The Financial Collapse Has Begun

Summary

Rich Dad Radio Show: "The Financial Collapse Has Begun"

Release Date: May 28, 2025
Host: The Rich Dad Media Network
Title: The Financial Collapse Has Begun

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1. Introduction to the Episode

The episode titled "The Financial Collapse Has Begun" delves deep into the intricacies of the current financial landscape, exploring the decline of the U.S. dollar, the pervasive issue of national debt, and strategic investment opportunities amidst economic instability. Hosted by Robert Kiyosaki, the show features insightful discussions with experts like Richard Duncan, Alejandro Cardona, and Tom Wheelwright, providing listeners with a comprehensive understanding of the impending financial challenges and actionable strategies to navigate them.

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2. The Dollar Crisis and Its Escalation

Guests: Richard Duncan & Chris Whalen
Timestamp: [01:14 - 06:52]

Overview: Richard Duncan revisits the critical insights from Chris Whalen's book, "The Dollar Crisis," originally published in 2002. Whalen articulates his concerns about the U.S. trade deficits and their destabilizing effects on the global economy. He forecasts a significant downturn, emphasizing that the U.S. economy has become more vulnerable due to unprecedented debt accumulation and expansive monetary policies.

Key Points:

• Historical Context:
  In 2002, the U.S. trade deficit stood at $450 billion, escalating to $1.1 trillion by 2022. Cumulative deficits surged from $3 trillion to $16 trillion over two decades.

  "The government's debt in 2002 was $6 trillion. Now it's $36 trillion, six times larger." ([03:30])

• Monetary Expansion:
  The Federal Reserve's asset creation ballooned from $700 billion to $9 trillion, exacerbating the economic bubble.

  "By keeping this bubble inflated, it's made this global bubble so much larger than it was when I first wrote the dollar crisis in 2002." ([05:15])

• Future Outlook:
  Whalen predicts a plunge in the dollar's value, potentially more severe than the 41% drop witnessed between 2002 and 2008, leading to destabilizing consequences globally.

  "We're moving into a new period where the dollar is going to plunge like it did after 2002." ([05:45])

• Government Strategies:
  Discussion on President Trump's tariff strategies aimed at devaluing the dollar and leveraging trade policies to mitigate the crisis.

  "Stephen Moran's three-step plan involves high tariffs, threatening security withdrawals, and forcing dollar devaluation." ([06:10])

Notable Quote:

"The whole point of inflated is to describe the layers of leverage that we have put on top of our republic over the last hundred plus years." — Alejandro Cardona ([11:42])

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3. Alejandro Cardona on "Inflated Money, Debt and the American Dream"

Guest: Alejandro Cardona
Timestamp: [07:24 - 12:11]

Overview: Alejandro Cardona discusses his book "Inflated Money, Debt and the American Dream," tracing the evolution of money from gold to debt-based systems. He highlights the transformation of the U.S. economy post-Civil War and the subsequent rise of the dollar as the global reserve currency. Cardona emphasizes the unsustainable debt levels and the necessity for economic evolution to preserve the American Dream.

Key Points:

• Historical Evolution of Money:
  Transition from gold standard to the creation of the greenback during the Civil War, marking the inception of debt-based currency.

  "Abraham Lincoln created the first cryptocurrency, the greenback, to finance the Civil War." ([07:50])

• Global Dominance of the Dollar:
  Post-World War II strategies that cemented the dollar's position as the world's reserve currency, facilitating U.S. economic dominance.

  "We rebuilt the world, transitioning from protectionist isolationism to free trade within 15-20 years." ([08:30])

• Debt Accumulation:
  Illustration of how continuous borrowing and debt have layered upon the U.S. economy, leading to potential financial instability.

  "We have compounded the error with a lot of debt. If you have a fiat currency, you can't put a lot of debt on top of it because it is debt." ([10:10])

• Future Prospects:
  While acknowledging the precarious financial situation, Cardona remains optimistic about future economic reforms, albeit necessitating significant changes.

  "I'm actually very optimistic about the future, but we're going to have to break some eggs to get there." ([11:50])

Notable Quote:

"The government's saying, look, it's okay if you save for retirement. We're happy to help offset that risk with lower taxes." — Jim Rickards ([22:35])

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4. Investment Strategies Amid Market Volatility

Guests: Tom Wheelwright & Jim Rickards
Timestamp: [14:47 - 29:48]

Overview: The discussion pivots to practical investment strategies in the face of anticipated market crashes. Tom Wheelwright shares his experiences leveraging market downturns to generate substantial profits through options trading. Jim Rickards elaborates on tax strategies that enable individuals to minimize tax burdens by transitioning from employee (S) to business owner (B) and insider investor (I) statuses.

Key Points:

• Market Volatility as Opportunity:
  Tom Wheelwright explains how he capitalizes on market fluctuations by using options puts during downturns and buying calls during recoveries.

  "When the president announced the tariffs, I was ready for that. We did 50 times our investments with options puts." ([15:17])

• Tax Strategies:
  Jim Rickards breaks down the tax implications across different economic roles:

  • Employee (E): Pays around 40-45% in taxes.
  • Self-Employed (S): Tax rate increases to approximately 60%.
  • Big Business (B): Benefits from a reduced tax rate of about 20%.
  • Insider Investor (I): Can potentially pay as little as 0% in taxes.

  "You don't have to pay 60%. That's actually a choice and I think it's a choice of ignorance." ([26:01])

• Encouraging Asset Investment:
  Both guests advocate for investing in tangible assets like real estate, oil, and cattle rather than traditional stock markets to align with government incentives and achieve greater financial efficiency.

  "It's the hardest way to reduce your taxes. You can't invest the actual asset like you do in the I quadrant." — Jim Rickards ([29:09])

• Practical Advice:
  Richard Duncan emphasizes the importance of focusing on asset acquisition, such as rental properties and direct investments in oil, to build wealth and secure financial freedom.

  "I just keep focusing here now, later stage of my life. I have to buy more real estate but not my house. I buy rental properties." ([27:07])

Notable Quotes:

"If you have the right tax advisor, you can actually behave like the big guys and get the same tax result as the big guys." — Jim Rickards ([26:42])

"The government's saying, look, it's okay if you save for retirement. We're happy to help you with that." — Jim Rickards ([29:48])

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5. Conclusion and Final Thoughts

The episode wraps up with a reinforcement of the critical need for financial education and strategic asset investment to safeguard against impending economic downturns. Listeners are encouraged to adopt the mindset of big business owners and insider investors to optimize their tax strategies and build substantial wealth through tangible assets.

Key Takeaways:

• Understanding Economic Indicators: Staying informed about trade deficits, debt levels, and monetary policies is crucial for anticipating financial crises.
• Strategic Investment: Leveraging market volatility through options trading and focusing on asset-based investments can yield significant profits.
• Tax Optimization: Transitioning from employee to business owner or insider investor can drastically reduce tax burdens and enhance wealth accumulation.
• Adapting to Change: The financial landscape is evolving, necessitating adaptability and proactive financial planning to achieve long-term stability and growth.

Notable Final Insight:

"The government's incentives are aligned with what they want: production and asset creation. By investing in real assets, you're not just minimizing taxes; you're contributing to economic growth." — Jim Rickards ([27:49])

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6. Additional Resources

• Alejandro Cardona's Book: Inflated Money, Debt and the American Dream – Explores the historical and economic factors leading to current financial challenges.
• Tom Wheelwright's Book: Tax Free Wealth – Offers strategies for minimizing taxes and maximizing wealth through smart investment practices.

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Note: This summary excludes advertisements and non-content sections to focus solely on the valuable discussions and insights shared during the episode.

Transcript

[Robert Kiyosaki]

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[Kim Kiyosaki]

And bad news about money.

[Robert Kiyosaki]

Here's Robert Kiyosaki.

[Richard Duncan]

Hello, hello, hello. Robert Kiyosaki, Rich Dad Radio show broadcasting from Arizona. And today we have a very special one of my original guests 25 years ago I believe now, and Richard Duncan. And we're so old I found his book in Borders Bookstore which is now gone out of business by Amazon. I mean, so much has transpired because things are moving so quickly. What is going to happen? Richard, how serious? Because you wrote the book the dollar Crisis. Can it be a much bigger crisis than this?

[Chris Whalen]

Right? So I wrote the dollar crisis in 2002 and that's the one that you saw and that's how we got to know each other. And in the dollar crisis I was very worried about these very large US Trade deficits that were destabilizing the global economy. They were blowing the trade surplus countries into bubbles like Japan and later on China. The money was boomeranging back in the United States and blowing the US Into a bubble. I said this bubble in the US Is going to pop and it's going to lead to a financial sector crisis and a severe recession and probably a collapse of the dollar standard in the global and the dollar reserve currency status. That collapse actually did happen in 2008 and the financial sector almost did collapse. There was a very severe recession, but the government managed to reflate the bubble with trillions of dollars of paper money creation and trillions of dollars of budget deficits. So the Great Depression that I foresaw at that time didn't happen. I just jotted down some how things have changed since then. 22 years ago at that time, the trade deficit was $450 billion. In 2002. Last year it was more than twice that much, $1.1 trillion. And the cumulative deficit, if you add them up over the years, in 2002, the cumulative deficit was $3 trillion. Now it's $16 trillion. In 2022, the U.S. government, the total debt in the U.S. was $33 trillion. Now it's $100 trillion. So three times larger. The government's debt in 2002 was 6 trillion. Now it's 36 trillion, six times larger. The total assets of the Fed, how much money they created back then, that was 700 billion. It peaked a couple of years ago at 9 trillion. Wealth in the United States in 2002 was 46 trillion. Now it's 169 trillion. And China's economy in 2002 it was $1.5 trillion. Now it's $18 trillion. Gold was $300. Now it's $3,500. So my point is that by keeping this bubble inflated in 2008 and again in 2020, it's made this global bubble so much larger than it was when I first wrote the dollar crisis in 2002. Now I think we're so we're so much more vulnerable than we were then, and it's going to be so much more difficult to keep this bubble inflated. And so I think we're now moving into a I've just published a new macro watch video today called the dollar crisis 2025. I think we're moving into this new period where the dollar is going to plunge like it did after 2002. Between 2002 and 2008, the dollar fell 41%. And that had seriously destabilizing consequences for our trading partners, for the global economy, for the US Financial markets. And ultimately, the global financial crisis blew up entirely in 2008. So now we're in this situation where we're much have a much bigger bubble and much less firepower to try to combat it if the bubble pops. So now returning to your question about what's going to happen if other countries start dumping our treasury bonds. This is a real concern. President Trump, as you know, has put up very high tariffs on, on all the countries in the world, but especially on China. 145% tariffs on China. He has a plan there is a strategy. The strategy was laid out in a paper by a person called Stephen Moran, who is the chairman of the Council of the President's Economic Advisors. And here's Moran's three steps plan. Step one is to put very high tariffs on all the countries of the world. Step two is then to threaten all of the other countries in the world to remove the United States security umbrella from them if they dare to retaliate against the high US Tariffs. And step three is then to force all of these countries to devalue the dollar.

[Richard Duncan]

Hello, Robert Kiyosaki, the Rich Dad Radio Show. I'm broadcasting from Phoenix, Ariz. Arizona, where it's either heaven or hell. And right now it's heaven. In a few more months, it'll be hell. But anyway, we have a very special guest today and I'm for full disclosure. I don't know him. His name is Chris Whalen. Welcome to the program. And so you're coming out with a new book called Inflated Money, Debt and the American Dream. What's that book of? How does money and the American dream and debt fit together?

[Alejandro Cardona]

Aha. Well, in the beginning there was only one kind of money, which was gold. Right. Everything else was debt. And then this fellow named Abraham Lincoln came along, got elected president and he had to fight the Civil War. But the problem was the government was broke. So he created the first cryptocurrency, the greenback, which was actually a piece of debt. It bore interest, it was like a T bill. And they used that flotation of funny money to finance the Civil War. But by the time we got up into the Grant administration, that piece of paper which had traded down to about 20 cents versus gold, actually retraced all the way back up to par because the country needed money. We had no money. The whole country was basically run on barter.

[Richard Duncan]

Yeah. So Grant was Ulysses S. Grant, he was a general who became president.

[Alejandro Cardona]

That's correct. That's correct. A famous president. But you know, it was a high growth time in the US and the point of the book Inflated is to teach people how we got here. How did we end up as the dominant economy in the world? How did we end up with everybody using the dollar? And how do we end up with all this debt? I mean, who on earth decided to lend us all this money? Right. So the book basically takes you into that. This is the second edition. The first one was published 15 years ago and I added a new chapter. We had to talk about Ben Bernanke and Janet Yellen and Jerome Powell and all the fun and games that they've engaged in over the past decade and then try and give people a sense of where we're going and who's at the end of the book but Jim Rickards. And what is his message? Buy gold.

[Richard Duncan]

So the author of Inflated Money, Debt and the American Dream. But my question is, because I think you and I are in the same way. I haven't read the book, obviously I haven't got it yet, but we're on the same wavelength because I think the American Dream is disappearing. Is. Is that what you see?

[Alejandro Cardona]

No, I, I think the American Dream is changing the, the we have to deal with fact versus illusion. You know, when you go through a period of war, First World War I and then World War II, our young country was essentially handed the baton by Great Britain as they collapsed in a heap in front of us. By World War II, Britain and most of the European powers were broke. They didn't even have the money to kill one another at that point. And the US provided the guns and the butter and all the other inputs you need for global destruction. And then afterwards, we rebuilt the world, right? So we went from protectionist and isolationist to free trader in a period of 15, 20 years. And that's what we've had until now. And then a fellow named Donald Trump shows up and says, well, we can't do this anymore. And I get into this in the book. There were some very smart people in the United states in the 1950s and 60s who realized that running a global reserve currency, essentially a free utility for the world to use for, for trade and investments, is expensive. And over time, we compounded the error with a lot of debt. If you have a fiat currency, Robert, you can't put a lot of debt on top of it because it is debt. And so we have. The whole point of inflated is to describe the layers of leverage that we have put on top of our republic over the last hundred plus years. Is the American Dream debt? No. But we have to shed some of the socialist, you know, trappings and pretensions that came with the New Deal and came with the post war period because in our hubris, we thought we could do whatever we wanted and just borrow endless amounts of money. There's a whole branch of economics here in the United States. It doesn't seem to mind debt. It thinks it's just fine. I love it when economists talk to me about continuous markets as though they're just going to be there. But one of the things we talk about and inflated is the treasury market did the treasury market just spring out of the ground one morning and say, here, buy some T bills?

[Robert Kiyosaki]

No.

[Alejandro Cardona]

It was created right after World War II and we have done our best to destroy it. So when you talk about the American dream, how we're going to finance things in the future, these are kind of important topics. And it's a topic near and dear to our friend Jim Rickards heart too. I think we just have to evolve and change. That's what it comes down to. I'm actually very optimistic about the future, but we're going to have to break some eggs to get there.

[Robert Kiyosaki]

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[Richard Duncan]

Hello, Robert Kiyosaki, the Rich dad radio show. Today we have a very important show, but we've always had important shows and as you know, we talk about financial education and this is a very important aspect of financial education. So today we have Alejandro Cardona. So the reason I want Alejandro in it when I tell Alejandro we're over here right now all time market high and we're going to crash here. Yes. I mean the market's going to crash. Do you care?

[Tom Wheelwright]

No, actually no. I did a lot of money when the market went down because.

[Richard Duncan]

More money.

[Tom Wheelwright]

Yes. When the president announced the tariffs, I was ready for that. And we did 50 times our investments with options put which gained a lot of value for that reason. And then the market went to the bottom of the long term trend and we bought some calls too. So it's a very dynamic market, which is not like I, I'm buying and holding because we have to take advantage of every opportunity that the markets does for us. I think it's a very generous market. It's a very volatile market when we are trained to do certain things. It's perfect.

[Richard Duncan]

Yeah, hang on.

[Tom Wheelwright]

Yes.

[Richard Duncan]

I just want here that you don't care if it goes up or down.

[Tom Wheelwright]

No, no, I don't care.

[Richard Duncan]

Okay. Because this is what you do. He's a technical. Yes, fundamental. This is Cash Flow 101. And this is all financial education. And one last book I'm going to plug is Rich Dad's prophecy came out in 2002, I think I read and I said the stock market crash is coming. Well, it's here now. It's coming down big. And who that's going to wipe out are all the guys with pensions. All the people with pensions were 401Ks, IRAs, RRSPs. There are pensions are gonna get destroyed. Yes. When it crash. So Alice, Alejandro, when I tell you the market's gonna crash, do you care?

[Tom Wheelwright]

No, no, actually not. I can make more money. I'm faster.

[Richard Duncan]

Yeah, yeah.

[Tom Wheelwright]

Those, those, those falls recently after the tariffs announcement, it was a lot of money there. I mean it's it's like you are create, creating the money and you thought through your teachings in, through your books. I mean rich people creates the money. They doesn't work for money. They don't work for money. So that's true in the markets.

[Richard Duncan]

Yeah. So the market's up here. Are you going to invest more for it to go up or you'd be waiting for it to go here.

[Tom Wheelwright]

Yeah. To go to the bottom. But I can make the puts that, the puts are really cheap. Although on those points it's like a kind of promotion. No, it's a, like a discount for, for puts when the market goes down and then when the market fail, fall. I mean you make a lot of money through those instruments. But the way that I did, dear Robert, is I started with small deals. That's, that's so deep. I, I didn't start with a big deals. Buildings, apartment complexes and all the. No small deals. A little bit of money here over there so I can accumulate an initial capital to invest in big deals or cash flow deals. That's a huge lesson. And through real estate, when I remember that lesson, you were I think in Texas or something like that with Ken McElroy and you explain how increase the value of the property, adding value and then you refinance the whole thing and that money is free. And that, that was like, oh my God, what is this? Yeah, it's like an explosion, atomic explosion in my head.

[Richard Duncan]

Tax free. Tax free.

[Jim Rickards]

Tax free.

[Tom Wheelwright]

That's what I do. That's what I do. It was one lesson and in turn it turns into a huge reality for me doing these kind of deals and using debt to leverage my money and increasing. But it's, I mean it's a process. The process is what make us richer and multimillionaires because it's been a process.

[Richard Duncan]

Hello, Robert Kiyosaki, Rich Dad Radio show broadcasting from beautiful Phoenix, Arizona. And we have a very important show with you as my guest today is Tom Wheelwright. He's been with me for 20 something years now. Tom is a CPA, but more than that, he's the author of this book here, Tax Free Wealth. So Tom, welcome to the Rich Dad Show.

[Jim Rickards]

Thanks, Robert. It's always good to be on the Rich dad show talking about taxes. My favorite subject.

[Richard Duncan]

Yeah. And then we'll bring this up. This was book number two of the of Rich Dad. It was called the cash flow quadrant and it fits right in perfectly to what my rich dad was telling me was my best friend's father. And what Tom is Saying, so let's go. So you know, most people say go to school and get a job and you become an employee. So Tom, this is worldwide. Approximately what percent in taxes do employees pay?

[Jim Rickards]

Yeah, if you make good salary worldwide, you're going to pay 40 to 45%. 40% in tax.

[Richard Duncan]

Okay, 40%. And then if you say, oh my goodness gracious, oh, this was the wrong way. But anyway, going this way, I don't know who drew this thing. But anyway, let's become. I'm going to start, I'm going to quit my job, I'm going to start my own business. So you move into self employed or you become a doctor, a lawyer or an accountant, something like this. How much do this. You know, the biggest mistake is employees who quit their jobs to start the business. What tax bracket do they go into?

[Jim Rickards]

Yeah, now they go into about a 60% tax bracket.

[Richard Duncan]

60%. So congratulations, you started your own business and now the government taxes you harder. And then B stands for big business. And According to the IRS codes, Internal Revenue Service code, this is approximately 500 employees. So that's Elon Musk, Donald Trump, Jeff Bezos and those guys. So how much does a big business entrepreneur pay?

[Jim Rickards]

About 20%.

[Richard Duncan]

About 20%. And I stands for insider. It's not inside investor. See, these people invest from the outside. They invest in stocks, bonds, mutual funds, ETFs, the stuff that Tony Robbins recommends. It's funny, but my rich dad said, come here, be an insider in a deal. And so we don't play with those stocks, bonds, mutual funds on the outside. What does an insider pay?

[Jim Rickards]

They can pay as little as zero.

[Richard Duncan]

So this was my rich dad's advice, was down here, you know, learn to be an entrepreneur and learn how to invest. So one of the first things I had to do was take a course on real estate. I took sales from when I was getting out of the marine Corps in 74. I took sales from Xerox because you have to learn how to sell. And then I took real estate to be an inside investor. Your comments on that, Tom?

[Jim Rickards]

Yeah, like I said, I mean that's how the tax law is written. And the reason is because it's doing what the government wants you to do. Right. It's just, I mean, I think that's a really good point, that the people in the E and the S quadrant, they're working for money. The people in the B and the I quadrant are working for assets. They're actually hiring employees. They're hiring people. They're building real estate. They're developing energy, they're growing crops. I mean, that's who those people are. And the government says, hey, we'll incentivize you to do that because we realize that you're taking some risk there and we're happy to help offset that risk with lower taxes.

[Richard Duncan]

So these are not loopholes, these are incentives. The government's saying, look, if you hire people, we'll give you a better tax break. But if you become an employee who's hired, they tax these guys here. Is that correct?

[Jim Rickards]

That's exactly right.

[Richard Duncan]

And then they want us to use money or capital to provide more jobs for these guys up here.

[Jim Rickards]

That's right. It's either other people's time and talents, which is the B quadrant, or other people's capital, which is the I quadrant.

[Kim Kiyosaki]

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[Richard Duncan]

Welcome back. Robert Kiyosaki, Rich Dad Radio Show. Also, Tom, what advice do you have for people who are in these categories? What can they do? Let's say you're an S paying the highest taxes. Is there something you can do?

[Jim Rickards]

Yeah, there actually are a couple of things you can do. First of all, you know, just because you're small doesn't mean you can't act like the big guys. So you can actually have, if you have the right tax advisor, you can actually behave like the big guys and get the same tax result as the big guys. You don't have to pay 60%. That's, that's actually a choice and I think it's a choice of ignorance because once you learn how you can go from S to B from a tax standpoint point pretty easily. And then on the, on the I side, this is a matter of going from S to I is really the more money you make, the more assets you need to buy. That's what it comes down to. The more money you make, the more assets you need to buy.

[Richard Duncan]

That's what's really interesting about Tom, is because I make so much money in this category anyway, I have got to keep buying and I generally buy oil, real estate and cattle. Livestock, so, so there are different categories. Even if you're up here, you can stay up here but act more diligently down here. Any comments on that?

[Jim Rickards]

Yeah, for sure. You may make your money as an employee or self employed person and that's fine. But when you invest your money, invest it like a big business owner, invest it like a, an inside investor and then you're doing what the government wants you to do with your money and actually you actually end up with more assets. It's interesting. I find that by investing the way the government wants you, you actually make more money on your investments, not just pay less tax.

[Richard Duncan]

Yeah, so what I, what I do is I just keep focusing here now, later stage of my life. So what I have to do is I have to buy more real estate.

[Jim Rickards]

Right.

[Richard Duncan]

But the, but not my house. I buy rental properties from Kenny McElroy, so I get depreciation. Da da da da da. But this other thing is people invest in oil. I was an oil man. I went to Kings Point to drive oil tankers for Standard Oil. And people invest in oil stock. That's not the same as investing in oil. Like with Mike Selli. Mike Boseli is my oil guy. I invest directly into oil. Well, what's the difference there, Tom, between stocks and investing in oil wells?

[Jim Rickards]

Well, you think about it. What does the government want? They want you to actually drill more oil. They want you to produce more cattle. They want you to build more real estate. And so they want you to invest in the actual hard asset. They don't want you to invest in a derivative which would be the stock they want you to invest in. The asset itself.

[Richard Duncan]

Yeah. So when I meet these financial planners who say, well, you know, invest in the s and P500, I just go, loser. I wouldn't do that. Now. You might have to. It's better than not doing anything. But I don't want to be a loser and invest in the S and P or the Nifty. It was a nifty Thrifty. And then now is the Big eight, Right. The Apple, Microsoft and all that. I just don't touch those stocks. Any comments on that?

[Jim Rickards]

Well, so, interestingly enough, as important as this stock market is to the in the economy, it's not from a tax standpoint. It's the hardest way to reduce your taxes. I mean, about all you can do. You can do a 401k or IRA and you get a little bit of deduction here and there, but you're not investing the actual asset. So the government's saying, look, it's okay if you save for retirement. We're happy to help you with that. But if you're going to do more than that, if you really want to be a serious investor, we need you investing in the I quadrant because that's where we need the production.

[Kim Kiyosaki]

This podcast is a presentation of Rich Dad Media Network.