Second Chance. Robert T. Kiyosaki

2008, the U.S. government and Federal Reserve Bank began printing trillions of dollars, causing millions of savers to be losers via the loss of purchasing power due to inflation, higher taxes, and low interest rates on their savings.

      Rich Dad’s Lesson One in Rich Dad Poor Dad is The Rich Don’t Work for Money… and it was the least criticized of rich dad’s three teachings on money. In this chapter, you will learn why this comment is the most important of my rich dad’s lessons, and why it is important to understand before you consider your opportunities for a second chance, a fresh start for both your money and your life.

      What You Need to Know About Money

      The subject of money can be complicated and intimidating. But if you start with the basics and use them as building blocks you can gain the knowledge you need to understand money and investing and how to make your money work for you.

      The most basic thing you need to know about money is that it is a subject that you can become smarter about, a subject that can give you the confidence to make informed and educated decisions.

       Q: Who needs a second chance?

       A: We all do.

       Q: Why?

       A: Because money—as we know it—has changed and continues to change.

       Q: Why is that important?

       A: Because the poor will become poorer, the middle class will shrink, and the rich will get richer.

       Q: I think we all know that. What is different about the rich getting richer and everyone else becoming poorer?

       A: Many people who are rich today will be among the new poor.

       Q: Why will the rich become the new poor?

       A: There are many reasons. One reason is because many rich people measure their wealth in money.

       Q: What’s wrong with that?

       A: The fact that money is no longer money.

       Q: If money is no longer money, then what is money?

       A: Knowledge is the new money.

       Q: So if money is knowledge, you’re saying that many who are poor and middle class today, have the opportunity to become the new rich of tomorrow?

       A: Exactly. In the past, the rich were those who controlled land and resources such as oil, weapons, or giant corporations. Today things are different. Today we live in the Information Age—and information is abundant and often free.

       Oil was the life-blood of the Industrial Age, but the Industrial Age is dying. While that may be good news for many, it spells disaster for many countries.

       Q: So why isn’t everyone rich?

       A: It takes education to process information into knowledge. Without financial education, people cannot process information into personal wealth.

       Q: But America spends billions on education. Why are there more poor people than rich people?

       A: Hundreds of billions of dollars are spent on education, but almost nothing is spent on financial education.

       Q: Why isn’t financial education taught in schools?

       A: I have been asking that question for years, ever since I was nine years old.

       Q: And what did you find out?

       A: I learned that knowledge is power. If you want to control people’s lives, limit their knowledge. That is why, throughout history, despots have burned books and exiled (and even killed) those with knowledge who threatened their power. Before the Civil War in America, it was against the law in many states to teach slaves to read and write. Knowledge is the most powerful force on earth. That is why the control of knowledge is essential to the control of power.

       The formula is:

       Information × Education = Knowledge

       Knowledge is power—and lack of knowledge is weakness.

      My poor dad was a highly educated man with a PhD, but he had almost no financial education. He had authority within the school system, but little power in the real world.

      My rich dad never finished school, but he was highly educated in the world of money. Although less formally educated than my poor dad, he had more power in the real world than my poor dad.

       Q: So those in power maintain control of that power through the school system… through what’s taught—and what isn’t taught. That’s why there is no financial education in schools?

       A: I believe that’s true. Today financial knowledge is more powerful than a gun or the whips and shackles of slavery. The lack of financial education enslaves billions of people in all parts of the world.

       Q: What has replaced the whips and shackles and guns?

       A: The monetary system.

       Q: The monetary system? Our money? How does the monetary system control people?

       A: The money system is designed to keep people poor, not to make them rich. The monetary system is designed to keep people working hard for money. Money enslaves those who are uneducated financially. Those who are financially uneducated become slaves to a paycheck.

       And our wealth is stolen through money, through the very thing most people work for all their lives. That is why the people who work the hardest for money, often called the “working poor,” continue to grow poorer, not richer, no matter how hard they work.

       Q: How is our wealth stolen via our money?

       A: There are many ways. You may already know some of them. They are:

       1. Taxes

       The value of your labor is stolen via taxes.

       2. Inflation

       Prices rise when governments print money. As prices rise, people work harder, only to pay more in taxes and inflation.

       3. Savings

       The banks steal savers’ wealth via a banking process known as the fractional reserve system. Let’s use a fractional reserve of 10, as an example. A saver puts $1 into his or her savings account. The bank is allowed to lend $10, against that $1, to borrowers. This is another form of “printing money” which is not only inflationary but reduces the purchasing power of a saver’s money. This is one of a number of reasons why rich dad often said, “Savers are losers.”

      Later in this book I will explain other ways in which your money is stolen from you. As I’ve said: The monetary system was designed to make people poorer, not richer.

       Q: Can you prove that?

       A: I will show you a graph. As the saying goes, ‘A picture is worth a thousand words.’ The graph is not proof, but it does tell a story about the growth of people needing government assistance.

      The War on Poverty

      In 1964, President Lyndon Johnson declared a war on poverty. Many believe we won that war. Others do not. The chart below shows the numbers of people who use “food stamps,” today called SNAP: Supplemental Nutrition Assistance Program. Although many believe we won the war on poverty, the increasing reliance on food stamps tells a different story.

      The chart of individuals receiving food stamps shows that, in 1975, approximately 17 million people received food stamps. By 2013, the number had increased to approximately 47 million people and continues to increase.

       Q: If the number of poor people is increasing, where are they coming from?

       A: The middle class. Many of today’s poor were doing well as middle-class Americans