1995, oil was about 10 bucks, today, it's 60 bucks. So that means your dollar has – you need six [times] more dollars to purchase the same amount of oil.
And then the economist say, "well, oil doesn't affect inflation." (Laughter)
(Source: https://youtu.be/0854UWAv8xA)
[YAPSS Takeaway]
Things doesn't go up in value, it's your currency that falls in real value.
