In Part Two of my interview with Robert Kiyosaki, (Part 1 available here), the author of 50m best-seller Rich Dad, Poor Dad waxes lyrical about two books that are shaking economic thinking in Southern Africa. He describes RW Johnson’s treatise as a must read – suggesting at the current rate of its Government’s debt accumulation, SA has just two years of “freedom” left. Kiyosaki is also very complimentary about Philip Haslam’s book on how financial mismanagement through money creation changed Zimbabwe from the continent’s bread basket to its basket case. Both books have important messages not just for South Africa, but the whole world – and, the entrepreneur and bestselling money writer maintains, help us understand why the next big stock market Crash is just around the corner. You might not agree with all of his ideas, but Kiyosaki certainly provides serious food for thought. – Alec Hogg
We are with Robert Kiyosaki. The author of Rich ‘Dad, Poor Dad’. The ‘50 million bestseller’, who’s recently published a new book called ‘Second Chance’. Robert, there’s a lot of work that’s gone into this. There’s also some fairly controversial issues. You mentioned your friend, Donald Trump – his economic issues are very similar to what you explore here.
Yes, I want to say publically, I don’t agree with what he said about Mexicans. He was talking about illegal Mexicans, you know. The same immigration problem you guys have. People are rushing into this country and they’re desperate, so to call Mexicans, rapists and gangsters and all this stuff – they are just desperate people and its part of the same symptom. The same as South Africa is flooded with people from Zimbabwe and other parts of the world.
Perhaps he just let his mouth run off with him a little there….
He’s not well handled, if you know what I mean.
We’ve all said things we shouldn’t have said. He’s saying a lot of them.
But on economics – it’s hard to fault him.
I know, but we do agree. Yes, we do agree economically.
Let’s just start off with the whole quantitative easing story and the consequences thereof. You have some thoughts.
Oh, yes. That’s the whole thing, so there’s three books, cross my book, but this is a fantastic book. It’s written by a South African, Philip Haslam. It’s ‘When Money Destroys Nations’ and it is about the collapse of Zimbabwe and the continuing collapse of it. Then there’s this book by another South African, R W Johnson, is ‘How Long Will South Africa Survive’.
Johnson’s has been a bestseller here.
It is. These guys are brilliant. I mean not that mine’s not brilliant but these guys are brilliant, you know. They are fantastic, so the beauty of it, as Philip says in this book is that South Africa has an opportunity to, just study what happened next door to them, in Zimbabwe, and you will see what quantitative easing does across the world.
Basically, what the three books are saying, Zimbabwe, South Africa, and my book is that this is going on worldwide, and when quantitative easing comes in printing money, then what happens is the gap between the rich and everyone else goes wider, but also corruption gets bigger. I know you guys are having trouble with Eskom and all that but America has the same thing. Detroit collapsed because our Public Sector Unions started the teachers, the fire fighters, and the police – they started taking too much money, and so did the Labour Unions.
Detroit collapsed. Stockton collapsed, and Alameda collapsed. Chicago is next, so the same thing that is going on, when I come to South Africa, and I love South Africa, it breaks my heart to see your systems breaking down, but I’ve already seen it in the States.
It’s just mirroring issues that happened elsewhere.
Yes, and that’s why Fuller wrote the book ‘Gross Universal Cash Heist – Grunch of Giants’, and it’s how the guys who operate the World Bank and the IMF operate. I’m not saying they’re bad people. Do you know what I mean? They have their agenda. You have your agenda. I have my agenda. Again, my agenda is why don’t we teach this in school?
You said, and I want to get back to that, that people who are uneducated financially do not ask the tough questions. They don’t ask the questions because they don’t understand it.
That’s correct. Do you know, back when I was a kid in the 60’s, I was taught to work hard and save money and invest for the long term in the stock market. Let’s look at the stats. In 1970 – if I had put a million Dollars in the U.S. Bank they paid me 15 percent interest, so a million Dollars at 15 percent would be $150 thousand (back in 1970). Now $150 thousand was a lot of money back in 1970, so today if I put a million Dollars in the bank and some 40 to 50 years later, if I put a million Dollars in the bank, I’m lucky if I get two percent, so two percent on a million is $20 thousand.
If I am a pensioner, attempting to live on $20 thousand a year – I’m not below the poverty line. That’s how worthless money has become and that’s why my rich dad said savers were losers, and don’t invest for the long term in the stock market. It’s crazy. Stock markets are at an all-time high. It’s about $18 thousand on the Dow, and you have HFT, High Frequency Trading. You know that book Flash Boys about the guys who front run the trades and all this, and the average person that’s sitting there working hard, paying more on taxes, saving money, and investing for their future in the stock market.
The stock market, and that is, I think somewhere where we will disagree. It is an investment in human initiative. It’s an investment when you invest in the right companies. Companies that can change the world for good, but not all of them, I guess and that’s your point. Not all of them do.
Well, if you read Second Chance, the stock market is rigged also.
Back in 1987, when the 1987 stock market crashed it wasn’t much – two thousand, well it was much bigger, but President Reagan put in, what’s called the President’s Working Committee on the markets. That meant the Fed could pop money into the stock market to keep it up, so it’s manipulated. That’s all I’m saying.
The Chinese are doing that at the moment, with the collapse in Shanghai.
Everybody is doing it. That’s what this book is saying. It’s not anything different.
How do we take your teachings and apply them to ourselves, to make sure that we are not victims and we are part of the solution rather than part of the problem?
You’ve used the exact words I would use. What Fuller says, we’re supposed to be architects for the future and not its victims. That was one of the final quotes in this book. The Second Chance is in three parts, past, present, and future, and the reason I recommend part three, which is the future, is financial education because what you’ll find is everything they teach in school it is opposite to what my rich dad taught me. I don’t save money. Why would I save money when they’re printing money? Why would I save money when they’re giving me, at best, two percent? Why would I invest for the long term, when there’s front running, high percentage trading and all this, you know? Why would I get a job when people who pay the highest taxes are people who are employees?
Everything is the opposite, so what happened, as I write about in Second Chance, is in 1971, Nixon took us off the gold standard. At that point, the U.S. Dollar became debt, so it makes it hard for people to understand the people that are winning are people like me, who understand debt. You see, debt is the name of the game today and not money. That is what this guy Philip is saying about Zimbabwe. The debtors are winning.
Just talking about those three books again, R W Johnson’s book – you have read it. You’re in South Africa.
I’ve read it. I love this book.
You read as I do. Lots of little points in it.
I will talk to my wife about it this morning.
What do you make of it?
A brilliant writer. Well he’s footnoted. He backs everything he says up. It’s saying the same thing I’m saying. It’s the same thing Philip is saying.
So what do we about avoiding because he says ‘two years to go’ for South Africa?
Well that’s why I’m saying, everything is opposite. The name of the game today is debt, so what’s happening to South Africa has happened to Zimbabwe – was you couldn’t pay back your debt. That’s when the IMF steps in. The same things happened in Greece, in Venezuela. It is happening in Porto Rico right now. Debt is killing us but to survive you must learn how to use debt.
Most people use debt to consume – a new car, new house, new cellphone, new clothes, and credit card debt, but I use debt to invest and most people say that’s dangerous and it is but that’s why financial education should teach you how to use debt to invest.
Particularly now, I guess when interest rates are so low.
I just, you know when the market crashed in 2007 – when it hit a high in October 14th, 2007 and it went down, a crash is good. I started to buy stuff at bargain basement prices but I used debt to buy it.
You’re concerned about the stock market but there are times when it offers value.
Absolutely and that’s why I don’t hate anybody. I love my banker. I love the JSE. I love the stock market. That’s where I got my money from. I love my insurance company because they give me money because I can use debt. They want debtors. The difference is the opposite in thinking. I don’t save money. I use debt.
You are nearly 70 years old now. It’s a long life and it’s a life that when you turned 50 it changed and went into a different direction. If you were to look back on that life, and share with us what you’ve learnt in that time. What would it be?
Well just, what Bucky Fuller said, you must trust your intuition, and it’s called your gut feeling, a lot of the times. Scientists have just physically found out that there’s actually brain material in your gut. That’s why you get a bad feeling and that’s kind of, where intuition comes from. It’s more from your gut rather than your brain. My intuition kind of changed because I went to Vietnam twice. I was a good marine, a U.S. marine pilot, and all this. I was doing it for God, country, and America and all this stuff and one day I was standing on the battlefield in 1970, when I thought ‘what am I doing here and why am I killing these people?’ I don’t hate them. They don’t hate me. That’s when my life – you start waking up, as you grow older, so I learnt to trust my intuition and say what I had to say. This book is about the future also, because Fuller was a futurist, so for me to write ‘Rich Dad, Poor Dad’ in 1997, nearly 20 years ago, was about the future. It wasn’t about 1997.
Are you optimistic about the future?
As I said, I’m a capitalist. Markets go up – I make money. Markets go down – I make money, so why shouldn’t I be optimistic.
However, the essence here is this grand experiment that God is having with mankind. Are you optimistic that mankind – there’s still more good than bad?
Well I’ll just repeat what Fuller said to me, some two weeks before he passed away. He said it’s going to be touch and go. He said God wants to know if we’re going to go with our hearts. Are we going to lead with our hearts and make the world better for everybody? So with that, I’m optimistic and I see a lot of change. Like this guy, Elon Musk, he’s the greatest entrepreneur in the world. He’s a South African. Why is he in the States? He should be here but they have geniuses like him, but guys like him are changing the world for the better, so I am optimistic. The concern is the other side, who doesn’t want him to change, so I’m very optimistic but as, Bucky says its touch and go right now.
So if you understand how the financial world works. If you can get a grasp on these things, you can ask the questions of the elites, of the bad guys, of the one percent who certainly aren’t your friends.
Yes, there are people who are definitely rich by being greedy, as you know, but so are many poor people rich, by being greedy. As I said, Detroit went down. Stockton went down. In Phoenix, Arizona today a police officer is the Public Service Union. Two days before he graduates he gets a million Dollar U.S. bonus. That’s a lot of money. Plus he gets $185 thousand for life. Now that’s good for the police officer. They do good work but it is bankrupting Phoenix. Same as fire fighters and same as schoolteachers. The same thing is going on here.
Robert Kiyosaki, as always a great privilege. The author of ‘Rich Dad, Poor Dad’, and ‘Second Chance: for Your Money, Your Life, and Our World’. It will open your eyes and it will open your thoughts to areas you didn’t even conceive were there before. Thank you.