Robert Kiyosaki: Biggest Stock Market Crash in History Coming in 2016Tuesday July 07, 2015 15:57
Palisade Radio Host, Collin Kettell: Welcome back to another episode of Palisade Radio. Today we have a new guest on the show none other than Robert Kiyosaki. You might know him better as The Rich Dad Poor Dad. Robert, thanks so much for coming on the show.
Author, Investor, and Entrepreneur, Robert Kiyosaki: Thank you, Collin. I am excited about talking to you because you are a wild man and a man after my own heart.
CK: Yeah, I was just joking before we hit record that you are making me look bad. You are in a professional studio with the soundboards and lighting, and rainy season is upon me here in Guatemala. It just got dark so you can hardly see me right now. But, anyway, we will go forward.
I saw you speak in Mexico and one of the brave predictions that you made, and you made this back in a book in 2002, is that there is going to be a major, major happening or market crash in 2016 or before that. I want to start the interview by touching on how you came to that conclusion?
RK: Well, 2016 is basically a mathematical prediction based upon stupidity, and the stupidity comes about with this thing called the 401(k). As you know I do not particularly trust my government. I do not particularly trust Wall Street. I do not trust the Treasury or the Federal Reserve.
Around ’74,’ 75 when I became aware of the 401(k) I knew they were just trying to screw the worker as they normally do. A 401(k) is basically a tax. When you walk into an American company and they say, “Well, which mutual fund do you want with your 401(k)?” And then they give you this BS about while it is the company will match your money, so you put a hundred bucks in a company that will give you a hundred bucks. That is BS because it is your $200. They are not doing you any favors, you know what I mean?
Basically, it is like the ’43 Tax Act where they basically take your money before you get paid, and the poor, small worker, I feel for them, they do not have any idea what is going on. When my rich dad saw it looking at the 401(k), because we do not trust the government, the flaw in it is that you must start withdrawing your money at a certain age, and that year is 2016. It is basically a Ponzi scheme, so what happens when all of these guys with 401(k)s are putting their money in and old guys with 401(k)s start withdrawing the money.
How is the market going to go up when the money is coming out? It is based upon base actual tables on age. That was how I made the prediction on, but also knew that the government was printing money through quantitative easing. If you read the book, Rich Dad’s Propechy, which is the book we are talking about, I said the other time that would happen was terrorism would increase. Why does it increase? Because terrorism is cheap. It is very, very cheap, and it is very expensive for the United States to fight extended wars, which we are doing today.
So 2016 was basically a guess based upon some mathematical formula, but it was also based upon stupidity of our government, so that is why 2016 is kind of the year. It may be 2020, but it is coming.
CK: Yeah, you made that prediction back in 2002. Now that we are in 2015, I do not know how closely you follow the markets, but actually in the equity market right now it has gone up for seven straight years. People think the market is still going up when in fact over 50% of the stocks in the Index are actually going down right now. The market is being carried up by less and less of these major companies. It is really remarkable, but it looks like, to a lot of different people for a lot of different reasons, 2016 may be the year, and you might have hit the nail on the head there.
RK: Well, I hope not. But if it is true at least you have a few more months to get out or do something different. Because this next— I do not know if you saw Ron Paul, that guy has got guts man, he is on CNBC saying 2016 is going to be much worse than 2007, and that is my prediction also. If you are sitting there hoping the market is going to keep going up, you better take some lap around the rosary beads and pray because you might get hammered. That is really my concern. I hope I am wrong. The job of a prophet is to be wrong so people can take action and not get hurt by this.
CK: Well, speaking of Ron Paul, he actually made his holding public a few years ago and that was partially because he was a public servant. He has lost a good amount of money the last few years, but his— I think a hundred percent of his net worth was in about ten different mining stocks. That is a testament to how much he believes in real money. He believes in gold and silver as somewhere to protect your money.
I know that you are big in real estate; that is kind of what people know you for. But you are also big in the gold and silver. Are you into the mining stocks as well?
RK: Well, I have started several mining companies so I understand the junior mining issue. The reason I have been in Peru for 20 years because that is where Barrick was. I also started a silver mining company in Argentina and one in Canada. I have been in the metals industry and all that, not because I am necessarily into it, but I really want to find out how the stock markets really operate, and as you know they are completely rigged a hundred percent.
It was a great education. I still own shares of my mining stock, but I got really what I wanted was my education on how markets operate. I do not care if it is oil, gold, tech companies, and all that. It is all manipulated. Exactly as you said, right now, the stock market is heading all time highs, but the insiders are selling; they are not buying. It is called the pump and dump. They pump up the stock market so the amateurs can come in or the Fed comes in and with plunge protection team to prop the market up so all the idiots think their retirement or college is safe. But the insider is actually selling.
What they are doing is they are taking company funds, like GE takes company funds to prop up their stock called stock repurchases. But what CEOs are doing they are selling their personal shares. They are using corporate money to keep the market high, but the guys are pulling their money out, the personal money out going to cash. That is what is going on.
CK: I do not know if you just saw the article that Peter Schiff put out a couple of weeks ago. But without going into detail the headline was, “In 1964 the minimum wage was 5 silver quarters. In 2015, 5 silver quarters have a melt value of $15.15.” What I am getting at here is you made a prediction a while ago that said savers will be losers. We used to tell our children save and the money that you save will be worth something in the end. What are people going to do now that are working and trying to grow a nest egg?
RK: Well, I would check the expiration date on their brain. When you go to the supermarket and buy a carton of milk, hopefully you checked the expiration date, because if you drink rotten milk you will get sick. But most people do not check the expiration date on their ideas. I have gotten in trouble for the last 30 years. The worst advice was go to school, get a job, work hard, save money, and invest in a long term in the stock market, and get out of debt. That is why it is a stupid advice because what happened in 1971, as we all know, Nixon took the dollar off the gold standard and then they could print money indiscriminately. Cash become trash, the dollar became debt, and yet people are saying to their kids save money.
I am a lot older than you are but I remember in 1970s I could get 14 to 16% on my savings. If I put my money into a certificate of deposit or CD with an S & L, which is out of business now, but S & L would give me 14 to 16% plus a toaster, you know. They actually gave me a toaster. Imagine that! That is how much your sayings were worth.
But when Nixon took the dollar off the gold standard, they do not want your money anymore. What they want are debtors. Guys like me. I borrowed in 2014 and 2015 nearly $300 million, nearly half a billion dollars. I just refinanced from 5% to 2.5%. That is just the cost of money.
The cost of debt is going down, and yet people say get out of debt. I mean how friggin stupid can you be to tell your kids to save money when they are not giving you any money for your savings? You know it is reverse savings now. There was ZERP, Zero Interest Rate Policy. Now it is NERP, No Interest Rate Policies. They do not want your money. They do not want your cash because they got too much of it. They printed too much of it, and yet they say to your kids – save money. You got to be nuts. You have got to be crazy. You got to be a complete lunatic. That means check the expiration dates on the ideas in your head. Today, you have got to check your expiration date probably every half an hour because things are moving so fast, so, so fast.
Look at how many businesses are out of business today because they got wiped out due to technology or they moved the company overseas? Really, it is our obsolete education, our corrupt government, the corrupt banking system, and Wall Street, which I love dearly, because they make me richer. I am on the 1% side, not on 99% side. If you want to get to the 1% side you better check the expiration date of your college education. That is all I say.
CK: You have the foresight in 2008 when the market crashed. Correct me if I am wrong, but you picked up a lot real estate assets. Now, you are going ahead and refinancing those assets at extremely low debt levels. You are probably getting somewhere between 2 and 5%. You are going to able to grow substantially even in a bad market.
What is a young person that just wasted four years going to college, hopefully they do not have any debt. What are they to do to become the next rich dad, poor dad thirty, forty years from now?
RK: Well, you might want to sue your school for malpractice, because that is the new game of how you make money – you sue people, which is why I got asset protection. To answer your question about 2008, I was preparing for 2008 back in 1983. If you read my book, it was actually in 1973, I came back from Vietnam. My rich dad said I should take real estate courses, not because of real estate. People think I am a real estate guy, but I am not. Really, I am a debt and taxes guy. You see, the more debt I have the richer I get, and the more debt I have the less taxes I pay.
If you understand that the 1% does not pay tax, they are also deeply in debt but it is good debt – debt that makes them rich. What the banks do is they will give you a credit card and then they tell you to have a FICO score, whatever that is, and they make it real easy to deposit your money in a 401(k) and they make it really easy to save money and they screw you. And yet these parents are telling their kids, “Oh, go to school, you got to go to Harvard, get a college degree, get a job, save money, get out of debt, buy a house,” and they are idiots. Everything has changed since 1971. The dollar is no longer backed by gold. Wake up and smell the roses. Today, every Central Bank is printing money. This is the worst part about it is you know the G8 meeting is now a G7? Who was not invited? Russia.
CK: That is right.
RK: We are going to go to war. That is the first sign of war. We say, “Screw you.” They drop the price of oil, so Russia is now in recession. They are probably going to depression. Russia and China just signed a deal for a pipeline deal to pump oil into China. China is going to pump that oil into Southeast Asia.
Just as that guy, Dr. Doom, said at the Cancun Conference was very well said. He said China has already won the war in Asia because Chinese are everywhere. If you have ever been to Australia and New Zealand, you ever been to Singapore, Malaysia, Indonesia, and those countries, the Chinese are there and the Chinese controlled the economy of Asia. They may be in Malaysia but it is Chinese running the economy, the same as Singapore. Dr. Doom, Marc Faber, basically said China has already won.
We are now trying to do this PPT – I do not know what it is – but they want to do this trade agreement between other Asian countries and the US. But they are just trying to fight China, and they are trying to fight Russia right now by not inviting Putin to G8 or G7.
You look at ISIS over here. I am old enough to have seen the route in Vietnam. I was flying over the DMZ, demilitarized zone, and I watched and I saw the South Vietnamese army dropping rifles and running, just running. Then you look at what is happening in that city, Ramadi or something like that, our Humvees were not heading for the front; the Humvees were heading back. They are now selling their guns to the Taliban and ISIS and all this stuff.
Then Obama goes on— and I am not Republican or Democrat but it is great entertainment. Obama says, “Well, the problem is we just cannot, for some reason, find recruits.” They cannot get those guys to volunteer and fight for some reason. That is the trouble when you have as the last two presidents, Bush, Clinton, and Obama, whenever they went to war and they really do not know what combat is like.
My friend, who is now a 3-star general, we were roommates in Vietnam on an aircraft carrier, we were pilots, we were the only guys that ever seen a full route. Not everybody has seen this route in Iraq, where the guys are running south and they were heading back to Baghdad. My prediction is Baghdad is the next city to fall. There is going to be such a major coup for ISIS, whether Sunni or Shia, they are going to kick our asses and take Saddam’s capital back.
When you watch that you are watching the stupidity of the American people because we do not understand what is going on in the world. We listen to our news, but our news is not the news, which I find interesting is you live there in Guatemala, because you get better news about the US outside the US. What I see going to happen is not very pretty.
Terrorism as I said in my book, 2002, will expand because it is cheap. It is not only cheap, they are selling our weapons, too, to our enemy. These guys have CFOs and all that. They use our oil that they capture to fund the weapons. They are very, very smart, ISIS, very smart, much smarter than us, I think. That is why I am saying you should buy gold and silver because eventually the tug of war between deflation and inflation. Somebody is going to quit and I think it is going to be hyperinflation. That is why gold and silver makes sense to me.
CK: Yeah, you are absolutely right about the news that you get inside the United States. Russia is a perfect example. In the United States, six months ago, the news was touting the fact that Russia’s ruble is dropping and the interest rates were spiking to 17%. Nobody knows in the United States now that the ruble has been the best performing fiat currency over the last six months where the interest rates are coming back down.
Here in Guatemala, the vice-president just got pushed out. The first time in Guatemalan history that a president or vice president has been forced to resign. The word on the street or from the people is that the United States pushed him out, and that is not a story to get into right now. But the United States is still trying to control the entire world. As you said they are losing the grip. Do you think that this crash that is coming in 2016 or 2020 is going to end for the United States as the police force of the world?
RK: I do not know if it is going to be the end of it. I just think we better be prepared for it. I think from 2016 to 2030 is going to be very tumultuous. It is more than just the US. It is the end of the industrial age; beginning of the information age. Today where the guy with the cellphone can kick the ass of the US army because his cellphone is power… It is said so, Mark Zuckerberg, as his tirade, he says the end of power. It is the end of the United States is what he is talking about.
Because you’re in Guatemala, I was just down there, I was in Colombia, Peru, Costa Rica, and Panama. I thought it was interesting that in Panama the Chinese are talking about building a canal across Nicaragua. It forced Panama to spend $5 billion to build another canal to compete with the Chinese. I was down in Peru and all the Peruvians just love the Chinese because they are talking about building a railroad from Argentina to Peru which will make Argentina and Peru richer. And what does America send in? Hit squads. They send in the CIA to take people out.
Then you look at China, which has already won the war in Asia. They do not really care about the islands, whatever they are talking about. You look at all that, you step back and you go, “Oh, my God! Here we are, we are killing people, and the Chinese are giving people money.” I was in Africa in Cameroon and it is a very, very poor country. I saw these huge trenchers going down the road, these little back roads of Cameroon. What the Chinese were doing they were dropping in fiber optic cable, and we send hit squads, death squads.
I was a former Marine. I went to the Academy and all these. Do not call me unpatriotic you sons of bitches, you know what I mean? But I am just calling it as I see it. It goes all the way back, as my book, Second Chance, it goes all the way back to the Federal Reserve in 1913, and also the Federal Reserve and income tax were passed in 1913. Is that an accident or what? Then in 1943 was the Current Tax Payment Act. America up to that point was a tax free county. Now, we are the most severely taxed country going. They are stealing our wealth and American public just raised a red, white, and blue, and says, “Yeah, we should be killing those guys in Iraq.” They are going to take Baghdad and kick our asses.
We are laughingstock of the world. Everybody now knows that this guy, Cheney, lied about weapons of mass destruction. The French knew it, Italians knew it, and the Germans knew it. But there was no weapon of mass destruction. The point here is the news is not telling us the truth, and that is really, really terrifying as an American. As a guy who fought twice in Vietnam, Academy graduate, and I watch this country being sold down by incompetents who have no idea what they are doing. That is what is terrifying.
In 1960, President Eisenhower’s farewell address famously said, “Watch out for the Military-Industrial Complex.” That is what is going on in the world today: the military, the CIA, the SEALs, and all that, they are hit people. People hate us. We send our people to kill people. We should be building the canal or building a railroad across Argentina and Peru. But no, we send in hit squads. I see that stuff and I go, “Why, what are we doing this for?” I said I am a former Marine, Academy graduate, and I look there is got to be a different way. We should spend our money making the world better, not killing people.
CK: Yeah. I share the same sentiment and people back at home will call me unpatriotic. Actually, it was an accident of birth to be born in America. But it is something that one should be proud of because it was a country that once stood for something very great.
I have a little bit of insight into the Nicaragua Canal. That was actually a monopoly that was first granted to Cornelius Vanderbilt back in 1850. Most people do not know this. It never came to fruition at the time. There was a rogue American that went in and destroyed the entire country there at that time. Then back in the 60s, there was a monopoly once again given to the United States. They forced Nicaragua to never build a canal because they did not want to compete with Panama. It is a great thing to see a country, like China, come in with enough power to push the United States aside and get something done in the world that the United States does not have the final say in everything. But on that note— go ahead.
RK: China is spending our money that we printed and gave it to them. They realized our cash is trash, so they are going and doing good with it, and they are actually making the world better in many cases. And we send in hit squads. There is something wrong.
CK: It is remarkable. Well, Robert, I want to get just a little bit on your new book, Second Chance. You were selling it and signing away copies when I met you in Cancun a few weeks ago. I have heard nothing but great reviews. I must admit I have not had a chance to read it yet myself. What can you tell our listeners about the book?
RK: Well, Second Chance is the real reason I wrote Rich Dad, Poor Dad. But I had to tone Rich Dad, Poor Dad down because Rich Dad, Poor Dad came out in ’97, and most people did not see those crises coming. Like I said I saw this crisis back in ’83, and I knew we were going to go down. Then in 2002 I called it for 2016. In 2008, I was on Wolf Blitzer and all that. I was saying Goldman Sachs and Lehman Brothers were in trouble. One would probably go down. As AIG went down, Lehman went down. Bernanke pumped up European money. Banks run out of money and all this. It is just a corrupt organization, the Fed.
Now, you can bitch and moan, but Second Chance is about why it happened, why this is happening, and what you can do about it? I am not complaining about the Fed handing out money as long as it hands me some money, and they have handed me a lot of money. But that is because I have education and the average person does not have. That was my Rich Dad’s education.
Second Chance is about your second chance to rethink the expiration date on your brain. Stop thinking with old obsolete ideas. Second Chance is about the past, how we got into this mess, which is why I mentioned the Fed in 1913, the IRS in 1913, the Current Tax Payment Act of 1943, the 401(k) plan back in 1974. When you look at the progression it has been this big cash heist of American wealth being shifted to the Military-Industrial Complex for guys like Cheney, Halliburton, and those guys, Boeing, Lockheed Martin, and all that. I can sit there and bitch and moan or I can choose which side to be on.
Years ago, my second chance was I decided I would rather be a capitalist and not pay taxes. I get the tax breaks like guys like Elon Musk get and Gates get, and Jobs get, or I can be bitching and moaning and pay taxes, you know what I mean? It is your choice.
So I ask you now the rich do not pay taxes in America. The rich do not pay taxes anywhere, legally, because they are partners with the government. I partner with the government by borrowing $300 million. The government loves me. They do not want your savings; they want debtors because they can print the money they want. They need debtors because I put money back into the economy and they give stupid people a credit card and a FICO score. We sit there, well, which side I want to be on, the FICO score guy or the guy that is borrowing millions of dollars? It is your choice. It is a free country.
Second Chance is about really, reevaluating the expiration date on your brain, your ideas. The book is full of charts and graphs making it simple. Those are not my opinions. The charts and graphs are Federal charts and graphs, so you can make up your mind the condition and the future of our country and the world.
I am pretty optimistic I am going to make even more money when the crash comes, but, unfortunately, like I said, for those who are not prepared, gold and silver are probably the best investments. But you have gold and silver, two other precious metals, guns and bullets [laughs]. The reason for that, I laugh about it, but my friend reminds me of this. He says, “You rich guys can buy gold and silver. Poor guys buy guns and bullets.”
If you understand that mentality is this gap between the 1% and the 99%, I would rather have gold and silver and guns and bullet, which is why I do not live in California [laughs]. I live in Arizona where they really respect guns and bullets. It is just a point of view. Second Chance gives you a second chance to really look at the expiration date on the thoughts in your head.
CK: Robert on that note it has been such a pleasure. Thank you for coming on. It was nice meeting you in Mexico and chatting with you again in this interview. I am sure all of our guests will be begging for you to come back next year when the crash has occurred and you are even richer.
RK: I give you credit for being a junior mining guy. I have been in Peru for twenty years chasing gold mines down there. I was in Argentina and Canada chasing junior mining companies, and I love it. I love junior mining. It is the most exciting. It is a higher risk game, but it is the most exciting. Congratulations and keep living the dream, man.
CK: Thanks a lot. I appreciate it, Robert.
RK: Thank you. Bye.