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2011-09-05 17:34:53
by Robert Kiyosaki
How did we get into the current financial mess? Great question.
Turmoil in the Making
In 1910, seven men held a secret meeting on Jekyll Island off the coast of
Georgia. It's estimated that those seven men represented one-sixth of the
world's wealth. Six were Americans representing J.P. Morgan, John D.
Rockefeller, and the U.S. government. One was a European representing the
Rothschilds and Warburgs.
In 1913, the U.S. Federal Reserve Bank was created as a direct result of that
secret meeting. Interestingly, the U.S. Federal Reserve Bank isn't federal,
there are no reserves, and it's not a bank. Those seven men, some American and
some European, created this new entity, commonly referred to as the Fed, to
take control of the banking system and the money supply of the United States.
In 1944, a meeting in Bretton Woods, N.H., led to the creation of the
International Monetary Fund and the World Bank. While the stated purposes for
the two new organizations initially sounded admirable, the IMF and the World
Bank were created to do to the world what the Federal Reserve Bank does to the
United States.
In 1971, President Richard Nixon signed an executive order declaring that the
United States no longer had to redeem its paper dollars for gold. With that,
the first phase of the takeover of the world banking system and money supply
was complete.
In 2008, the world is in economic turmoil. The rich are getting richer, but
most people are becoming poorer. Much of this turmoil is directly related to
those meetings that took place decades ago. In other words, much of this
turmoil is by design.
Power and Domination
Some people say these events are part of a grand conspiracy, and that might
well be. Some people say they represent the struggle between capitalists,
communists and socialists, and that might be, too.
I personally don't participate in the debate over a possible global conspiracy;
it's a waste of time. To me, the wider struggle is for power and domination.
And while this struggle has done a lot of good and a lot of bad I just want
to know how to avoid becoming its victim. I see no reason to be a mouse trying
to stop a herd of elephants from fighting.
Currently, many people are suffering due to high oil price, the slowdown in the
economy, loss of jobs, declines in home values, increased bankruptcies and
businesses closings, savings being wiped out, the plummeting stock market, and
rising inflation. These realities are all direct results of this financial
power struggle, and millions of people are its victims today.
An Extreme Example
I was in South Africa in July of this year. During my television and radio
interviews there, I was often asked my opinion on the world economy. Speaking
bluntly, I said that South Africans had a better opportunity of comprehending
the global turmoil because they're neighbors to Zimbabwe, a country run by
Robert Mugabe.
In my interviews, I said, "What Mugabe has done to Zimbabwe, the Federal
Reserve Bank and the IMF are doing to the world." Obviously, my statements
disturbed many of the journalists. I did my best to comfort them and assure
them I was not an anarchist. I explained, as best I could, that Zimbabwe was an
extreme example of an out of control power struggle.
After they were assured I was only using Zimbabwe to illustrate my point, I
said, "If you want to understand the world economy, take a refugee from
Zimbabwe to lunch." I advised them to ask the refugee these questions:
1. How fast did the economy turn?
2. When did you know that you were in financial trouble?
3. When did you finally decide to leave Zimbabwe?
4. If you could do things differently, what would you have done?
Three Approaches to a Crumbling Economy
I spoke to three young couples from Zimbabwe while I was in South Africa. Two
couples were recent refugees now living in South Africa, and one couple still
lives in Zimbabwe. All three couples had interesting stories to tell.
One couple said that they would have quit their jobs earlier. Instead, they
hung on, hoping the economy would change. Then, virtually overnight, the value
of the Zimbabwean dollar dropped and inflation went through the roof. Even
though they received pay raises, the couple couldn't survive and soon depleted
their savings. They left Zimbabwe by car with almost nothing. If they could've
done something differently, they told me, they would have started a business in
Zimbabwe and began exporting products to South Africa, so that they would have
had South African currency and a bank account there before they fled.
The second couple that fled the country said they saved money and paid off
their house and other debts even as the Zimbabwean dollar fell in value.
Looking back, they say they would've saved nothing and gotten deeply in debt in
Zimbabwe, allowing them to pay off their debt with the cheaper dollars.
Instead, they fled after they lost their jobs, leaving behind their house and
owning $200,000 in nearly worthless Zimbabwean dollars.
The third couple still lives in Zimbabwe. When they saw the writing on the
wall, they set up a business in South Africa and, with the profits, began
acquiring tangible assets in Zimbabwe. Often, they'll buy an asset in Zimbabwe
and pay the seller in South African currency. They believe that once Mugabe is
gone and order is restored, they'll be in a strong financial position.
Many Problems, Few Solutions
There are three major problems with the events of 1913, 1944, and 1971. The
first is that the Fed, the World Bank, and the IMF are allowed to create money
out of nothing. This is the primary cause of global inflation. Global inflation
devalues our work and our savings by raising the prices of necessities.
For example, when gas prices soared, many people said that the price of oil was
going up. In reality, the main cause of the high price of oil is the decreasing
value of the dollar. The Fed, the World Bank, and the IMF, like Zimbabwe, are
mass-producing funny money, thereby increasing prices and devaluing our quality
of life.
The second problem is that our economic crises are getting bigger. In the
1970s, the Fed faced and solved million-dollar crises. In the 1980s, it was
billion-dollar crises. Today, we have trillion-dollar crises. Unfortunately,
these bigger crises mean more funny money entering the system.
Apocalypse Soon
The third problem is that in 1913, the Fed only protected the large commercial
banks such as Bank of America. After 1944, the Fed, the World Bank, and the IMF
began bailing out Third World nations such as Tanzania and Mexico. Then, in
2008, the Fed began bailing out investment banks such as Bear Sterns, and its
role in the Fannie Mae and Freddie Mac debacle is well known. By 2020, the
biggest of bailout of all will probably occur: Social Security and Medicare,
which will cost at least a $100 trillion.
Even if we find more oil and produce more food, prices will continue to rise
because the value of the dollar will continue to decline. The dollar has lost
over 90 percent of its value since the Fed was created. The U.S. dollar will
continue to decline because of those seven men on Jekyll Island in 1910.
Granted, the funny-money system has done a lot of good it has improved the
world and made a lot of people rich. But it's also done a lot of bad. I believe
somewhere between today and 2020, the system will break. We're on the eve of
financial destruction, and that's why it's in gold I trust. I'd rather be a
victor than a victim.