Robert Kiyosaki, author of Rich Dad Poor Dad, agrees with Ron Paul

Historically, throughtout time, there has been a depression every 75 years. The rich will get richer, and the poor and middle class would be destroyed, coz dollar is losing value.

The world is awash with paper money...

http://www.youtube.com/watch?v=FOKn7tiUMyc

Its worth checking out.

Robert Kiyosaki, author of "Rich Dad Poor Dad," is an investor, entrepreneur, and educator whose perspectives on money and investing fly in the face of conventional wisdom.

http://www.richdad.com/RichDad/RichContent.aspx?cpid=63

Please check out the video, and give your opinion. The video is crystal-clear, all numbers. Numbers never lie.

 

I'm only going to mention my crazy theory because you brought it up, but EVERYTHING societal repeats in roughly 80 year cycles. This is about four generations and it helps demonstrate why events like economic depressions and political revolutions are truly "once in a lifetime."

I'm not quite done with the video, but there's one important thing they're leaving out.

80 or so years ago, FDR seized the privately held gold. If it gets too valuable, the government can just come and take it.

 

There is a saying you learn when studying statistics, "Do the figures lie or do liers figure." Statistics and numbers can always be distorted to prove an erroneous point of view. We see that every day in politics.

I want to say that I have all of Robert Kiyosaki's books and have attended a few of his seminars. I like the wisdom in his early books. But his business model has changed from that of an investor-writer to a corporate model that sells expensive investing seminars. Along with that, his message is changing in order to sell seminars. That has reduced his credibility. The video is a prelude to one of his investing seminars.

A lot of the information is accurate. Yeah, we are in a currency crisis. But we can never go back to a gold standard because that means that every dollar in circulation has to be backed with $1 dollar in gold. That is not possible today. There isn't that much gold in the world. It is also absurd to assume that the price of gold will multiply to match the value of the money supply. That, in itself, would be super hyper inflationary. It will never happen, but they elude to that in the video.

The info about a depression every 75 years is also not accurate. That number is being stretched to fit the current circumstances. Historically, USA depressions have hit the economy about every 40 to 50 years. We were in a depression in the 1840s, the 1890s and the 1930s. We missed the depression that should have hit us in the 1970s due to social programs such as as unemployment compensation and welfare. However, the 1970s were still filled with economic turmoil. We avoided a depression through programs that gave money to people who would normally not have any money in a depression. That kept the economy moving and avoided a depression.

Also, the "cash is trash" mantra is nonsense. Sure, cash is fiat money and he is correct that it doesn't have any real value. But during depressions, the people with cash are the ones who do not suffer. In a depression, cash is golden. Real assets decline in value. Many of the people who made their fortunes during the 1930s depression did so by offering low-ball cash prices for people's homes, which they then sold after the depression for a huge profit. They basically screwed desperate people out of their homes.

As korr mentioned, from FDRs time until the 1970s it was illegal for US citizens to own gold in anything other than jewelry. That was the only way that the government could store enough gold in Fort Knox to back the currency.

The problem is worse that just the paper currency issue. Less than 5% of value of people's accounts is backed by paper currency. In other words, if everyone tried to cash in their accounts, there isn't enough paper money to pay them. Most of our cash assets exist only in electronic form. Think about that one.

 

I dunno if I'd count the 1890s. Globally, the depression was from the 1870s until near the turn of the century but America experienced economic growth for the majority of that period. There was some deflation, but it worked toward the advantage of Americans' purchasing power.

So far, each of America's political revolutions have occurred in 80 year cycles, +/-5 years. The last two revolutions were preceded by at least five years of economic downturn. Of course, trying to strictly apply the generational cycle is messy and imperfect, but its still a little uncanny.

Gold is just the next bubble asset IMO - the way its being pushed lately reminds me of the advice experts were giving on "forever appreciating real-estate" back in 2004 and 2005. Pump and dump, right?

Its tough to even say now if the money supply is being hyperinflated or contracted. Fewer indicators are being published and there's mixed signals in the market. The fed cuts rates, but banks are charging higher interest on credit cards and student loans. CPI is a joke, its practically meaningless now other than as a tool of propoganda.

I think the potential is in the stock market right now because all the doom & gloom talk has shaken the prices down to a good entry level. Some well-established companies have attractive P/E ratios but no one in the media is hyping the market.

Maybe the biggest problem in finding the next best investment opportunity is that profitability is increasingly tied to government activity rather than market cycles. A bad business model might offer the best return simply because the government subsidizes it or mandates it or regulates competition out of existence.

 

I wonder if the guys in Zimbabwe agree with you. Do you even realise what you said makes absolutely no sense? PAPER is golden during recession?

 

Actually, this is not correct.

The value of any measure of gold can fluctuate, what cannot fluctuate wildly is the supply of gold itself, which makes it desirable as a stable form of currency. It cannot be easily manipulated by counterfeit or over-production.

This entire statement makes zero sense. The dollar would have to devalue for the values to match. That would mean the dollar is hyper inflationary, not Gold.

Please be aware, the "value" of the money supply, is not commensurate with the size of the money supply. With the production or destruction of currency, the aggregate value of the economy doesn't change, aggregate pricing does.

It's far to simplistic to believe that (sic) depressions occur on a timetable. There are causes for depressions, and different ways of dealing with them, that determine how long they last, and how long until the conditions are created for the next one.

Depressions/Recessions are brought on by an expansion in credit, which ultimately leads to a contraction of the economy to purge mal-investment. It's as normal to have a down, as it is to have an "up". The notion that growth should be continual, and prices and the money supply should inflate indefinitely are not only unnatural, they are not feasible in the long term, and I dare anyone to prove otherwise.

This is incorrect. It was illegal to own gold as money, or to exchange FRNs for gold, because the FED had produced more dollars than there were hard assets in the economy to back it. The only way the government could (sic) stimulate the economy, was to do it with debt, and a government restrained by a hard asset currency cannot finance such social programs through inflation and debt.

The paper is worthless anyway. If you think about it, trading in gold or silver alongside fiat money is no stranger than paying by cash or by electronic payment. Or by credit card. Or by check.

Some places will offer a discount for cash. The type of a medium of exchange, regardless of a common system of denomination, can infer a difference in value.

 

It makes perfect sense. When you have money you can buy the things you need. What can you buy when you have no money?

What would make you think that just because cash is paper, it would have no value when the economy is based upon paper money?

I'm not saying it is literally worth gold. I am saying that those with cash assets do not suffer during a depression.

Don't confuse depression and inflation. They are two different things.

@korr, there was a depression in the 1890s in the US. It was brief, but still a depression. There actually were several small depressions in the 1800s in the USA, including the post Civil War depression you mentioned.

http://goldinfo.net/depressions.html

http://www.sjsu.edu/faculty/watkins/depressions.htm

http://www.answers.com/topic/depressions

 

the zimbabweans have a lot of money too. They have billions. It's just that they're worth nothing. Post ww1 Germany was exactly in the same situation. During a depression you need things that have VALUE. Things that have value are things that other people really really want or need. Such as food. That's what you need to have during a recession. That's why people sell their real estate for nothing during recessions: because they need food not because they need paper

 

My statement is absolutely correct. Being on either a gold or silver standard means that every dollar in circulation is backed by an equal value of gold held in reserve. The limited amount of gold available does not allow the USA to go back to a gold standard.

If you watch the video, that is one of the statements that Kiyosaki's gold expert makes. He says that if the US was to go back to an gold-backed economy, the price of gold would go "way north of $6000." It is an absurd statement, which is what I said. It is not possible to go back to a true gold standard and gold would have to be worth an astronomical amount in order to back the currency in circulation. The price of gold would have to be inflated perhaps hundreds of times the current value. It's not going to happen.

I agree with that statement, but until the lessons learned in the 1930s, there wasn't any effective way to stave off with depressions. They were like a business cycle and were a natural part of the economy. Boom times and bust. Good times and bad.

Like I just said. It is part of a natural cycle.

Your statement is incorrect. It was illegal for private citizens to own gold ingots, bullion or any form other than jewelry. I am older than most of you pups. I was there.

In 1933, in order to stabilize the monetary system, President Franklin D. Roosevelt, under Executive Order No. 6102, confiscated most privately owned gold in the United States.

http://en.wikipedia.org/wiki/Executive_Order_6102

Actually, starting in the 1950s, citizens were allowed to own gold coins minted prior to 1933, because they were presumed to be collectibles. This was an exception to the gold confiscation rules.

http://www.usagold.com/cpm/privacy.html

http://www.blanchardonline.com/beru/confiscation_again.php

 

Yup, like 1893 to 1896? I guess the reason it doesn't seem so significant to me is because the global depression was 20+ years and America was still growing for most of that. It seems like we escaped the worst because the major factors were external. Of course, using the 80 year template the 1890s would be analogous to the 1970s - bad, but could have been worse - and mostly triggered by external events (crop failures vs. oil shortage).

1776 - Revolution
1861 - Civil War (+85)
1930s - New Deal (+75)
2010s ??? (~+80)

Each event is preceeded by two things: serious economic problems, and legislation that enables the revolution. (Stamp act, 1840s compromise, income tax). Now we have serious economic problems brewing and the enabling legislation has been passed (Patriot Act)

With currency problems and record-low federal government popularity, politically revolutionary change looks likely in the near term without even relying on cyclical prediction. History is no crystal ball, but its the closest thing we have!

 

I agree with the fact that you need to own hard assets, such as real estate. But during a depression the purchasing power of most real estate assets is greatly decreased. Property is only worth what someone is willing to pay for it--with cash or other hard assets. You could not walk into a grocery store in the 1930s and pay for something with gold, because it was illegal to do so. Other than bartering, people with cash could buy what they want. It doesn't matter that it was printed on paper. During the 1930s and until the 1950s, US dollars were silver certificates, which meant they were worth $1 in silver and the government promised to pay such to the "bearer upon demand." They therefore had a value beyond that of printed paper. Cash was therefore worth something, which is what I meant when I said cash was golden.

http://en.wikipedia.org/wiki/Silver_Certificate

People also need food to survive. Food therefore always has value. People do not need property to survive. The value of property therefore diminishes along with the demand.

 

Hey, if you want money backed by metal assets, ask for your paycheck in pennies The problem is we can't even tell if they are contracting or hyperinflating the money supply. Low fed red would indicate hyperinflation, but the 'credit crunch' and rising private loan rates suggests a contraction. In a contraction, you'd want cash. In hyperinflation (zimbabwe, pre-ww2 germany, brazil) you wouldn't want cash at all. They're hiding the indicators so who knows which way its going to hit? Diversify, or get access to those numbers they don't want to publish anymore...

 

He he. That sounds like the stories of wheelbarrows of cash people were using in Germany to pay for food or rent--only pennies have more value due to their zinc content.

Absolutely correct. But we are not in a hyperinflationary situation in the USA. The devaluation of the dollar doesn't directly affect prices for US produced goods and services sold to US citizens. It only affects the price we pay for foreign goods and materials.

We are not printing lots of worthless cash to pay the national debt in the USA. We are, unfortunately, borrowing the money, which we will have to pay back.

Like Kiyosaki says in the video, the only difference between the Democrats and the Republicans is that the Democrats tax and spend, while the Republicans borrow and spend.

I wonder how many--if any--asset-backed currencies are still in existence anywhere in the world.

 

I don't know if I fully believe that currency devaluation only affects imports in our global economy. Domestically produced food gets exported by the ton, and what foreign purchasers are willing to pay affects its local value. Other than (mostly imported) electronics and real estate, nothing is going down in price even though our productivity numbers are increasing.

Off topic: I love political talk in non-political websites. It avoids the problem of dogmatic partisan loyalty that most political websites fall victim to.

 

Actually in a gold standard the value of gold doesn't fluctuate, the government sets the rate, sort of like how China pegs their currency to the dollar.

Also whats stops the government from printing more money, that's what happened when we were on the gold standard last time.

 

Again, this is incorrect. I suggest you check the value of a dollar in the Coinage Act.

Gold over $6,000 is not inconceivable. Twice in the last 100 years, Gold has matched the Dow Jones at a 1:1 ratio. If it should do it again, you could expect Gold to be well over 5K.

This is incorrect. We had periods of growth, and recession. But not big booms and busts, until the FED came on the scene. The business cycle is caused by credit expansion of the monetary supply.

Not that it is relevant, but you were there in 1933?

 

The biggest partisan wingnuts are on vacation from this forum right now. Hopefully for good.

That's not true. You could circulate 1 ounce notes. They don't have to be denominated in dollars. A dollar is a silver coin anyways.

Allow gold and silver to circulate as currency again. Take off the capital gains and sales taxes. Allow people to settle their debts to the government with gold and silver, as the Constitution says.

 

The constitution also states that the president not congress has the power to wage war including listening in on our enemies but that doesn't sit well some people here, I guess the constitution is like the bible people pick and choose which parts they want to follow.

 

Yes, he is the Commander-in-Chief, but he doesn't have the power to declare war, only Congress does. You do realize the whole purpose of that is that ONLY Congress can begin a war.

 

Speaking of picking and choosing, did I miss a declaration of war by the Congress?

And, speaking of "listening in on our enemies", did someone miss the 5th Amendment?

It's been exposed that Bush was doing domestic spying prior to 9/11. The wiretap nonsense is a refuge for the weak minded, war mongers.