CW 387: Financial Education & Cultivating Entrepreneurial Genius with Robert Kiyosaki Acclaimed Author of ‘Rich Dad Poor Dad’

Welcome to Creating wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven't thought of before. And a new slant on investing fresh new approaches to America's best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine, self made multimillionaire who not only talks the talk but walks the walk. He's been a successful investor for 20 years and currently owns properties in 11 states and South 17 cities. This program will help you follow in Jason's footsteps on the road to financial freedom. You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome to the Creating wealth show. This is your host, Jason Hartman. And thank you so much for joining me today. We'll be back with today's guest or segment in just a moment.

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It's my pleasure to welcome Robert Kiyosaki back to the show. Of course, you know his name. He's an international best seller and he wrote the number one personal finance book of all time, which you've probably read. It's Rich Dad, Poor Dad. And we're going to talk about his latest work today, which is entitled Rich Dad 8 financial scams disguised as Wisdom. And this is very timely for today's world. And Robert, welcome back. Good to talk to you.

Thank you very much.

Well, it's good to have you on the show. So tell us about some of these things that people should really be aware of and concerned about out there in the world. There's snake oil salesmen everywhere. That was true hundreds of years ago. It's true today.

Well, my question has always been why don't we have financial education in schools? So in my opinion, this financial crisis we're in today, and it's a serious crisis, really starts in the classroom. When I was a little boy, about nine years old, I kept asking My teachers, when we're going to learn about money. And the teacher finally told me the truth. We don't teach about money in school. And so that's when I kind of, that's at nine years old. I said, well, I better find out who's somebody who can teach me about money. And that's when I met my rich dad, who was my best friend's father. And then I began to realize the biggest scam of all is education. And they only train you to be employees to work for the rich. And as long as you know nothing about money, they can control your life. So that's where the scam starts.

Yeah, it sure does. That whole system was designed by the industrialists 100 plus years ago to create employees. It's kind of like a factory. They were just, you know, educating, if you will, employees, as you've talked about in depth in some of your work over the years, to just work for them and not to think, not to be entrepreneurs, not to be successful investors. So why, why hasn't that changed? I mean, are the powers that be, the National Education association, as Steve Forbes calls the National Extortion association, so powerful that we just can't make a dent in the system?

That's part of it. You were talking about 100 years ago. The exact date was 1904. A gentleman named John D. Rockefeller founded the Standard Oil Company, basically heisted the educational system by creating the General education board in 1904. So 110 years ago. And what the general education system did that Rockefeller controlled was he then dictated the content or the curriculum of schools. So as you know, to be successful today in the real world, you need academic education, you need professional education, and you need financial education. And the reason most people are highly educated, very smart people like my poor dad is they don't have any financial education and they think they're smart. So as long as you come out of school with this false sense of that I'm smart and you're not, then it's really tough to learn from an I'm smart, I'm great, and you're an idiot point of view. So what we have today, when you look at politics, you have a bunch of very highly educated, smart people who really don't know much about money. That's from the president on down. So that's our problem.

Yeah, I certainly agree with you there, Robert. So what can we do to overcome this? I mean, reading Rich Dad, Poor dad is a great start. That's inspired millions of people, of course. But to take A deeper dive. Where should people really focus their effort? When you talk about financial education and do you include entrepreneurship in that, by the way?

Well, I don't. You know, it's not about so much entrepreneurship as you have no assets from liabilities. And the richest people on earth never went to school. They're called Steve Jobs, Bill Gates, the Beatles, Oprah Winfrey. And what they did was they created mega brands and mega businesses, the same as Google and Facebook and all this. Walt Disney never finished school. So what they did was they were great entrepreneurs, but you don't have to be that big an entrepreneur. I have a friend, he's my age, and he started when he was in high school with, I think, 12 chickens. He just started taking the eggs from his chickens and reinvesting his eggs. Today, his chicken factory out of Ohio produces 10 million eggs a day. So if you figure he's making 10 cents an egg or whatever he makes, it's a lot of cash flow. And then he off sells fertilizer and chicken meat and all this. And the guy never went to school. He's a chicken farmer. And Colonel Sanders, all he had to sell was a chicken recipe.

And J.K. rowlings, who was on welfare, wrote Harry Potter. So a lot of it is very understanding the world of business, and you don't have to be an entrepreneur to tap into it. So J.K. rollins is hardly an entrepreneur, and she just tapped in.

Yeah, good. Good point. So, you know, I'd like to talk to you about some sort of related issues, if we could. Yesterday, I posted on my Facebook mentioning that I was going to have you back on the show today, and I had a few questions that people brought up, and one of them is the seemingly very exciting area of crowdfunding. I have a feeling you would have something to say about that, especially as it comes to maybe funding real estate deals.

Well, crowdfunding to me is a scam also. I mean, it's not the way I would do it, but as long as it stays small, people will not get hurt. But as you know, there's right now a lot of con men who are going to float dubious, you know, deals, and people will send money in like they did to Bernie Madoff, and then somebody's gonna get burned. It's gonna be a big hullabaloo about it, and then they're gonna try and set it down. I mean, you can see it coming.

Without really thinking much about it. It's sort of like bitcoin. I try and get my head around it, but I'm going, well, eventually somebody's going to get burned. So every time you have people just kind of rushing into something, then you'd better step back a little bit and.

Pay attention and think. But as an alternative to Wall Street, I mean, we know that Wall Street's a scam in so many ways, even though it's legalized through lobbyists and PR firms and lawyers and accountants. But it just seems like there's going to be a lot of opportunity for the little guy to get a deal off the ground nowadays. Of course there will be scam artists, we know that's coming. There will be tons of litigation. But we already have that. We have scandals galore on Wall street, even after all the so called corporate governance reforms.

Yeah. So what's your question?

Well, I don't know. Just I guess you answered it, so thank you for that.

I think my question is, what are you going to do about it? And you know, I've never changed my tune. I've always said you have to have financial education. But the biggest scam of all is what Wall street passes off through the education system as financial education. For example, what Wall street and the financial planners and the stockbrokers and the schools here say is financial education is save money, invest for the long term in a well diversified portfolio of stocks, balance and mutual fund and you'll be rich. Well, that's how they rip you off. Because the way you get ripped off in the stock market is, as you know, the market always goes up because they pump it up with quantitative easing right now. And so all the amateurs come running in because they see the stock market at all time highs and then the bottom is going to fall out and then the amateurs will get ripped off by the professionals. And it happens all the time.

It happens every time. You know, it's always the amateurs that come in when the news is so positive and everybody's, you know, the adrenaline junkies and they always, they always, they're playing musical chairs and the music stops and all the big guys have already pulled out, haven't they?

Well, that's the game. I mean, you're probably too young to remember this, but in the comic strip Peanuts, you know, like Charlie Brown and Lucy, Lucy would always hold the football and Charlie Brown says, you're going to pull it out, aren't you? You know, she goes, no, no, no, kick, kick the football. And every time, Charlie Ball, Charlie Brown winds up, runs at the football and Lucy pulls the football away and he falls down. It happens every single time. And people don't Work.

It's amazing how short people's memories are, aren't they?

Well, if you look at what's going on in Iraq, I mean, somebody said, oh, my God, this is just like Vietnam. I said, it's always been that way. We're not there to fight for peace. We're there to fight for the military industrial complex because it's very profitable to explode bombs in the desert and it's very profitable to have people killed. Oh, we're there to save the Iraqis. That's B.S. they're fighting for the military industrial complex. And the moment you recognize that, you know, I'm a former Marine, I fought in Vietnam twice. But one day I woke up and I said, this is not about world peace. This is about money. And that's why, you know, I don't regret going to Vietnam, but I kind of woke up and I see the same thing going on in Iraq today. It's a war we could never win.

Yep. No question about it. So, Robert, as we've got a little time left, I'd like to ask you, you've made some predictions in the past that have just been amaz, accurate and prescient. What do you think is coming next for us? I mean, are we going to see a lot of inflation? Will we see deflation? It seems like with all the money printing, we ultimately have got to see inflation. But I don't know. There are those who think both ways.

Yeah, that's the truth. You don't really know which way it's going to go. But obviously the government wants inflation because you can fight inflation, you can't fight deflation. So when prices start to go down, they accelerate down. Let me give an example. If you knew today that you're going to buy a new Kia, and it was 10,000 bucks, but you knew tomorrow it'd be 8,000 bucks, you wouldn't spend 10. And if you knew it was going to wait from 8 to 6, you would wait again. And so that's when the bottom drops out is because people are waiting for it to crash anyway. So that's deflation. So the Fed obviously is trying for inflation, and the only thing they're inflating is the stock market, and they're trying to inflate the housing market. And as I said, we don't learn from mistakes. We didn't learn from Iraq, we didn't learn from Vietnam, and we didn't learn from the last crash. So they're doing exactly the same thing. The stock market isn't really up. What is happening is that the CEOs are basically repurchasing their own stock. So it gives the illusion the price is going up, but they're just drying up the supply of stock. And eventually the amateur is going to come rolling in again, and it's going to be a Wile E. Coyote moment and go beep, beep, and you'll fall off the cliff.

That is true. And I remember when the dow went above 15,000, and of course CNBC was going crazy and everybody was talking, locking it up. And, and all, all you do is you. You compare the real and nominal dollar return. And really until the Dow got to. Of course, you know, the S and P is a more accurate gauge because it's much broader. But just looking at the Dow, since it's quoted the most, it had to be 15,800 to be in real dollars, exactly where you were about 11 years earlier. And they're, they're talking about record highs. And, you know, most people, they just don't even realize it. They don't even get it. Trickery with numbers.

That's correct. And they can lie with words. For example, when the crash hit in 2007, 2008, all these big companies came on and they said, yeah, we beat the S and P. What they didn't tell you is S and P went down by 57%. And they only went down by 50%.

As somebody says, you can't cure stupid.

Yeah, yeah, that's for sure.

It's the same. We're making the same mistakes again and again and again, and the average person will never learn. So shame on them.

Yeah, no, you're absolutely right.

If you understand a crash is a good thing. I made more money between 2007 and 2014 than I did all the years of my life prior to that. But I was prepared for it. I had experience, I had education, I had my partners, I had my team. So when the crash came, we thought we went to heaven.

You were ready to seize upon opportunities when most people either weren't or they were just scared because they didn't know any better. So they just were full of fear. They were just allowing the media to program their minds.

Well, worst of all, they don't have the skill set to take advantage of the crash, if you know what I mean. So they may be a PhD in microbiology, very smart people, but they know nothing about crashes. And I'm afraid the next crash may be a long one. You know, in 1929, the Dow went down from a high of 381 and it took 25 years to hit 381 again. So it went down in 1929 and it didn't hit 381 until 1954. So this next one may stay down for a long time because there'll be redemption after redemption, which means old guys like me will be cashing in their stocks because they don't have time, so they cash now.

Yeah, very good point. Very good point. And I think probably what really rescued, if you will, the stock market way back then was the fact that Merrill brought so many people from the general public into the stock market. They started promoting the stock market so much more widely. And when the average John Q. Public started bring bringing their savings into the market, that probably helped quite a bit too.

Well, that's correct. They took Wall street to Main Street. Merrill did do that. And then the worst thing between 1929 and today was in 1929 only a few people were in the stock market. And today what you're bringing up is that I would say most people in one way or the other, through their funds or retirements are in the stock market. And if you look at the Dow today, it's in a triple top. And a triple top is possibly the most ominous.

It's almost like they showed a double funnel tornado yesterday. Well, a triple top is like a triple tornado hitting us. So that's why I look at all that stuff and I listen to CNBC and I feel for every person my age is going to what should I do? What should I do? You know, I got my money in the stock market and I'm receiving nothing in interest in my savings and I don't know where to put my money. Well, those are all symptoms of a person who may be highly educated but lacks any financial education. You see, it's really a good time coming up. Unfortunately, millions of people will be wiped out.

Yes, you are most definitely right about that. It is going to be painful for a lot of people. What are you doing with your real estate portfolio nowadays? And by the way, I want to tell you something that I just discovered about two weeks ago. I was reading your Wikipedia entry and someone put in there that you were on my show in 2011 and it, and it said that you owned 1400 apartment houses. And you know, I'm sure that was units. They sort of misquoted you probably and talked about investing in warehouses, triple net leases. And I know you talked about oil wells too back then and just kind of wanted to see where you were on real estate. We talked a lot about stocks well.

First of all, I wouldn't believe anything I read on the web anyway.

Well, yeah, fair enough.

I don't know how people believe that stuff. I mean, I'm an old guy, you know, So I sit there and watch it and I go, you can say anything you like, why would you believe it? And the other thing is not 1400, it's 4000.

That's interesting.

And what I'm doing with real estate is I have about $500 million in debt and right now the average floating debt is around 5%. And a company just came by and says we'll refinance it all for less than 3%. You don't have to be a rocket scientist to know that if you take 5 million at 5% and you drop it to 3%, that's $2 million in extra cash flow due to reduction in mortgage payments. So that's why debt makes people rich. And yet you listen to all these so called financial experts who are saying get out of debt, that's really bad advice. You should be getting into debt.

Oh, I completely agree.

Interest rates, are you kidding me?

Yeah, yeah. Unbelievable. And what are your thoughts on the real rate of inflation? I mean of course we've got the official numbers, but if you're getting your debt at 3%, I would argue that you have a negative real interest rate there.

Yeah, I do because, well it depends on how you compute CPI consumer price index. Because in 1972 I think was Nixon changed evaluations for the CPI consumer price index and he took out food and took out fuel from inflation. So that's how Janet Yellen can get up there or Obama can get up. So we have no inflation. But if you go shopping you'll see inflation all over the place. And you know, when Obama took office, gasoline per gallon was about $1.80 a gallon and today it's about $3.50. So that's 100% increase in so many years. But yet Yellen and Obama can say there's no inflation. So that's what I'm saying. It's like Facebook or the web. I don't know how you believe anything today.

Yeah, now you really have to read between the lines and people have got to feel, think they've got to have an education, they've got to think for themselves and just you know, know how to dissect this stuff and to, to understand it and buy a mutual fund rather than, you know, accumulate some good long term fixed rate debt against real estate. And especially Robert, when as real estate investors we don't even pay our own debt. Our tenants pay our debt for us. Right?

Correct. I mean, the key to life is other people's money. So you borrow your bank's money and your tenant pays back the bank.

What a deal.

There is a God someplace.

Yeah. All you need to do is get in the middle of that deal and you can get fabulously rich. Right.

Imagine that. I mean, the bank will give you the money to buy something that makes you rich, and then the tenant will pay you to live there and then pay off the bank. On top of that, you get appreciation, depreciation, amortization, all these tax breaks. And then you hear everybody complaining about rising taxes. But if you own real estate with debt, you don't pay any taxes. So, you know, that's what this book, I guess is about. Eight financial scams, disguises wisdom. You can get it@richdad.com but it starts with school. You know, being successful in school doesn't make you rich.

Yeah, that's for sure.

It's kind of a rip off. Every time I look at these student loans, I feel for the young people leaving school with all these million, 20, $30,000 in student loan debt. That's hard to pay back.

It sure is. Especially when there aren't jobs out there waiting for them. And the fact that that debt is the only type of debt not dischargeable in bankruptcy. So they've literally created a generation of indentured servants that don't get a second chance.

It's even worse than that. I mean, what you're saying is accurate. It's the worst possible type of debt. If I screw up on an apartment house, I can just be bankrupted.

I'm free and clear from the debt. But I can't bankrupt a student loan debt on top of that. I haven't learned anything about money on top of it. So what do I spend that money for? It goes back to what I was saying when I was nine years old, I raised my hand and I said, when am I going to learn about money? The answer was never. So why am I going to school then? That was my question. You look at the richest people on earth didn't finish school. Steve Jobs, Bill Gates, Michael Dell Zuckerberg, Walt Disney, Henry Ford, Oprah Winfrey, just to name a few.

Yep. And don't forget Jason Hartman in there. Because I just felt like when I was in college, I was listening to a government bureaucrat essentially teach me about something that I'm just never going to use. I was anxious to get out there in the real World Buy Properties and I bought my first rental property at 20 years old. And you know, it's been on from there. And successful people are doers, you know, they learn. Of course you've got to balance learning and doing, but they get the kind of education that is real world education, financial education.

In 1973, I returned from Vietnam as a pilot for the Marine Corps and my poor dad obviously wanted me to get my mba. And rich dad said, well, it's a waste of time. But anyway, so he suggested I take a real estate course. I took a three day real estate course as well as sign up for my mba. And I learned more in three days in the real estate course than I did in my MBA program. So finally, after falling asleep every night of the week in the MBA program, I just dropped out and got rich buying real estate.

Yeah, that's true, that's true.

It was less time. I made more money because it's cost me three days and $385 was a lot of money back though back in 73. But I became a multimillionaire over and over and over again for that $385. And I pay zero taxes legally. What's better than that?

Hey, Robert, I want to take a guess. Was that like William Nickerson's course or something way back then?

Yeah, it was that course. Yeah, yeah, yeah.

That's fantastic. That's the old days of real estate investing in real estate gurus out there. But fantastic. Well, Your website is richdad.com of course, and people can get this book. It's a download right from the web. I found it really fascinating how you did Conspiracy of the Rich, which was fantastic, by the way. I really enjoyed that one.

Thank you.

And you know how it was kind of this collaborative effort. Did you do that with this new book?

This new book is to be truthful. What now? That book is coming out. These are books I wrote a long time ago, so. But what I said a long time ago is coming true. Still true financial scams. I mean, it's really hard to believe. Financial scam is going to school and a job is the worst thing you can get because you're paying more in taxes. All the harder you work, the higher tax rates you move into. And why would you save money? Everybody say you got to save money. Why would you save money when I can borrow money at, you know, 3, 3.8% and then why would I invest for the long term in the stock market when I'm only going to get ripped off when the market Crashes. And why would I buy a house when your house is not an asset? And so really that's a scam. The scam has to do with what so called the rich have perpetrated upon us without financial education. So what the scam is what we think is smart is actually stupid. So that's really what the eight.

Scams are.

If you really want to find out how big a scam that information is, that's why you should get the book. And maybe you'll stop thinking that way. Maybe you won't be looking for a job. Maybe you won't be going back to school. Maybe you won't be thinking your house is an asset. Maybe you'll think maybe I should get rich instead of work for somebody else. And that's the purpose of my work. I'm not saying what you should do, but I would think differently. And the biggest scam is a lack of financial education in our school system. Like I said, it started in 1904 with a man named John D. Rockefeller and the General Education Board. If you read the bylaws of the General Education Board, the purpose of the General Education Board was to take farm kids and turn them into employees in factories. That was the mission and nothing has changed. And so if you're going to school for a good job and all that, you're being suckered. That's the worst part about it.

Absolutely.

I'm not saying education is unimportant. I'm saying it may be obsolete.

Right, right. And you know, the worst thing is to see people get these useless liberal arts degrees. You know, at least if you're going to go to school, be an engineer or do something that's real, you know, I can't tell you, Robert, how many people over the years I've hired who have degrees in psychology, you know, that they're not using. I mean, it's just unbelievable. But good advice. Well, very sage advice again from Robert Kiyosaki. It's a pleasure to have you back on the show. His website is richdad.com go and download this book. I think you'll really enjoy it. And Robert, again, thanks for joining us.

Thanks for the time.

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