Money, Money , Everywhere... is it?

Conspiracy of the Rich

The 8 New Rules of Money

by Robert Kiyosaki

Online Exclusive Update - #82
March 1, 2011

Money, Money, Everywhere

For someone out of work, deeply in debt, and not earning enough money to make ends meet, it’s hard to imagine that the world’s problem is too much money. It’s like the old saying, “Water, water, everywhere, but not a drop to drink.”

If you’ve read Conspiracy of the Rich: The 8 New Rules of Money (COR), you know that the world’s problem is too much money. The problem is that without financial education in our schools, which is part of the conspiracy, most people—even highly educated people from good schools—are short of money even while floating in a sea of money.

Today, trillions of dollars are circling the globe looking for people who know what to do with it all. This tsunami of money is causing booms and busts all over the world. For example, in China and Brazil, massive sums of money are causing inflation. Rather than solve the problem, these countries are timidly raising their interest rates and increasing the required down payment on a home from 40 percent to 60 percent, and still, real estate prices are climbing. I predict that in the near future, China’s real estate bust will make the real estate bust in Dubai look like chump change.

For those of you who understand macro-economic forces, when tons of money moves into a country, the banks need to lend that money immediately. The reason this credit expansion happens is because savings are a bank’s liability. Money in a savings account costs the bank money due to storage fees and interest payments. The only way a bank makes money is by lending out your savings at interest.

Hence, banks need borrowers. The more money in savings accounts, the more banks need to lend money, and soon, as banks pass out money like candy, we have real estate, stock market, and commodity booms. When hot money flows into a country, the expansion of money can be explosive, if it’s not well managed. As you know, this is what happened in Japan, the US, and Europe. Economic booms led to economic busts. The rich got richer and the poor and middle class are paying for the clean up.

In spite of all this chaos, I watched a former Federal Reserve Bank governor say on television, “There is no inflation.” He’s either lying or really stupid. The riots in Egypt were set off due to high unemployment and high food prices—both symptoms of corrupt governments and too much money driving up prices.

This former Fed governor, today a college professor, basically said this wouldn’t happen in the US. I don’t know what this guy is smoking, but if the US doesn’t control its spending and reduce its deficit, the problem will only grow worse. If governments start laying off government bureaucrats due to budget cuts—which might be a good thing—we’ll only have more unemployment and higher prices.

As a person who invests in oil production and not oil stocks, this is good news for me because the price of oil keeps going up. Unfortunately, since oil affects all prices, high-cost oil destroys the living standards of the poor and middle class. To make matters worse, the Obama administration hasn’t reopened oil drilling in the gulf since the BP disaster. Due to environmental fears, the government has stopped energy exploration on the Outer Continental Shelf and has canceled 77 drilling in Utah.

This may be good news for environmentalists, but it’s bad news for the economy. In a few years, it’s possible we’ll have gasoline prices in the US as high as they are in Europe, which is around $7 a gallon.

As all this turmoil swirls around the world, the US government continues to create more debt to buy old, bad debt. This makes no sense to me. Yet, what can politicians do? All they can do is keep the lies and deceptions going, and as long as people are happy, the party roars on.

Personally, I would rather take matters into my own hands and not be dependent upon the “smartest” people in the world, our leaders in Washington. This is why COR is important, especially the 8 new rules of money. If you’re playing by the old rules of money, you may also find yourself surrounded by money, money, everywhere but not able to afford to live.

In my upcoming book, Unfair Advantage, I’ll be going into more detail on what I’m doing to stay head of the financial insanity running the world today.

Thank you for supporting COR.

Robert Kiyosaki