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Speaker 3This is the Rich Dad Radio Show. The good news and bad news about money. Here's Robert Kiyosaki.
Speaker 4Hello, hello, hello. This is Robert Kiyosaki at the Rich Dad Radio Show. Today I'm very excited about a very special guest. Possibly one of the more important futurists of our time today. And we really do need some people that can look into the future. And his name is Robert Kiyosaki. His name is Jim Sprickards. We've interviewed him before. And it was on The Road to Ruin, The Global Elite Secret Plan for the Next Financial Crisis, which I read. Fantastic book. And then I was driving around Montana with another friend of mine. And we were listening to Jim on audible.com. And it was like I never read the book. And you can ask him. I've been walking around. I've now listened to the book 14 complete times, which means it's 14, 14 hours, I believe, times 14.
Speaker 5Yeah, I can't talk to you anymore because you've got your headsets on day and night.
Speaker 4I look like Mickey Mouse walking around with these headsets on. And I'm just listening to what I think one of the most important, not only financial guys, but also futurists. You've got to look into the future. So for those of you listening, this is a very important program, especially if you want to see what's coming in the future, which is today. So I'll just keep going. I have a quick background. The reason I'm absolutely thrilled with James is because the definition of intelligence is if you agree with me, you're intelligent. And Jim is very intelligent because he says things I've been saying for years with no agreement, with no agreement. You know, stuff like quit your job, get your 401k out of there. You know, you're getting, you're trapped in this little box. You're about to get hammered. And, you know, Wall Street doesn't like my message. So anyway, I'm very happy to have James Rickards here. And where my whole education began, I was flying off a carrier in Vietnam for the U.S. Marine Corps. And I was sitting in the ready room and, you know, the snail mail letter came from my rich dad. And he says, hey, did you know that President Nixon took the dollar off the gold standard last year? And I didn't even know that. It was August 15th, 1971. And I said, what does that mean? What does that mean? And the reason I'm really appreciative of James' books, the books on currency wars, the death of money, the new case of gold, and the road to ruin, the globally secret plan for the next financial crisis, fills in many of the blanks I could not figure out as I kept asking the question, what does it mean that President Nixon took the dollar off the gold standard? So with that, the one most important guest we have, and he is forecasted to be passing, possibly, which I've also said, the biggest financial collapse in world history, possibly. The biggest in history. So be prepared. You know, for those of you who think tomorrow will be the same as yesterday, I think you're in la-la land. So welcome to the program, Jim.
Speaker 6Welcome, Jim. Thank you, Robert. Thank you, Kim. It's great to be with you again.
Speaker 4Yeah, so before we scare the, you know what, out of people, can't you give them kind of a little ray of hope? Because I think, I think you did that for me because I was on suicide watch listening, you know, reading Road to Ruin. And what you said, you talked, you told the story about the one third, one third, one third, how wealth is really preserved no matter what happens in the economy. So would you mind starting with that? Then we get into what you see coming.
Speaker 6Well, thank you, Robert. And I think I can give more than a little ray of hope. Hopefully I can give a very bright, you know, sunshine ray of hope, if you will. We're not helpless. We have choices. We make choices. And so to me, it's all about the choices and understanding history, understanding the dynamics, looking forward and thinking about how to preserve wealth. And I was once on a TV program and, you know, one of the financial networks and got in a debate with a host. And I, you know, she was yelling at me about, you know, I recommend that gold and gold wasn't going up that day. You know, the way everyone has such short attention span, you say something on a Tuesday and it's not true. It doesn't happen on Wednesday. And somehow you're an idiot because it didn't happen in 24 hours. I was like, well, give it time. But I made the distinction between making money and preserving wealth. I said, those are two different things. You basically make money on your talent because you work hard. You're an entrepreneur. You got a pizza parlor, a car dealer, a dry cleaner, you're a doctor, a lawyer, you're an author, whatever it may be. You make money on your talent. But then when you have it, you have to preserve it. That's a completely different skill. And that's what the third, a third and a third is all about. I'll talk specifically
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Speaker 2Their sweaters are the perfect easy layer for low-key plans. And on a nice night out, I'm reaching for their
Speaker 6classic trousers. what we mean by that. But this came up in a conversation. I was in a place called Palazzo Colonna. Palazzo Colonna is a private home. It's a palace, a palazzo in Rome. And it's interesting for the ultra-rich, you know, it's completely nondescript from the outside. It's kind of got like stucco walls. If you drove by it, it's like boring, brown, old. It does not catch your eye at all. But man, you go through the gates and you get inside into the courtyard and the galleries and the museums and the marble floors and the gold. There's gold pillars and everything. You've never seen anything like it. And it's, you know, an unimaginably, you know, rich environment, priceless art, etc. But the point is, this palazzo has been in the Colonna family since the 13th century. We're talking 800 years. So this isn't, you know, in the U.S., people talk about the new money from Silicon Valley or Wall Street. Then there's the old money. And by old money, we mean, you know, the Rockefellers and the Vanderbilts and the Astors and so on. Some of those, the Whitney's and some of those things. But that money is maybe 100, 150 years old. In the case of the Astors, they're 200 years old. But here's the family fortune that's been around for 800 years. And think of what you had to survive to do that. It was not just like a down stock market or something like 1987. I mean, they had plagues. They had invasions. They, you know, the counter-reformation in the 16th century, the 30 years war in the 17th century, the wars of war of Louis XIV in the 18th century, Napoleon in the 19th century, World War I, World War II, the Holocaust. I mean, think about what you had to survive. And the family is still wealthy and they still live in this palazzo. So I was sitting next to this lady, very wealthy European. And I said, you know, it's one thing to preserve wealth through a business cycle or a couple hundred years, but how do you do it for 800 years? How do people do it? She just looked at me and she very confidently said a third, a third, and a third. And I said, okay, what does that mean? She said, one third gold, one third land, one third fine art. And obviously you have some cash for day-to-day necessities or whatever else you need. There's a cash slice in there, but a third, a third, a third in terms of wealth preservation. And, you know, let's just go back to 1620. You know, you're in Bavaria, early 17th century during the 30 years war and Wallenstein is two miles away and he's burning down everything in sight. And what you can do, you put your gold coins in your pouch, you take your art off the wall, roll it up, stick it in a backpack, get on your horse and ride away. And then once he's done burning everything down and the dust settles, you come back, you should be able to reestablish title to your land. You put your gold coins on the table, you put your art back on the wall, and you're rich. Everyone around you is wiped out. And just to bring that down, that sounds like, gee, what advice can we get from the 18th century? Or the 17th century, but think of Cuban-Americans today who were dispossessed by Castro in 1959, 1960. All their property was taken over. Well, when those people left and came to Miami, a lot of them took the deeds to their houses. They might have had gold coins stitched in the lining of their clothing. I actually know good friends of mine about my age came over as 9-, 10-year-old children in 1960, and they had gold coins, I guess, in the lining of their clothes. But a lot of them bought their deeds. And I promise you that the State Department, in the course of normalizing relations with Cuba, is going to seek justice for those people. And they may get that land back, or at least they'll get a fair compensation. But in many cases, they'll get the land back. So that actually works. Now, people say, well, wait a second, Jim. This is the 21st century, the modern age. There's no 30 years' war going on. Well, don't be so sure. I mean, if you go through history, there are much more periods of collapse, turmoil, war, social breakdown. And perhaps we are today, perhaps we're too complacent. But, you know, when I look at the situation in North Korea, it's not just war. It's natural disasters. Look at, talk to the people in Puerto Rico. You know, one of the biggest, you know, great tragedy in Puerto Rico because of Hurricane Maria, and everyone was, oh, the Jews are short of gasoline, they're short of water, which is true. But you know what the main shortage was? What? Cash. Because when there's no electricity, the ATMs are shut down, the banks are shut down. And people were going to stores. Now, the shelves were kind of stripped bare, but maybe they had something. But the merchants were saying, well, pay me in cash. I can't use your credit card. I can't take your debit card. I can't process it. There's no telecommunications. By the way, our friend Warren Buffett, you know, a famous stock investor, right now he has $100 billion in cash. That's how much cash is on the balance sheet of Berkshire Hathaway, his holding company. So if everything's good, why does Warren Buffett have $100 billion of cash? Well. He knows.
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Speaker 6Everything's not good. He knows the system is bubbly and prone to collapse, and he's famous for waiting for that to happen and then, like I say, going out and picking up bargains, so there's a place for cash as well.
Speaker 4Again, this is James Rickards. I would call him, right now, a futurist. He talks about being a raven. A raven in Greek mythology is the bird that can see the future, and I sent Jim pictures of our two ravens that sit on our driveway, and I never knew they were ravens. I never knew that. I just like seeing the future because I was a student of Dr. R. Buckminster Fuller, a futurist. And he was the one that warned me about this time today. And what you say and what Fuller says and what we're seeing coming is what Fuller says we're going into one of the biggest transformations in world history, not just U.S. history. But in the meantime, everything might come apart. So that's why it's James Rickards. He's a New York Times bestselling author and economist. "The Road to Ruin: The Globally Secret Plan for the Next Financial Crisis." Please read that book if you want to preserve your wealth. His other book was "The New Case for Gold," which my advisors and I studied. "The Death of Money," which is absolutely eye-opening and fantastic. And the book I first read was "Currency Wars." So for those of you out there who are saying, "Oh, well, tomorrow's going to be the same as last year." I think you'd better wake up and smell some coffee because when we come back, we'll be talking about why Jim says to have one-third, one-third, one-third.
Speaker 3You're listening to "The Rich Dad Radio Show" with Robert Kiyosaki. Log on to RichDadRadio.com while you listen. Now back to Robert Kiyosaki. Welcome back, Robert
Speaker 4Kiyosaki to "The Rich Dad Radio Show." The good news and bad news about money. You can listen to "The Rich Dad Radio Program" anytime, anywhere on iTunes or Android. And to listen to this program again, all of our programs are archived at RichDadRadio.com. I personally believe this is the most important person you can listen to today. And again, I said the definition of intelligence is if you agree with me, you're intelligent, then Kim will verify everything Jim has been saying. I've been saying is coming also. So I believe we're on the biggest, biggest, biggest precipice of a massive, massive, at least a crash and possibly a collapse. And the way I define a collapse is three crashes in a row with no recovery. And the reason for it is, again, is that Nixon took the dollar off the gold standard in 1971, which allowed everybody to print as much money as they wanted, which is why at Rich Dad we've been saying the rich don't work for money. Savers are losers. And instead of getting out of debt, learn to use debt because money is now debt after 1971. But also watch out for that 401 fill of stocks, bonds, mutual funds, and ETFs. So with that, our guest again is James Rickards. His latest book, "The Road to Ruin," and Kim will verify it. Jim, thank you so much for joining us today. Thank you for having me. It's a pleasure. I've been walking around my house with looking like Mickey Mouse listening to this over and over and over and over. And I pick up a couple of things that Jim will say, and I'll just go into it and then research what he said just so I understood it better. So before we go on, Jim, would you mind giving everybody, before we go into the eve of destruction, now that you give them the happy days version of one-third, one-third, one-third, what caused you to see the world from this point of view?
Speaker 6Well, my financial education, Robert, kind of started around the age of 9 or 10 at the dinner table. But you mentioned being a Marine on an aircraft carrier and getting a letter from your rich dad. I had a rich dad also, not financially rich, but rich in wisdom and love and shared experience. And he was a Marine. He was in the 1st Marine Division, fought in World War II in the Pacific as part of the occupation of China. So as a 9-year-old, we were always, as little kids, we were always like, Dad, tell us, we want to hear combat stories and everything. He never talked about that, never talked about that. It was only much later as an adult when I read about Peleliu and Okinawa in depth that I understood what he went through. But we were kids, what do we know? But he would talk about other things. And one of the things he always mentioned was he was in the occupation of China. So really at the beginning, he actually got a Cold War medal in addition to World War II medals because he was in, that was 1945. 1946 in China was the beginning of the Cold War. Now at the time, it was still nationalist Chinese. The communists were on the rise, but they hadn't taken over yet, Chiang Kai-shek.
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Speaker 2officially the holiday season and abercrombie's new collection has outfits for everything on your calendar it's the busiest time of year and between shopping and party invites i don't have time to plan every look but abercrombie's always got me covered their sweaters are the perfect easy layer for low-key plans and on a nice night out i'm reaching for their classic trousers fill your closet with the pieces you'll need all season long have a very abercrombie holiday shop in the app online and in stores specialists
Speaker 6were in charge my father's in the marines and they're occupying they're in a place near chen sen and he said he told me about the hyperinflation of the nationalist currency now most people are familiar with the weimar hyperinflation weimar germany 1922 and walking around with wheelbarrows full of cash and so forth but and all those stories are true but my father said we have to have wheelbarrows full of chinese yuan to go down and get you a case of beer for the barracks because uh. if that's what it was so i learned about hyperinflation from my father who had experienced it firsthand the other thing my father did he always carried a twenty dollar silver certificate in his wallet and i guess that little nine-year-old kid he pulled out two twenty dollar bills he put them down and in front of me and he said read this what does it say and i would say well silver certificate he said read this there'll be a new one and he said what does it say it says federal reserve note and he would slam his hand on the table and say that is not backed by anything and he would make the point that in the day you could take the the silver certificate into a bank and they would give you silver it would give you twenty twenty ounces of silver twenty uh. one dollar silver dollars for uh. imagine getting twenty ounces of pure silver for a twenty dollar bill today and good luck with that you get one ounce if you're lucky uh. but uh. so i learned about hyperinflation i learned about uh. gold standard and silver standard and uh. fiat money as a nine or ten year old from my father now i probably put that you know in the back of my mind and then went through you know college and graduate school and law school and had a long career on wall street and worked in derivatives and hedge funds and that was all the the paper and the leverage and the contracts and i was an expert in all that i mean i i invented along with another guy the the uh. sovereign uh. credit default swap market we did the first one when i was at long term capital management in nineteen ninety four even before uh.
Speaker 4was your father disappointed
Speaker 6in you uh. he was he was well the one thing he did ask me because i went to college then i went to graduate school got a degree in international economics then i went to law school but then i went to graduate law school specializing in taxation lm master of laws and taxation family so i was about thirty and he was like when are you going to get a job you're going to school but uh. but eventually i did i settled into banking and investment banking and hedge funds and all that but the other thing about just to kind of bring it back to the education for a second robert i went i did graduate school in international economics i was class of seventy four i was the last class that was taught gold as a monetary asset because you know nixon went off the gold standard in nineteen seventy one that's right but it wasn't the end of the gold standard it was the end of gold convertibility for dollar holders true but the gold standard kind of stumbled and bumbled around for a couple more years the french wanted to return to it they thought that it was a temporary suspension and they would devalue the dollar and go back to gold at a new valuation exactly what f_d_r_ had done in nineteen thirty three the bank of england did in nineteen thirty one but they never got back to it they just you know milton friedman came up with this floating currencies and all this stuff and then the one by one the world uh. abandoned gold but when i was in grad school it was still a monetary asset uh. you still had to give gold to join the i_m_f_ and i studied it and then that's it they just stopped teaching it so i tell people if you're younger than i am and you know anything about gold uh. you either uh. you're either self-taught or you went to mining college because the universities just stopped teaching it it's not taught anymore you can't find an american uh. you know under let's say the age of sixty who uh. thinks that gold is uh. as a valuable financial asset or it has a monetary role and they'll give you all the usual arguments barbarous relic and all that stuff all of which by the way i demolish in my book the new case for gold i i i just got so tired of hearing these arguments i gotta just take them one by one and shoot them down and that that's what i did the books that's a little bit of my monetary uh. background fantastic
Speaker 4once again this is robert kiyosaki of the rich dad radio show probably the most important guest of our times again i call him the raven now because the raven can see the future and i was a student of dr r buck's mr fuller also a futurist and he's saying the same thing that jim is saying that we're on the eve of destruction now not tomorrow not next week and all for the same reasons what jim calls the global elites so we're here right now his books are the road to ruin please get that book and read it his other book is the new case for gold april twenty sixteen please get that book and the death of money that is a very powerful book and also his first book currency wars is where i first came across why are we on the eve of destruction
Speaker 6now well uh. what i used to analyze this robert when i say things like this by the way i think you know me well enough i never make a claim without backing it up oh my god
Speaker 4wait jim i've never met a man who backed up more than you that's why i walked around with mickey mouse ears on all the times listening to everything you said
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Speaker 4dot com for details and i was kind of guessing in large chunks so i appreciate that appreciate what you've done and backing it up.
Speaker 6Yeah, and the Road to Ruin has 155 endnotes. You don't have to read them. They're in the back, but they're there if you want them. And they're not, those endnotes are not to, you know, fringe conspiracy websites or whatever. It's IMF documents, Treasury documents, United Nations documents, etc. So it's all there. You can skip them if you want, but if you want to drill down, it's all there. But I use a couple scientific disciplines to make my forecasts, as did Buckminster Fuller and Alvin Toffler and other noted futurists. And one of the main ones I use is complexity theory. I use three others, a Bayes theorem, which is a branch of applied mathematics, behavioral psychology, and history. But the one I'll talk about right now is complexity theory. Now, there's nothing new about complexity theory. It was invented or discovered in the 1960s, and maybe relatively new in the history of science, but it's been around, you know, almost 60 years at this point. I didn't invent it, but I'm one of the pioneers, not the only one, but one of the pioneers in taking complexity theory and bringing it into capital markets where it is not widely used. It's used in, you know, earthquake science, forest fire management, you know, cosmology, many, many other fields.
Speaker 4But you also talk about, you work with the CIA because they have to use it because they can't depend upon the past. They have to be able to see the future. Is that correct?
Speaker 6Correct. I was tapped by the CIA to come in and help them after 9-11 because there was, I think it's well known, I talk about this in my book, The Death of Money. There was insider trading ahead of 9-11. Clearly, there was a large group that knew about the attack in addition to just the terrorist attackers themselves. And the last two trading days before 9-11, in buying put options, and when you buy a put option, it's a bet that the stock's going to go down. The volume of put options on American Airlines and United Airlines was 286 times the average daily volume in the stock. So it's like a guy. He orders a tuna sandwich every day for lunch, and then one day he orders 286 tuna sandwiches. You know that something's up. That's not the normal lunch order.
Speaker 5Can I just interrupt? When you say they, who's they? You said people that had insider trading. It's a good question, Tim.
Speaker 6It's a good question, Kim. These are terrorist associates. So look, nobody works in isolation. Because when I first started bringing this up at the CIA, I encountered a lot of skepticism. They said, oh, well, they would never compromise operations. They would never compromise operational security by trading stocks ahead of the attackers. I said, wait a second. Nobody's saying that Mohammed Atta stopped off at Charles Schwab on his way to Logan Airport to hijack a plane. That didn't happen. But everybody has a mother, father, sister, brother. You have a driver. Who wants to make a few dollars. Safe house operator. Exactly. And people cannot. There's something about human nature that cannot resist the sure thing. So the attack was known in the social network of the terrorists, and that's documented in the 9-11 Commission Report, which I read. It's a cover, including the end notes. And then they said, well, nobody would do that. And I say, I have a two-word answer for that. Martha Stewart. Martha Stewart was a legitimate billionaire. Martha Stewart made a billion dollars legitimately through hard work, and she ended up behind bars on a $100,000 stock trade.
Speaker 4On a tip from Sam Waxell, right? I mean, give me a break here.
Speaker 6Exactly. So what better evidence?
Speaker 5What drove her to do that?
Speaker 6Yeah. She goes to jail. So why would you go to jail for $100,000 when you're a billionaire? The answer is because people can't resist the sure thing, and that's what leads people to do it. And, you know, a $5,000 option trade with 10 to 1 leverage, you could make $50,000. That's a lot of money to a safe house operator or a cook. But people say, well, why was it, you know, 286 times average daily volume? That's a big number. And the SEC and the FBI never got to the bottom of it, or at least they never admitted it in the 9-11 Commission report. And the answer is something which I identified, I called signal amplification. So the terrorist is going to do, like, a $5,000 share lot or whatever. Okay, but the specialist sees the order. So the market's up, airlines are up, the sector's up, but somebody's buying puts. They don't know you're a terrorist, but they say, you know something, I don't. So I'll buy some from my own account. I'll buy $10,000 from my own account. Then some upstairs trader at a hedge fund says, huh, $15,000 just crossed the table. I'll buy $50,000. Somebody else says, I'll buy $100,000. So by the end of the day, you know, you've traded for a lot of money. You've traded for a lot of money. You've traded a million shares, 98% of which are completely legitimate. It's just people piggybacking on the original trade. But the problem is when the SEC investigated, they, I mean, they're not intelligence analysts and they're not mathematicians. They're cops, right? And what I did with the CIA, they said, well, okay, so if that happened, which it did, if there were going to be another spectacular terrorist attack, would there be insider trading? Could you spot it? Could you trace it to the source, get a FISA warrant, break down the door? Or stop the attack and save lives? And the answer, we did a two-year strategic study answering that.
Speaker 2Hiring now? It's officially the holiday season, and Abercrombie's new collection has outfits for everything on your calendar. It's the busiest time of year, and between shopping and party invites, I don't have time to plan every look. Their sweaters are the perfect easy layer for low-key plans, and on a nice night out, I'm reaching for their classic trousers. Have a very Abercrombie day.
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Speaker 4Yeah, so that's why everybody, this is James Rickards. I think he is the most important futurist economist, smart guy. You can listen to it right now. He's a New York Times bestselling author. His book is called The Road to Ruin. He talks about the put option as the choice of terrorists in the death of money and why the U.S. dollar is going to change. We're going to die soon, and the economy may all come down all at one time, and we'll find out why that's going to happen. Hopefully it won't happen, but why we're on the eve of destruction right now. We'll be right back.
Speaker 3You're listening to The Rich Dad Radio Show with Robert Kiyosaki. This is The Rich Dad Radio Show, the good news and bad news about money.
Speaker 4Welcome back, Robert Kiyosaki. The Rich Dad Radio Show, the good news and bad news about money. Once again, you can listen to this program anytime, anywhere on iTunes or Android, and all of our programs are archived at richdadradio.com. We archive them so you can listen to this again, so you can pick up things you might have missed the first time, but more importantly, you can talk to your friends, family, and business partners and listen to this program, especially with James Rickards, and discuss it because we started the program with kind of the good news, the one-third, the one-third. Now, if you missed that, go to richdadradio.com and re-listen to this whole thing because now we're going to go into why this baby is coming down. And back in 2000, actually 1999, I started writing a book called Rich Dad's Prophecy, and I was calling for the crash to hit on 2016, and it didn't happen. I never understood why it didn't happen because the stock market kept going up. And when I read James Rickards' book, Currency Wars, number one, number two, The Death of Money, please get that book, three, The New Case for Gold, and The Road to Ruin, his latest book is The Global Elite Secret Plan for the Next Financial Crisis, you'll better understand why we're on the eve of destruction right now. So in reading James' book, The Road to Ruin and The Death of Money and The New Case of Gold, I understand why my forecast, which came from Dr. R. Buckminster, about the 2016 crash, was what Jim calls it, it was truncated. I mean, the elites or the grunts or the people that control the system just stopped, just stopped the collapse from coming. Is that correct, Jim?
Speaker 6That's correct. In other words, but it's happened twice already, Robert. One was 1998, and the other one was 2008. Now, there have been other crashes, you know, October 19th, 1987, the stock market fell 22%. By the way, from today's Dow level, Dow Jones, 22,000, a 22% decline would be 4,000 Dow points. Not 400, 4,000. If the Dow fell 400 points, it would be every headline in the world. Well, imagine 4,000 points. That is what happened on October 19th, 1987 in percentage terms. 1998, we were hours away from shutting every market in the world, but Wall Street bailed out the hedge fund, long-term capital. We were hours, if not days, away from every bank in the world failing, but the central banks bailed out Wall Street. So both times, the collapse that you're talking about, that I'm talking about, was underway. It was happening, and but for government truncation, government intervention to stop it, it would have played out exactly as we've described. Now, the problem is the government intervention is not cost-free. It comes with a very large cost, which is that each crisis, gets bigger than the one before because all you do is you lock the system in place. You don't clean out the rock, you don't clean up the balance sheets, you don't get rid of the bad paper, you let it sit there and then you let it grow. And then the next crisis comes and it's bigger than the one before. The problem is we're now at the point where, again, '98, Wall Street bails out a hedge fund, 2008, central banks bail out Wall Street. Next time, who's going to bail out the central banks?
Speaker 5And Jim, that's the question I'm asking because we talked to some friends of ours and we talked about this coming and they're like, "Oh, no, no problem. The government will just bail us out again." And you're saying that's not going to be the case.
Speaker 6Right, and there's a reason for it, Kim, which is that, okay, what did the Federal Reserve do the last time to bail it out? Well, they took their, they did two things. They cut interest rates to zero, kept them there for six years, and then they increased their balance sheet from $800 billion to $4.5 trillion. Here's the problem. If somehow they had normalized, so interest rates were back to 2%, 3%, the balance sheet was back to $800 billion or even a trillion, let's say, I'd say, "Hey, nice going, guys. You know, you saved the world. You normalized your balance sheet. You're ready for the next time." But that did not happen. They have not normalized interest rates. They have not normalized the balance sheet. Okay, interest rates have gone up to 1%, but you need 300 or 400 basis points, 3% or 4% of cuts to get out of a recession. Well, you can't cut 3% if you're only at 1%. Same thing with the balance sheet. Okay, they started the normalization literally just a couple days ago, October 1st, but there's still over $4 trillion. They're nowhere near. It's going to take years to get down to where they should be. So the point is, if the crisis happens tomorrow or even six months from now or next year, they don't have the capacity to cut rates and print money the way they did the last time because they used it up and never normalized. So that's the point.
Speaker 4Yeah, so as I was watching the stock market, it kept going up. The reason, as you say in your book, The Road to Ruin and Especially the Death of Money, is because the savers had no place else to go because there was no interest rates. They left the banks and went into Wall Street, which jacked up the price of stocks. Now everybody is set up. So it didn't happen because the stock market kept going up. So what happened? You talked about there's three things that make, well, one are treasuries, which are U.S. debt, gold, and then reserve currencies like the euro, the dollar, Swiss francs. But something happened on October 15th, 2014. You said it was earth shattering. What happened on that day?
Speaker 6There was a flash crash in treasury yields.
Speaker 4That's U.S. debt.
Speaker 6U.S. treasuries, exactly. U.S. treasury notes. It was in the 10-year treasury note. Now, bond math, the way it works, Robert, is yields and prices are inverse of if interest rates are coming down, prices are going up. So this was not a crash in prices. It was a crash in yields. But the point is, within literally 30 minutes, it's it dropped about 60 basis points so that's something that's a move that usually takes like six months or a year in a volatile market. Sometimes you go two years without seeing those kinds of moves. But this happened literally in a matter of minutes. And the reason it happened is not because there was some news flash or everybody changed their mind. It was because of automation. It was because people sell these computerized stop losses. So it says, well, if it goes down a little bit, I automatically want to sell. Well, you sell, it goes down more. Somebody else sells. They keep hitting all these triggers. There are technical names for it. But it's the same thing that happened in the bond market as happened in the stock market, October 19th, 1987, which we talked about earlier. And there's also another flash crash of May 2006. So May 10th, 2006. So the point, sorry, 2010. But the point is, these things keep happening. They're scary when they happen. People investigate them. They can't get to the bottom of it. The answer is it's all pre-programmed. It's like gremlins, but it's exactly like what we talked about earlier.
Speaker 4The blue. Let me ask you this. I wasn't watching the bond markets. We don't really understand it. But why was the bond market much more significant to you than the stock market, that flash crash?
Speaker 6Well, because first of all, the bond market is a lot larger. It's a lot. People are surprised to hear that. They go to the stock market and say, yeah, well, it's not as big as the U.S. Treasury market. It's not as important as the U.S. Treasury market. And countries around the world with trillions of dollars of savings invest those savings in Treasury bonds as to a lot of individual Americans. So you shut down the bond market, you're talking about shutting down the entire global financial system, because that's how important it is. So to see that happen and see the Treasury have a special commission, they issued a special report. They described what happened, but they couldn't really explain what happened. And what they said is this could happen
Speaker 4again. Right. So what you're saying, these are the four shocks, like the, you know, like I grew up in Hawaii where there's always earthquakes. So there were four shocks. Then comes the big shocks. Then come the aftershocks. Right. But so that four. That's exactly right. What you're saying is that there's always earthquakes. What you're saying, the four shocks are now increasing. Is that what you're saying?
Speaker 6That's right. And, you know, the stock market flash crash, the bond market flash crash. We had a currency flash crash. On January 15, 2015, the euro fell 20 percent against the Swiss franc in 20 minutes. 20 percent in 20 minutes. These are two major currencies. These are supposed to be money that represents stores of value. Why is one crashing 20 percent against the other in, not in a week or a month, but in 20 minutes? So we've seen flash crashes. We've seen flash crashes in every major market. Bonds, stocks, currencies, commodities, etc. And they're all warnings. These are warnings to us, saying, you know, this market is unstable. These gremlins, if you will, they're embedded in all this computer code. Nobody can untangle it. Nobody can see it coming. One day, sooner than later, it's going to start. And it's not going to stop in a half hour, an hour. It's going to keep going. It's going to spread to contagion exactly the way disease spreads. It's going to grow exponentially. And it's going to spin out of control in ways that central banks can't stop. And it's going to keep going. And it's going to stop. So my question for investors is, are you prepared for that?
Speaker 4Right. And that's what we've had. Rich Dad, I mean, not to ride your coattail, but that's what we've been saying for years and years, which is why I wrote Rich Dad's Prophecy. But I thought it was at the stock market. The question is this, you know, which I which you answered for me in the book is why do people keep doing it? You know, why do the rich have to keep doing this at the expense of all the other people? And you call it parasitic. That is correct.
Speaker 6And, you know, you go to Wall Street and or the central banks, for that matter, academia and say, well, how do you measure risk? And they'll tell you that we have these what they call value at risk. We assume risk is normally distributed. That's the famous bell curve. We use regret. They have all the science, right? Well, I've studied it all. I understand it. I understand the math. And it's it's junk science, meaning it all works internally, but it does not describe the real world. It's not an actual reflection of risk. It's just a self-contained model, a closed model. Now, here's the point. I use different models. We talked about those. But my point is, well, what's the matter with these people? Are they dumb? Oh, no, they're not dumb. They've got like 160 IQs. I know a lot of them. Are they are they stupid? Are they? No. The point is, they actually know this doesn't work, but they have no interest in fixing it because they make money out of it. If you had a proper measure of risk, you would never do what they're doing. So what they do is they say, let's have a flawed measure of risk that allows us to take a lot more leverage, make bigger bets, make more money. We personally will get paid bonuses. We'll take our money and go buy, you know, they're not investing in the stock market. They're buying yachts and houses on Nantucket and real estate and gold. Every billionaire I know in Greenwich has got gold. I mean, they won't talk about it publicly, but they're buying physical gold. They're relying on the suckers to, you know, kind of load up your 401ks with stocks, et cetera. And so the point being, whether they actually know what works or not, they know that what they have doesn't work, but they stick with it because they make money. That's parasitic behavior. You're not, see, I have no problem with Bill Gates being worth $50 billion because he created value. He created more value than he took out of the system. But our bankers on Wall Street, they don't create value. They destroy value, but they still suck your drive. So they're not creators. They're parasites. So
Speaker 4Kim and I have been taking evasive action today. We have tons of gold because we don't save dollars. We save gold. We have no stock so we're not in 401ks or anything. But also you warned us about banks. What is your warning about saving money in banks?
Speaker 6Well, the problem with banks, look, to some extent, if you have cash at all, I mean, unless, you know, you can pile up physical currency, but then, you know, you'll get a, even if you're a totally honest, law-abiding, taxpaying citizen, they'll still report you to the treasury on a currency transaction report, et cetera. People think they can get their cash out of the banks, but just try it. You know, you'll get the. We have tried. It's hard to get. You'll get the carry-on ball from the tower. They'll say, come back tomorrow, et cetera. So you end up having some of your cash in the banks, but keep it under the insured amount, which is $250,000 per account. You can open multiple accounts if you have more than that at different banks. But what I do is, you know, I keep enough cash for, you know, whatever I need, you know, pay your taxes and pay your bills and take a trip or whatever. But then I'll put it in, whether it's real estate, gold, silver, fine art, all the things that I talk about, I actually do. I also, I own stocks, but they're not publicly traded stocks. I own private equity, startup companies, tech companies, companies where I know the owner. I have a paper contract. I'm not relying on some digital, you know, depository trust company or whatever. So there's room for entrepreneurship and stock investing, but I invest in private companies because they're the ones I know.
Speaker 4Which is one thing you also said was something about anything that was digital or crypto and all that stuff. You want something that's, as that woman said in Kelowna, things that last.
Speaker 6Correct. And that's where, again, if I buy, if you buy private equity, you actually have, you have a paper contract. I can get on my bicycle and go see the owner. I don't need electricity or transportation or bank payment system to track my investment.
Speaker 4And what about fake gold? That's, see, that's the thing I've been talking to people for years is real gold and fake gold.
Speaker 6Yeah, well, I buy, I buy American gold eagles. They're from the U.S. Mint. I have a reputable dealer. Um, so you, you do have to take precautions, but, uh, uh, let's put it this way. I would not buy a kilogram bar on eBay.
Speaker 4What about GLD, a gold ETF?
Speaker 6Well, I don't buy any paper gold. That's a gold ETF. Uh, look, here's, here's the problem with paper gold, Robert. When you most want it, when, when the price is screaming, it's going up the way I've described, and you most want your gold, you're going to find that all those paper contracts are being terminated, and they'll send you a check. They won't steal your money, but they'll send you a check for yesterday's closing price. And you'll say, wait a second, I want today's price. I want tomorrow's price. That's why I bought it. We'll say too bad, because they don't have the physical gold to back it up.
Speaker 4Which is, which is kind of what the fractional reserve system is, is that they can sell you stuff they don't even have. And how much leverage is there, you think, on gold? I mean, if there's one ounce of gold, how much is it?
Speaker 6Well, it's easily, easily a hundred to one. When you take, um, uh, what are called unallocated gold forward contracts from London Bullion Markets Association banks, they're the big gold dealers, you know, Goldman Sachs and Citibank and a few HSBC and a few others, plus the gold futures contracts on the, on the, uh, COMEX, uh, part of the Chicago American Teal Exchange, uh, plus, uh, gold options, gold ETS, et cetera. And you say, okay, how much physical gold is there to back up all that paper gold? The answer is it's probably leveraged a hundred to one.
Speaker 4And it's, and it's, and it's declining. Isn't it? And the amount of gold that they can leverage off of a real gold is disappearing.
Speaker 6Yeah. I got back from, uh, I was in Switzerland recently and I meet, you know, when I go to Switzerland, I don't talk to the bankers. I talk to people who handle physical golds, refiners. And what they tell me is that customers are taking their gold out of the banks. So UBS and Credit Suisse and Deutsche Bank, and they're moving it over to Loomis and Brinks. Now you say, how do you take a, you take a gold bar from here and you put it over there. What's the difference? Well, the difference is that if it's, it's in the banking system, it's part of what's called the floating supply that can be used to leverage and manipulate the price of gold. But if you put it in a private vault, it's no longer in the floating supply. It's still gold. It's your gold, but that cannot be pledged or leased or hypothecated or used to, uh, to create this gold and vertical pyramid. So, so the same amount of gold is there, but the floating supply is shrinking. The private supply is growing, which means you have more and more paper gold on less and less physical gold. So this inverted pyramid's getting more unstable. It's going to tip over. It could be any day.
Speaker 4Which is what you also said, that China has now rebalanced into real gold, right?
Speaker 6Correct. They're on the physical side of it. They officially acknowledge 1,800 tons, but I'm certain they have far more than that based on Hong Kong export records, Swiss export records, geological surveys, Chinese mining. But there's enough hard information to form an estimate that they actually have significantly more. No one knows the exact amount, but 4,000 to 5,000 tons versus the 1,800 tons they report is a reasonable estimate.
Speaker 4So, Jim, we're totally out of time, but Kim is crawling on me right now.
Speaker 5Jim, you asked our listeners, are you prepared? So if they're not, what are a couple of things that they could do immediately to help be prepared?
Speaker 6I would take 10% of my investable assets and put it in gold. When I say investable assets, do not. Do not include your home equity, because, you know, don't bet your house. Do not include your business equity. So, like, if you're a car dealer or a dry cleaner, put that to one side. That's your livelihood. Whatever is left, once you take your home equity and your business equity out, whatever is left, those are your investable assets. Take 10% of that, put it in physical gold, put it in a safe place, not a bank, and that will serve you well.
Speaker 4Perfect. So, Jim, I really, really, really, really appreciate your diligence and your professionalism and your. Filling in the blanks for us. So, if I could be so bold to ask you to come back again, would that be possible?
Speaker 6I would love to, Robert. Always a pleasure to be with you and Kim.
Speaker 4Yeah, it's fantastic, because you fill in so many of the blanks that I was guessing at. So, anyway, thank you, Jim. Thank you, Jim. And until the next time. Thank you. Excellent. Thanks so much. So, we'll come back if we're going to our most popular part of our program, which is Ask Robert.
Speaker 3And now, The
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Speaker 3Financial freedom begins with financial education. Now, back to Robert Kiyosaki and The Rich Dad Radio Show.
Speaker 4Once again, you can listen to this program anytime, anywhere on iTunes and Android. And all of our programs are archived at richdadradio.com so that you can listen to this program again because there was a load of information on there. Once again, thanks to James Rickards. Please get his books. Read them and study them. The Road to Ruin, The Global Elite's Secret Plan for the Next Financial Crisis, The New Case for Gold, The Death of Money, and Currency Wars. His website is jamesrickardsproject.com. jamesrickardsproject.com. And please, you know, read the book. And what I do is after I read the book, I go to audible.com and I listen to it over and over and over again until I understand it. Because we are on the eve of destruction. So anyway, thank you to James Rickards. So Melissa, what's the first question for us, Robert?
Speaker 11Well, you know, Robert, one thing, one of the questions that we, we often get, we get it many, many times, I'm sure you and Kim hear it, is why did the two of you start and found the Rich Dad Company? Is it the reasons that Jim talks about?
Speaker 4Exactly. Thank you for that question. Because what happened in 1983, I was studying with futurist Dr. R. Buck, Mr. Fuller, also Alvin Toffler, who Rickards mentioned, but also noticed his father was a Marine. And we saw things happening in the real world that La La Land, in America, does not see. So Fuller died in 1983, July 1st, and posthumously his book, Grunch of Giants, came out. And Grunch is the same thing as Global Elites. It's how we're ripped off by the richest people in the world. And when I read Grunch in 1983, I said, I can't sit here and be in rock and roll anymore. I was in a rock and roll business. And I said, my conscience cannot, will not allow me to sit still. And I said, I got to do something. And I sold my company in Honolulu, and I was ready to take a leap. And then I met Kim. And I really, you know, I'm not really religious, but I think God sent me the perfect person when I was ready to get on with what I'm supposed to do. Because I believe all of us have a special God-given talent and a God-given purpose. And I said to Kim, I don't know what's going to happen, but we can't just sit here and do nothing. Because Fuller, talked about around the year 2000, he predicted AI, which is artificial intelligence, UI, which is universal income, but most importantly, the collapse of the current world economic system. It's collapsing now. We're right in the middle of it. But for years, it was really tough talking to people about why mutual funds suck, why you shouldn't have a 401k, how to use debt because the US dollar is debt, why savers, are losers. You know, why most of the people giving you financial advice are crooks, charlatans, and con men. It's been hard. So when I came across James Rickards' books, "Currency Wars," I said, man, I get this guy. He gets me when I read all of his books, he's saying exactly everything that Fuller said. Because what Rickards is, is a futurist, the raven. And if you ever come to our house, we have two ravens sitting in the front of our house. And we didn't know that. I just sit there because I want to know the futures. I can prepare for it. Unfortunately, the future is today. Any comments, Kim? -
Speaker 5Well, I just want to say about this show with James Rickards, and we talk about repetition, and I would listen to this show again and again. He truly is a firehose of information. And there was so much that we covered in just that short period of time. -
Speaker 4It was three 10-minute sections. -
Speaker 5Yeah, and you've been studying this one book, "The Road to Ruin," for, I don't know, what, 14 times? - 14 hours, 14 times.
Speaker 4I look like Mickey Mouse walking around the house with his ears on my head. -
Speaker 5But, you know, a lot of, and what you say too, a lot of what he's talking about in terms of how to prepare, we've been doing, I remember buying silver. - Since we met. - In 1985, we started buying silver when we were living in La Jolla, California, and stacking it in our closet. And to this day, we buy gold, we buy silver. - We don't save money. - We have a lot of land. So we do our best to be prepared. Personally, I hope this never comes to fruition, but it's certainly looking like it's a very serious possibility, and there's certain things that you can do right now to get yourself prepared. -
Speaker 4Yeah, and he says in "The Road to Ruin," this guy raises his hand, and he says exactly the same thing I would have said. This guy raises his hand in a seminar in New York. He says, "Well, you know, I always get this pushback "from these educated people. "Well, you know," that guy says, "Well, I have a job, "you know, and I have a 401K and all that, what should I do?" And Rickert says, "Quit your job, you know, get out now." And the thing I loved about "The Road to Ruin," he always talks about from, I think it's Vonnegut, "Cat's Cradle" or something, "Nice, nice, so very nice. "All these different people trapped in the same device." And when you look at the cash flow game, that's the rat race. All these highly educated people who went to school and all that, they drank the Kool-Aid, they have job security, they're saving money, they have a 401K, they're getting out of debt and listening to other people, I won't mention their names. That's the people, those are the people Rickert is just saying, "Nice, nice, so very nice." All these different people trapped in the same device. That's the shrinking middle class. They're getting hammered right now, but they're hanging on to this illusion or belief that they're highly educated, and that's the trap. -
Speaker 5And James said people have such a short attention span. And the silly argument that people give about gold and silver, and, "Oh, I'm not gonna buy, "silver went down yesterday, why should I buy it?" Or, "Gold went down yesterday, and over the year, "it's not doing very well, and it's not making a lot "of money, and there's not a lot of upside," and that's not what we're talking about. We're not talking about this short-term thinking. -
Speaker 4FYI is that I bought my first piece, I was trying to buy my first piece of gold in '72 in Vietnam behind enemy lines, it was unsuccessful. But anyway, my first piece of goal was less than $100, I still have that piece of gold, today we're at $1,500. Meanwhile, the dollar has shrunk by 95%. So all you savers out there, wake up. You're the biggest losers on planet Earth because what Brickers is saying is what the government is doing right now with the elites is they need to destroy the dollar. In other words, they need to make the value of the dollar come down so far so they can pay off approximately 1.2 quadrillion in global debt. So they're going to destroy the dollar while you're still going to the bank saving your little pittance there. Look, savers are losers. The moment you can understand that, that's what my book "Second Chance" was about, if you can wake up and smell the coffee there, when you see it by saving money, and Rich Dad's lesson number one is the rich don't work for money, and I use debt to get rich, which is why the rich are getting richer, I use a team, which is more important than money. This is what the Rich Dad Company was founded for, was this time. It began in 1983 and met Kim in 1984. We practice what we preach. So I thank you all for wondering why we formed this company. We don't sell real estate, and we don't sell stocks, bonds, and mutual funds. So you can submit your questions once more to [email protected]. Great thanks to James Ricketts. Please get his books, and thank you for listening. Speaker 10We'll see you next time. Thank you.
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