Personal Finance 

Kiyosaki’s American Economic Doomsday

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My friend Tony sent me Robert Kiyosaki’s, of Rich Dad Poor Dad fame, Yahoo Finance column in which Kiyosaki claimed that “cash is trash” and that due to inflation and the tenuousness of the US economy the value of money, as opposed to appreciating assets, is slowly declining and those of us holding onto cold hard cash will find their popularity waning. We should be holding gold and silver instead.

My concern is that very soon, citizens of the world will tire of America’s gross fiscal mismanagement and hesitate to take U.S. dollars. In order to keep the world interested in the greenback, interest rates must rise. When that happens, U.S. assets, … will drop in value. Some real estate prices will increase because replacement costs are high, but overvalued real estate will drop.

As the article continues, the picture it paints is bleaker. Kiyosaki claims that if you diversity, you’ll lose because too many asset classes will suffer and only those that focus, pick the few winners, will be able to thrive and the winners are those assets which are not tied to the US economy – commodities like gold and silver.

This article was written on March 21st and by that time gold had already seen record-breaking highs with silver hot on its heels. He also makes these claims after the dollar was at record lows compared to the euro a year and a half ago. At first I was a little concerned because Kiyosaki was playing on our very publicly known fears – the enormous national debt and its effects on us (on the 31st there as an Ask The Expert column about the debt and its effects on our retirement). However, Kiyosaki is like the guy who reads the BBC at 4 am before everyone else is awake and then proceeds to pretend the tell the future – we know all this already. Buying gold and silver now, at record highs, is like trying to predict a winner in the 100 yard dash 8 seconds in – it’s not a big deal if you pick the guy in the lead at that point.

What do you all think?

via Yahoo Finance.

{ 9 comments, please add your thoughts now! }

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9 Responses to “Kiyosaki’s American Economic Doomsday”

  1. blake says:

    Hadn’t seen this article, but reminds me of his doomsday scenario for when all the boomers are forced to start taking their 401k distributions at age 70… I think the year is 2016 or something, and it’s supposed to cause the market to deflate in a rapid sell-off. Isolated, it’s an interesting concept, but not one that holds credence if you weigh about fifty gazillion other factors that are likely to change between now an then.

    Taking advice from people like Kiyosaki, beyond what made them wealthy (i.e. real estate investing in undervalued markets) is foolhardy, since they don’t have any experience to back the claims. You don’t see folks like Peter Lynch talking about the impending doom of the real estate market, for example. Lynch sticks to stocks – which is what he knows. Kiyosaki’s books are all the same – work hard, take risks, be your own boss if you want to make big bucks. Inspirational perhaps, but not too insightful.

  2. Herb says:

    Have you read his books? He’s one step short of a scam artist, although that might be a bit too harsh. The basic tenant though is probably true; there is already the Euro to compete with and the APAC region is hinting at creating their own currency in the coming decade or so. So, the $ is probably headed for a less distinguished role, and we are pretty fiscally irresponsible. Along with the fact that China and/or India will probably rule this century, since we had the last one, these things all go in cycles (Britain, Spain, France had previous centuries before us) and they’ve got a lot more people than us 🙂 Doomsday though? I doubt it… It’s going to be a long while before anyone else can outstrip our purchasing power, so while they might not like it, I’d expect China will keep taking our money to pay for stuff their people produce.

  3. KW says:

    Here’s an article with a pretty harsh (but powerful) critique of Kiyosaki’s book:

    Although the author is himself a real estate professional, he refrains from personal bias in this review. I find it to be objective and well-researched, and the arguments he presents here are very hard to dispute.

  4. ~Dawn says:

    Doesn’t he have a 50/50 chance of being right, just like any other American out there?
    Common sense usually gets you the farthest. Of course you can stop the stupid decsions people will make with their money or the governments money. So I give him no better odds than any other well read person out there.
    WE just love to predict the future, it’s fun and man do we feel good when we are right, and if we aren’t, well, who remembers anyway.

  5. jim says:

    KW – I’ve read John T. Reed’s about a thousand times and every time I see another shill on TV selling the next real estate get rich scheme. 🙂

  6. Easy E says:

    He’s right. Cash is not king. Why do we invest? So that we aren’t holding onto cash that will be worth less (worthless) in the future. There is a reason that gold is climbing. It’s because it is the world’s currency, always has been and always will be. It is a way, not the only way, but a way to hold the value of your hard work. I would say to buy land as well as gold, the only thing that will always have value in this world is land. There is no more land to be had, who cares if the price goes down later, you don’t sell land to make money, you utilize it. If you think buying and selling is the way to make money you are wrong. Your best bet is to make money from something without having to sell it. Land.

  7. Tony says:

    It is hard to believe his rhetoric when almost a third of the world’s economies use the dollar as their currency of reserve funds. The most significant fact that I believe he misses is that despite our balance of payments, it is not in the best interest of the worlds economies to have the dollar depreciate to the extent that he is talking about. Yes, you will have fluctuation but the worlds governments have way to much invested in the dollar to create a detrimental sell off or decline in value.

    Nice post Jim…

  8. Virgina P. Dean says:

    Get rid of the Monarchy of type of government in America,
    No morals. no guidelines for the Constitution,and no priority
    to leadership . The Power Privilege types that believe they have a right to Rule the White House. George Bush Junior, Hilliary Clinton, and John McCain. American voters must Vote Democrat just to get a complete
    different mind set in the real world, with facts, and reality.
    The complete Collapse of the financial Industry of America, in a horror is due because AMERICA LET ITSELF BECOME A MONARCHY GOVERNMENT BY THE GEORGE BUSH JUNIOR FAMILY.
    because of complete abuse of power.

  9. Rockefeller says:

    OMG, such ignorance!

    The person who supposedly read Robert’s books and found them all the same has obviously not understood them at all.

    Kiyosaki doesn’t teach work hard – but work smart – “use leverage”.
    He doesn’t recommend taking risks – in fact he’s risk averse! That’s why he’s more likely to build a business or buy a real estate asset that he can add value to, than to buy-and-pray on some stocks. He says most people don’t know what they are doing, so they diversify – but he calls it ‘de-worsify’.

    He says, if you are good at one asset class, stick to that; and sure, park spare cash in assets from another class.

    And the be your own boss thing; he stresses a big difference between owning a business and owning a job. If you can walk away from the business for a year and it can still run, then you own a business (his definition is a leveraged system). if you can’t, then you just own a job.

    Robert Kiyosaki is definitely inspirational (that feeling when you finally get HOW the rich get rich, and WHY the poor are poor) and insightful.

    Kiyosaki has been criticised (for example by my dad) by being too basic, and not giving specific enough information. I think he’s like a first-step guy; he teaches the average person WHY working for a wage is not going to get you rich; WHAT leverage is and how the rich use it; and what COMPOUNDING will mean to your growth.

    (most people get what compounding means in reverse to a credit card purchase they made back in 2002 and are still paying off 6 years later, long after the computer -or whatever item they bought – is obsolete…)

    Treed is the guy who I bet is trying to get famous by running down the guys who are as famous as he would like to be.

    He would get more press from detracting Kiyosaki than writing his own books with a new idea- if he even had one.

    So Treed is using Kiyosaki’s fame to leverage his own; – using the very books’ teachings he is dissing! (what a hyprocrite, no respect there.)

    Firstly Kiyosaki has predicted this collapse for years, as has Stuart Wilde.

    A friend kindly explained the fractional reserve banking system to me; There is so little known about this system, that even the chairman of the local chamber of commerce wasn’t able to explain it to me. (That’s okay, because I was able to sit down and explain it to HIM.)

    He doubted me, of course; but that’s a bigger problem. Why don’t people know this – because they aren’t interested, it’s not on TV, ‘they’ don’t want us to know, people are too busy to care – ‘just give me my paycheque – I’ve worked a long week and now i’m goin fishin’ with a slab of beer.’

    Most of the employees in a bank don’t even know what it’s fractional reserve rate is.

    I could rant on about this and that but really my point is, most don’t understand; so they put others down for a myriad of reasons.

    ‘I’m broke, and it’s your fault’ – victim story. People love blaming others; it’s how Hitler got away with what he got away with. Sigh.

    In the end the rich are using the same system to get rich than the poor use to get poorer; the difference is like racing a guy on foot against someone using leverage (of any sort. even just a wheel!)

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