In 1997, Robert Kiyosaki revealed the secret to lifelong success: Deliver grifty seminars and hire child slaves.
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Thanks to Mindseye for our theme song!
In 1997, Robert Kiyosaki revealed the secret to lifelong success: Deliver grifty seminars and hire child slaves.
Support us on Patreon:
https://www.patreon.com/IfBooksPod
Where to find us:
Sources:
Thanks to Mindseye for our theme song!
Michael: Peter.
Peter: Michael.
Michael: What do about a book called Rich Dad Poor Dad?
Peter: So, I haven't read the book, but I do know that the only difference between a rich dad and a poor dad is that one of them invested in GameStop.
[If Books Could Kill theme music]
Michael: Rich Dad Poor Dad is a book by Robert Kiyosaki which was self-published in 1997 and then publish published in the year 2000. This book is on numerous lists as the best-selling personal finance book of all time. So, this is not ancient history. I looked at the personal finance bestsellers on Amazon today. Of the top 10, four of them are Rich Dad Poor Dad.
Peter: Wow.
Michael: Paperback, hardback, audiobook, whatever. He has three million subscribers on YouTube. He has six million subscribers on Facebook.
Peter: That's that rich dad mentality. [Michael laughs] I know almost nothing about this book other than it's a sort of weirdly, conservative personal finance book, which is-- that's almost redundant because-- I almost had the field of personal finance, but that's not really what it is.
Michael: It's more of a convention center parking lot [Peter laughs] where people are selling pizzas out of the trunk of their car.
Peter: They have to go into weird, bootstrap energy places very quickly, because actually good personal finance advice is super boring, right?
Michael: Dude, yes.
Peter: It's like make a budget, invest in mutual funds and ETFs, like, diversify. You can't write a best-selling book based on that. You need to bring truly dark, demonic energy into it to get people going.
Michael: Yeah, it's very similar to health advice, where it's like, “Eat fruits and vegetables, try to exercise every day.” It's like the actual retirement advice you've heard a million times like, “Try to save some percentage of your money. Put it in early. Get compound interest.”
Peter: [laughs] The books that actually make a ton of valid points never sell 30 million copies.
Michael: Yeah, no shit. [laughs]
Peter: Invest in low-cost mutual funds, the book.
Michael: That's in zero airports.
Peter: That's the foundation of our podcast.
Michael: So, I want to get into the book as fast as possible because I feel like I really have to give you a portrait of what it is like to spend 200 pages with this man. The worst thing that I can say about this book, and I mean this in the most derogatory way possible is that it makes Men Are from Mars, Women Are from Venus look good. [Peter laughs] There was a period with Mars and Venus. There's a chapter or two where I was like, “Oh, maybe this isn't so bad.”
This book was like a sentence or two. He starts out with just the basic premise of the book. He says, “I had two fathers, a rich one and a poor one. One was highly educated and intelligent. He had a PhD and completed four years of undergraduate work in less than two years. The other father never finished the 8th grade. Both men were successful in their careers, working hard all their lives. Both earned substantial incomes. Yet one struggled financially all his life, the other would become one of the richest men in Hawaii. One died, leaving tens of millions of dollars to his family, charities in his church, the other left bills to be paid.” This was the part of the book where I thought he was like an ally and he literally had two dads, if he doesn't make it clear. [laughs]
Peter: I was like, "This is cool."
Michael: Yeah.
Peter: It's 1997. He's writing about his gay fathers.
Michael: So, poor dad is Robert's actual birth father. Rich dad is his neighbor's dad. [Peter laughs] He says, “My two dads had opposing attitudes in thought. One dad thought that the rich should pay more in taxes to take care of those less fortunate. The other said taxes punish those who produce and reward those who don't produce.”
Peter: [sighs] Okay.
Michael: For one dad, the idea of job protection for life and job benefits seemed more important at times than the job. He would often say, “I've worked hard for the government and I'm entitled to these benefits. The other believed in total financial self-reliance. He spoke out against the entitlement mentality and how it was creating weak and financially needy people." So, already you're like, “Oh, we're not going to have to read between the lines for the makers and takers shit.” Okay, it's just straight up in the text.
Peter: I'm also immediately quite convinced that these two people are not meaningfully real.
Michael: He also, throughout the book, has a huge amount of just open contempt for his father, his real father-
Peter: Shocker.
Michael: -who honestly seems like a really cool guy.
Peter: Just like a normal human being. Yeah. [laughs]
Michael: Yeah, he's a school teacher for basically the entire time that Robert is growing up.
Peter: Ooh, poor dad job.
Michael: Fuck this guy. And then he eventually becomes the head of the Department of Education for the state of Hawaii. He basically just positions his father as just a total chump for working a full-time job his entire life. Whereas this rich dad, who he's very vague on the details of is just like, “He's independent. He's not a slave to his wage,” and all this weird philosophical shit.
Peter: [chuckles] When you're growing up, you always think that other people's parents are better. You're like, “Wow, you can watch TV after 09:00 PM.” Or, like, whatever rule that your parents gave you that your friend's parents didn't, you're just like, “Wow, this guy just carries that forward into a best-selling book.”
Michael: We're two like pages into this book. I'm going to send you the paragraph that turned me against the book.
Peter: Hell yeah. “I remember in school being told The Story of Robin Hood and His Merrie Men. My school teacher thought it was a wonderful story of a romantic hero, a Kevin Costner type who robbed from the rich and gave to the poor. My rich dad did not see Robin Hood as a hero. He called Robin Hood a crook. This war between the haves and have nots has been going on for hundreds of years. It is the take from the rich crowd versus the rich.”
Michael: [laughs] Fuck this guy. Fuck this guy. [Peter laughs] Hot take. Robin Hood sucks.
Peter: The early reveal that rich dad is just his neighbor's dad makes this all so good because I don't know, you're just at your friend's house and his dad is like, “Robin Hood I s a piece of shit, all right? Don't let anyone tell you that Robin Hood is a good guy.”
[laughter]
Michael: Also, I got two editions of this book. So, from the library, they had the original self-published text. And then I also, from Amazon, got the republished, like, once a major publisher got involved post-Oprah, and they updated the text. As you can imagine, they cut from the later text, a real Kevin Costner type. [Peter laughs] Why do you think he's a Kevin Costner type, Robert? Is it because he was played by Kevin Costner in a fucking movie? What do you mean, a Kevin Costner type? Literally, the movie just came out, Robert.
Peter: Right. A Kevin Costner type. It's literally just his neurons firing off basic associations.
Michael: A paleobotanist, a real Laura Dern type. [Peter laughs] Yeah, that's what we associate with that, Robert.
Peter: This is such a classic American capitalist sort of thing, where poor people have the wrong mindset, right?
Michael: Yeah.
Peter: Then you zoom out. You could look at a map and see that poor people live here and rich people live there. Are those maps reflecting geographic mindset differences? [Michael laughs] That's what you have to believe to believe that this shit is meaningful.
Michael: Right. Also, Danish people are just on a grindset mentality, has nothing to do with unemployment benefits or pensions.
Peter: And anyone who's ever met a Dane knows that's not true.
Michael: Yeah. [laughs] All that hygge has made them soft. So, okay, now, once we learn that Robin Hood is bad, we then get to the origin story, like the mythos of the rich dad throughout this book. So, Robert says that he's growing up in this middle-class household where his dad is a humble schoolteacher, and he's going to school with a bunch of the rich kids. This is in Honolulu in the 1950s. He's born in 1947. So, he's nine years old. He comes home and he tells his father that he bumped into his friend, Jimmy, from school driving a Cadillac and he's like, “Hey, Jimmy, where are you going?” Jimmy told him, “I'm going to the beach, but you can't come because you're too poor.”
Peter: Hell, yeah. Get his ass, Jimmy.
Michael: Yeah. [laughs] One of the first of many just flagrantly fake anecdotes that we're going to get in this book. He then goes home and he asks his dad, “Dad, how can I be rich?” His dad, of course, doesn't know how to be rich because he's a wage slave. So, he says, “Well, son,” he began slowly, “if you want to be rich, you have to learn to make money.” “How do I make money?” I asked. “Well, use your head, son,” he said, smiling, which really meant, that's all I'm going to tell you, or I don't know the answer, so don't embarrass me.
So, then we get a long sequence where Robert and his friend, Mike, go around the neighborhood asking for everybody's toothpaste tubes. So, they knock them to the door, “Hey, do you have any used toothpaste tubes?” They're gathering them up. This is a long sequence of them going around. They go to grocery stores, and go through the dumpsters and get the used toothpaste tubes. These children are nine, by the way. They go in the backyard, they build a furnace, and they start melting down the toothpaste tubes, because in the 1950s, toothpaste tubes were made of lead.
Peter: Okay.
Michael: So, when his poor dad comes out into the backyard, he finds his son and Mike melting down the toothpaste tubes and pouring them into molds. And he says, “‘I put the steel pot down and smiled at my dad." "What are you boys doing?" He asked with a cautious smile. "Watch," I said. With a small hammer, I tapped at the seal that divided the cube in half. Cautiously, I pulled up the top half of the plaster mold and a lead nickel fell out. "Oh, my God," my dad said. "You're casting nickels out of lead?" "That's right,' Mike said. "We're doing as you told us. We're making money."
Peter: What the fuck is that? What? How is that the story you make up? It's obviously made up, but it's also so bizarre. The basic dad joke I get, making money. LOL
Michael: Got it.
Peter: Got to be illegal, by the way, to have a mold for a coin.
Michael: Yeah, 100%.
Peter: Wouldn't that nickel be half toothpaste?
Michael: I read this and I was like, "Oh, deep sigh, I'm going to have to fucking look this up, aren't I?" Like, "What the fuck?"
Peter: Oh, yeah. [laughs]
Michael: So, it turns out that it's true that toothpaste tubes were made out of lead before World War II. And then in World War II, because factories needed lead for the war effort, the toothpaste companies had to start making it out of different metals, and plastics, and they started mixing it with other things. Eventually, after the war, they started making them out of lead again. All of this is roughly true. However, this thing of melting down lead toothpaste tubes to get smelted metal out of them-- This is essentially a urban legend, like, the kind of thing that your grandpa would sa like, "Things were so scarce, so, we had to melt down our toothpaste tubes."
I read various academic articles about this. First of all, by the 1950s, they put lead back in the toothpaste tubes, but they were 1% to 5% lead.
Peter: Got it. Yeah.
Michael: It was nowhere near enough lead to actually get fucking lead out. And also, they had toothpaste in them. so you'd have to be separating the lead from the burnt toothpaste.
Peter: Go ahead and try to get toothpaste, like, all of the toothpaste out of your tube.
Michael: Exactly. And you can't fucking separate them chemically in this way. So, clearly, this is just an urban legend that heard growing up and repeated as if it was true. Nobody throughout the publishing of this book or 42 million copies ever bothered to google and be like, “Hey dude, you're just very obviously making up this anecdote.”
Peter: Two nine-year-olds smelting lead is guaranteed to end in the death of at least one nine-year-old.
Michael: Exactly. [laughs] So, then we learn that, Mike, he says his dad understands money. They vaguely intimate that he owns a construction company, he runs a chain of convenience stores. He's just doing deals and running stuff. And so, he agrees to talk to them about money. It's like 09:00 AM Saturday morning and like, “Come over and I'll tell you about money.” Mike and Robert go over to the house. When they get there at 09:00, he's on the phone doing deals or whatever, and he makes them wait for an hour. Finally, he comes into the living room. So, we're going to run through a script here. You're going to play rich dad.
Peter: Hell yeah.
Michael: I feel like you have rich dad energy.
Peter: Yeah, absolutely.
Michael: People say that about you.
Peter: "Mike says, you want to learn to make money. Is that correct, Robert?”
Michael: “I nodded my head quickly, but with a little intimidation.”
Peter: “Okay, here's my offer. I'll teach you, but I won't do a classroom style. You work for me, I'll teach you. You don't work for me, I won't teach you. I can teach you faster if you work and I'm wasting my time if you just want to sit and listen like you do in school. That's my offer. Take it or leave it.”
Michael: “May I ask a question first?”
Peter: “No. Take it or leave it. I've got too much work to do to waste my time. If you can't make up your mind decisively, then you'll never learn to make money anyway. Opportunities come and go. Being able to know when to make quick decisions is an important skill. You have an opportunity that you asked for. School is beginning or it's over in 10 seconds.”
Michael: “Take it.”
Peter: “Good. Mrs. Martin will be by in 10 minutes. After I'm through with her, you ride with her to my superette and you can begin working. I'll pay you 10 cents an hour and you will work for three hours every Saturday.”
Michael: “But I have a softball game today.”
Peter: Mike's dad lowered his voice in a stern tone, "Take it or leave it.”
Michael: No, you could have done that with your voice, Peter. You didn't have-- [crosstalk]
Peter: Okay, fair enough. I think I did do it with my voice, FYI.
Michael: And this is my favorite stage direction. He says, "I'll take it," I replied, choosing to work and learn instead of playing softball.
Peter: Oh, thank you for that illustration.
Michael: That's what happened in the scene that we just read. Ah, okay.
Peter: I love the way he's talking. “Oh, you want to learn how to make money? Well, I got a plan for you. It's called work at my store in exchange for wages.” Wow, rich dad, how do you do it?
Michael: He's doing this kind of Glengarry Glen Ross vision of what rich people are like. The kind of person you have to be, to be wealthy, where it's like this weird alpha bullshit where it's like, “Take it or leave it,” most dads are just nicer than this and just calmly walk you through.
Peter: Also, I feel like if a nine-year-old was like, “How do I get rich?” It's like, “Go play outside.”
Michael: Yeah, exactly.
Peter: “I have a real life.”
Michael: So, Robert stresses that even in 1956, 10 cents an hour is a very paltry wage.
Peter: That's a great lesson. Here's how you get rich, slave wages to children at your stores.
Michael: [laughs] There is a section where his dad is like, “That's child labor.” And he's like, “My dad just didn't get it.”
Peter: "My dad's such a fucking loser. He doesn't realize you get rich off of child labor."
Michael: [laughs] Okay, so then Robert works for a couple of weeks, three hours every Saturday. He does this for a while he's not earning enough money. And so, he storms into rich dad's house to confront him. And we have another scene. This one starts with me.
“You said you would teach me if I worked for you. Well, I have worked for you. I've worked hard. I've given up baseball games and you haven't taught me anything. You're a crook like everyone in town thinks you are.”
Peter: “I'm glad you got angry about working for 10 cents an hour. If you had not gotten angry and had gladly accepted it, I would have to tell you that I could not teach you. You see, true learning takes energy, passion, a burning desire. When it comes to money, most people want to play it safe and feel secure. Passion does not direct them. Fear does.”
Michael: “So, that why they'll take a job with low pay?”
Peter: “Yes. Some people say I exploit people because I don't pay as much as the sugar plantation or the government.”
Michael: The sugar plantation? I pay less than the sugar plantation. Great guy.
Peter: “I say the people exploit themselves. It's their fear, not mine.”
Michael: “But don't you feel you should pay them more?”
Peter: “I don't have to. And besides, more money will not solve the problem. Just look at your dad. He makes a lot of money and he still can't pay his bills. Most people given more money only get into more debt.”
Michael: “So, that's why the 10 cents an hour. It's part of the lesson.”
Peter: “So, do you still have the passion to learn?”
Michael: “Of course.”
Peter: “Good. Now get back to work. This time, I will pay you nothing.”
Michael: “What?”
Peter: “You heard me. You will work the same three hours every Saturday, but this time you will not be paid 10 cents per hour.”
Michael: “That's not fair. You've got to pay something.”
Peter: “You said you wanted to learn. If you don't learn this now, you'll grow up to be like your dad, earning lots of money only to be in debt up to his eyeballs, hoping more money will solve the problem.”
Michael: "Boom. What lessons?"
Peter: What the fuck is the lesson here? What the fuck is going on? [Michael laughs] He just said that it was good that he complained because most people exploit themselves. And then he's like, “I want you to work for less.” And the kid agrees and he says, "That's good too?" He just told them not to do that.
Michael: It's like, "Wow, wisdom." Wow. You're going to be even shittier to a child.
Peter: Lesson number three, you pay me and do three hours of work every Saturday. What the fuck is going on here?
[laughter]
Michael: It's also very funny to me that throughout the book, he keeps presenting rich dad as this, like, Gandalf figure who's full of all this wisdom and he just comes off as such a prick.
Peter: Such a piece of shit.
Michael: Like, "You talk like this to a child?"
Peter: Imagine talking to a kid and being like, “Look at your stupid fucking dad.”
Michael: Yeah, “Look at your fucking chump of a dad.”
Peter: “Your dad makes money, but he's in debt, which I know because I know your father's finances.” [Michael laughs] Anyway, now I'm enslaving his child.
[laughter]
Peter: That's rich dad energy, kid. You either have it or you don't."
Michael: So, I want to pause here. We're going to debunk this as we go along. So, one of the things that rich dad says here, which is kind of a rich text, Robert says, "Don't you feel you should pay them more?" And rich dad says, "I don't have to." And besides, more money will not solve the problem. This is actually fairly common messaging among conservatives. Poor people think that money will get them out of their problem, but all it does is exacerbate the poverty, if they don't have the right mindset.
Peter: Yeah. He says, “Most people given more money only get into more debt.”
Michael: Later in the book he says, “More money will often not solve the problem. In fact, it may actually accelerate the problem. Money only worsens the cash flow pattern running in your head. If your pattern is to spend everything you get, most likely an increase in cash will just result increase in spending. Thus, the saying, a fool and his money is one big party.”
Peter: What?
Michael: It's not the saying.
Peter: [laughs] What the fuck is that saying? What is that saying even mean?
Michael: He clearly misheard, a fool and his money are soon parted.
Peter: Which actually makes sense in this context.
Michael: Exactly. And then my favorite thing about this is they didn't update this for later editions of the book. It still says, “A fool and his money is one big party.”
Peter: “A fool and his money is one big party.”
Michael: Which doesn't make any fucking sense.
Peter: The saying we all know and love.
Michael: That we all say.
Peter: That makes it sound like it rocks to be dumb with money.
Michael: I know.
[laughter]
Michael: So, another thing that, I mean, because this book is suddenly repetitive. He basically just says the same thing in 50 different ways. The only evidence that he points to about this is that a lot of lottery winners end up bankrupt. They win the lottery or they get this big relative dies, and they get this big financial windfall. And then five years later, they're broke again. So, it doesn't work anyway.
Peter: "Anyway, that's why I pay super low wages to my convenience store workers."
Michael: "That's why I don't pay children enough."
Peter: "Less than my main competition, the sugar plantation."
Michael: [laughs] So, to the extent that there are any fucking statistics in this book, this appears to be a misreading of a weird zombie statistic. Have you heard this that 70% of lottery winners end up bankrupt?
Peter: I don't know that I've heard the 70% number, but I've heard some variation on this, lottery winners go bankrupt at exceedingly high rates.
Michael: You see it packaged different ways, but this narrative is actually quite common. This 70% statistic is typically traced back to something called the National Endowment for Financial Education. This zombie statistic is so common that the actual this think tank had to put out a statement being like, “We've never said this and it appears to originate with somebody who was on a panel that we hosted. But it's basically just some random guy who said this thing that is not true." I looked into this. It's actually really interesting. This myth reflects, I think, Americans like deep ambivalence about people who, “don't work for their money.” If people are getting money unjustly, it's much more comforting to be like, “Ah, well, they end up really sad and poor.”
Peter: It reinforces this idea that there are people who deserve the money they earn and there are people who don't.
Michael: There's also a really interesting journalistic thing happening here, where anecdotes, where somebody wins a million dollars and they just are happy for the rest of their lives and are fine, that's not really news. That doesn't get into the paper. Whereas every once in a while, you have these weird outlier cases where somebody wins the lottery-- Apparently, it actually happened once where somebody won the lottery and had a heart attack when they heard the news. So, that ends up in the paper. There's a guy whose kids kill him almost immediately.
Peter: That's the downside to being a rich dad, by the way.
Michael: These are outlier rare cases. The reason they end up in the newspaper is that they are rare. But the fact that these are the only stories of lottery winners that end up in the newspaper makes people think that like, “Oh, well, most lottery winners must have some sort of disaster befall them.”
Peter: It does make some sense that a lottery winner would have a heightened risk of bankruptcy, for example, relative to other people with the same amount of money because they probably don't have experience managing that much money.
Michael: There's actually a really interesting study of this where they tracked lottery winners for five years. And for the first two years, obviously they were much less likely to declare bankruptcy. But then in years three and four, they were much more likely than the average to declare bankruptcy. Some people end up blowing all of their winnings really quickly and then by years three and four, maybe they own a boat or they bought a house that they can't maintain. But then by year five, it basically just goes back to the baseline, kind of average rates of bankruptcy. Bankruptcy among lottery winners is really rare. The overwhelming finding from studies of lottery winners is that they're just happier.
Peter: Yeah. [laughs]
Michael: You look 10 years out and they're just like, “Yeah, they're wealthier and happier.”
Peter: Right.
Michael: Only around 3% of people retire, quit their jobs and just do nothing for the rest of their lives. Most people, two thirds of lottery winners keep working the same job. This thing of, like, people blow their winnings really quickly or yeah, they give money to relatives or they buy a two fancy car or something like that. It seems people tend to blow some portion of their winnings, but most people are really prudent about it and just invest in retirement. So, he's playing on this really widespread myth that it's like, “Getting more money won't help you.” But all of the data seems to be that the solution to poverty is just very straightforwardly money. There's really not like a grindset angle to this. He's trying to make it more complicated than it is.
Peter: This is also very funny as a justification for paying your workers very little money.
Michael: Your child workers. [laughs]
Peter: They're just going to fucking get into debt or something. "I'm actually helping them, like, get the fuck out-- [crosstalk] Come on.
Michael: I'm just going to assume that if they're making not enough money, they must have a bad mindset.
Peter: "Because if they had a good mindset, they wouldn't be working for me." That honestly seems to be it. It's like just a total lack of respect for the common worker.
Michael: [laughs] So, then we get a really weird scene where it's now like three months later, he's still working as a convenience store--
Peter: As a slave.
Michael: A child slave. He's working there and the rich dad shows up on a random afternoon and the rich dad is like, “Okay, I'm going to start paying you again. How's 15 cents an hour?” And he's like, “That sounds great.” “What about 25 cents an hour?” He's like, “Even better. Great.” He's like, “What about a dollar an hour? What about $25 an hour?”
Peter: It’s the lesson, don't take the first offer?
Michael: It's significantly dumber than that, Peter.
Peter: Okay.
Michael: Don't worry. This book is not going to take a turn into actual useful advice. [Peter laughs] Okay. And then that leads to another scene.
Peter: “How did you feel when I tempted you with a pay raise? Did you notice your desires rising?”
Michael: “We nodded our heads.”
Peter: “Most people use fear and greed against themselves. That's the start of ignorance. Most people live their lives chasing pay checks, pay raises and job security because of the emotions of desire and fear, not really questioning where those emotion driven thoughts are leading them.”
Michael: “So, what's the answer?”
Peter: “What intensifies fear and desire is ignorance. That is why rich people with lots of money often have more fear the richer they get. Money is the carrot, the illusion. I've seen how money runs people's lives. Don't let that happen to you.”
Michael: “So, what does ignorance have to do with greed and fear?”
Peter: “Because it is ignorance about money that causes so much greed and so much fear. As we headed back to the store, rich dad explained that the rich really did, ‘make money.’ They did not work for it. He went on to explain that when Mike and I were casting five cent pieces out of lead thinking were making money, we were very close to thinking the way the rich think. The problem was that it was illegal for us to do it. [Michael laughs] It was legal for the government and banks to do it, but not us.
He explained that there are legal ways to make money and illegal ways. He talked about the gold standard that America was on and that each dollar bill was actually a silver certificate. What concerned him was the rumor that we would someday go off the gold standard and our dollars would no longer be silver certificates. When that happens, boys, all hell is going to break loose. The poor, the middle class, and the ignorant will have their lives ruined simply because they will continue to believe that money is real and that the company they work for or the government, will look after them. We really did not understand what he was saying that day, but over the years it made more and more sense.”
Michael: [laughs]
Peter: Oh, my God. I feel like our listeners might not understand what is happening here.
Michael: I know. [laughs]
Peter: But there is a widespread crank libertarian theory that our departure in the 1970s, was it?
Michael: Yeah, it was Nixon.
Peter: From the gold standard was the beginning of the decline of the American economy, because when the dollar was pegged to gold, it was pegged to something “real.” We are now in a place where money is a fiction. You could do a thousand podcasts diving into this topic in and of itself, but I think the only thing-- I will say about the validity of that theory is that the value of gold is also a fiction.
Michael: It's all fake. Yes.
Peter: And so, what this is, is this guy in the 90s pretending that the rich dad in the 50s was doing the gold standard conspiracy theorizing 20 years before we were off the gold standard. Incredible.
Michael: Yeah, he predicted it all. And also that he would hear this as a nine-year-old and remember it.
Peter: Also, what was the point of being like, “What about a dollar? What about $25? Like, what if I paid you more?” What are you talking about? “Yes, I want the larger amount of money. Why did you just make me work for three months for no money at all? What is going on?” [laughs]
Michael: There was a big section in the middle that I cut where he's lecturing them about greed. But it's like you're also going to lecture me about greed in a book, scamming me into get rich quick schemes?
Peter: “Oh, you want more money? I just gave 15 cents, the last hour you worked. And you want another 15 cents this hour? Greed.”
Michael: One of the main threads throughout this book is this idea of ignorance. The reason why people are poor is because they don't know anything about money. I think one of the things that explains the bizarre popularity of this book is this overall narrative that kids aren't learning about financial literacy in schools. It's up to these gurus to teach people about money as they get older.
Peter: You can argue that schools should teach that, but the main reason that schools should teach that is, so people like this don't become the ones who are in charge of teaching it to our children.
Michael: What's really frustrating about this is that as soon as you start googling around about financial literacy, you find out that financial literacy programs in schools are nearly universal. First of all, as a general rule, whenever anybody says, they don't teach that in school, that's never being said by somebody who knows what they teach in school. What they teach in school varies widely state to state. But I found a report on this by the Council for Economic Education that found all 51 states, 50 states plus DC, they all have requirements for kids to learn financial literacy. In 1998, when he's writing this book, it was 39 states. The idea that kids are not learning personal finance in school is just false. This is as close to a universal lesson in American schools as like the three branches of government.
Peter: I think the reason that people are always saying like, "You need to be taught taxes and shit like that." People say that because you hit your first tax season and you're like, “I don't know what to fucking do.”
Michael: Oh, yeah.
Peter: But here's the thing. You can't just teach that to a 16-year-old and then have it stick with them for-
Michael: Exactly.
Peter: - the next several years. A lot of people are probably learning this and then forgetting that they did.
Michael: It is true that American adults do not have super great financial literacy. It's not that bad either. It depends on how you measure it, but it's like we're middle of the pack compared to other rich countries. But that does not mean we're not learning it in school. American adults also do not know what mitochondria are, and we all fucking learn that in school.
Peter: Right.
Michael: So, for this episode, I read a really interesting book called Pound Foolish: Exposing the Dark Side of the Personal Finance Industry by Helaine Olen, who talks about this drive for financial literacy as basically like a 40-year propaganda campaign mostly funded by credit card companies, banks, other financial institutions who have a stake in this as proposing as an explanation for America's higher rates of poverty that people here lack financial literacy.
Peter: Right. It's not the fucking 20% interest rates that credit card companies are charging. It's the fact that poor people don't understand how to manage their credit.
Michael: Helaine Olen, in this book, traces all of us back basically to the 1980s, when the credit card companies and other financial institutions started pushing this idea and actually started supplying financial literacy curricula to schools.
Peter: Jesus.
Michael: Some of it has basic stuff in there about compound interest and don't fall behind. Some of it is fine. But these are companies that are basically pushing the idea that like, "Doing spending on your credit card is totally fine and student debt is something that's really important and normal."
Peter: Please step onto that onto the floor that is made of leaves and sticks, please right over there.
Michael: Exactly. This paragraph drove me nuts. She's talking about the 1990s. She says, "Others were jumping into the fray, including the National Association of Securities Dealers, which released a survey in 1997 demonstrating that 78% of us could name at least one character in a TV sitcom, but only 12% knew the difference between a load and no load mutual fund."
Peter: Wow. Really? That says a lot about society.
Michael: People watch TV.
Peter: But they don't know about whether a mutual fund has a load or not.
Michael: When I dump a load in my mutual fund, it doesn't follow me around for a week.
Peter: [laughs] Oh, God. But also 22% of Americans can't even name one sitcom character.
Michael: I know. That seems low to me. The juxtaposition of the two numbers is just so disingenuous. But also like, yeah, people watch TV and don't know the technical details of retirement funds. That's not some sort of societal catastrophe. That's just like, “Yeah, people like things that are fun, and they don't like things that are technical and horrible to think about.”
Peter: To even imply that the average person should have to understand every minute detail of different types of fucking mutual funds is obscene. In fact, signals that maybe something is wrong with the financial system more broadly if people need to understand these sorts of minute details in order to control their financial future.
Michael: What she points out in this book is that the credit card companies, as they are entrenching this idea of the importance of financial literacy, they're also lobbying against any effort to make their own products simpler and easier to understand. There was this initiative a couple of years ago where they were going to be forced to provide plain vanilla products of just like, “Here's a normy ass bank account and you must provide, people, with super basic information in plain words," what they are signing up for and what the risks are, and they push back against it successfully. So, we don't have that.
Peter: Right.
Michael: She also points out that this is the beginning of this myth of like, “If you didn't drink so many lattes, you'd be able to afford a house.” This is a big part of this propaganda push that if you restricted your personal spending, if you didn't eat out so much, if you didn't take so many weekend trips, then you would be financially healthy. But people in the 1970s spent significantly more of their disposable income on personal stuff like, food, restaurants, all this, “frivolous spending” was actually higher in the 1970s, but people had higher savings rates because housing, healthcare, childcare, and education had not exploded in price.
Peter: That's all because we left the gold standard. [Michael laughs] Let me go get my nickel mold, my illegal black market nickel mold that I have.
Michael: But then what is also really interesting about this financial literacy stuff is that there's no evidence that having more financial literacy makes you better at spending or more financially well off. Your financial fortune is much more closely related to how much money you earn and stuff. It's really not about knowledge. Then financial literacy is also associated with being more susceptible to scams. I went to Robert Kiyosaki's Facebook page, which is all, like, crypto grifters and various other buy gold grifters. One of the most common messages is like, “You're a savvy investor, you're above the crowd. You're not one of these sheep. They're pumping you up as somebody who's smarter than everybody else and isn't just going to follow the crowd and put your money in a mutual fund. This is key to the messaging.”
That's not really an argument that no one should understand retirement savings at all, but it's not clear that the lack of financial literacy in school is a problem and it's also not clear that financial literacy is the solution to this stuff.
Peter: I love the idea that his friend's father took him under his wing at nine years old because he could tell. He's like, “This kid is a real piece of shit.”
Michael: Just a real fucking sociopath.
Peter: This kid fucking sucks. So, I'm going to mentor him.
Michael: Well, do you want to talk about rich dad?
Peter: Let's talk about Rich dad.
Michael: We're a third of the way into the book. This is where he totally abandons the chronological narrative. The rest of the book is just grifty, lists, and advice. It basically just becomes a long Facebook post.
Peter: I like that we never learned the true lesson of the child slavery. [Michael laughs] He was like, “I'm working you for 10 cents an hour.” The kid's like, “Damn, that's almost nothing.” And he's like, “That's a good point. Now you're working for nothing." And then he starts talking about the gold standard, and that's it. There's no lesson.
Michael: He does mention. He's like, “The lessons continued until we both went to college, which rich dad did not pay for.”
[laughter]
Michael: Ah, dude, you want to throw that in there?
Peter: Oh, my God, that's so good. It's so good.
Michael: So, I want to take a little detour and talk about what we know about rich dad and what we know about Robert Kiyosaki.
Peter: Okay.
Michael: After this book comes out, the very obvious question is like, “Well, who's this rich dad?” And he mentions various little clues. He says, "He's one of the biggest landowners in Hawaii." At one point, he refers to a, “billion-dollar empire.” The Honolulu Advertiser looks around and is like, “Well, there's a finite number of billionaires in Hawaii.” They look around and they can't find anything. Over the years, Robert will say that rich dad is dead, but then he'll also say that he's still alive, but he's a recluse.
In later editions of the book, they add a disclaimer that says, “Although based on a true story, certain events in this book have been fictionalized for educational content and impact.” And in 2002, when he's pressed, he says, “Why don't you treat rich dad like Harry Potter?”
Peter: Rich dad is an idea. He's a concept, an ethereal entity that hates the fact that we left the gold standard.
Michael: We should also mention there's no evidence that Robert Kiyosaki had money before he wrote this book. He grows up in Hawaii as he says. He goes to school to become a boat driver, boat captain, and works for Standard Oil.
Peter: Grindset, grindset, grindset.
Michael: Yeah. [laughs] He ends up leaving to become a helicopter pilot in Vietnam, which sounds fake, but is actually true. People have found his military record. The only business that we know he had is, in 1977, he starts a company importing Velcro wallets. In the surfer craze, Velcro wallets were cool, I guess or something like endless summer beach boys, whatever.
So, he starts importing these wallets. He has an extremely fake story, not in this book, but in his previous book, which I looked for more biographical details in. He talks about how he's walking the factory floor and he's like, “The workers weren't having fun and I told them that they should be having fun at work. And a month later, I came back and productivity increased by 350%." [Peter laughs] Like, Robert, you're just gilding the lily, dude. Say 10%, man. It's still fake, but it's not as insultingly fake.
Peter: If I were on a factory floor making Velcro wallets and the boss was like, “You guys aren't having fun?” I would just kill him on the spot.
Michael: But also, there was no factory. This is in his previous book. He pretends there was a factory, but then in Rich Dad Poor Dad, he admits that he's just importing the wallets from South Korea. [Peter laughs] It doesn't make any sense to manufacture wallets in Hawaii at this time when they're selling for a buck or two. The wallet one is the only specific one that we know about, but it goes bankrupt. It appears very quickly within a year. Then there's this period where in various interviews and books, he intimates that like, "I was selling merchandise, I was selling T-shirts." He's never really specific, but it's very clear that none of these ideas work.
Peter: I love this because he gets the various speeches about greed and fear. The implication is like, “You want to be a different kind of person, so that you can get rich. You're not one of the sheep.” And then he's racking his brain for three decades. The only idea he can come up with is like, “All right, I'm going to buy cheap merchandise and then I'm going to sell it for more,” but he can't get the shipping cost to work.
Michael: But then after 10 years of various failed ventures, he then pops back up on the grid in 1984, basically delivering get-rich-quick seminars. Are you familiar with this business model where it's like there's a free seminar?
Peter: Yes. You hand out flyers for a get-rich seminar. A guy who you are told is rich stands up and gives you a motivational speech, and then you subscribe to some sort of service to get the next level of knowledge. I will teach you my system.
Michael: It's exactly the same business model as Trump U where there's a free seminar, you then pay 500 bucks for the weekend seminar. There's a good expose of this that the CBC ran in 2010, where they went in Robert's seminars for this CBC expose and literally, like, 905[?], the first thing that they say on the $500 seminar day is like, “You didn't think you were going to learn everything in three days, did you?”
Peter: Yeah, there's always a next step.
Michael: Exactly. And so, then they get you into the elite model, whatever. So, this makes me so mad. They tell you're going to be buying real estate and it's all this mindset stuff. So, I need to know that you're serious. So, I need you to call your credit card company right now-
Peter: Hell yeah.
Michael: -and get them to up your limit. You call your bank and you get them to up your limit. And then it's all this mindset stuff and blah, blah, blah. They're trying to sell you on the next stage, like, the elite gold plan, whatever. And then when you ask, “Well, how much is the elite gold plan?” They say, “Well, how much did you increase your credit card limit to?” There's reviews and complaints and stuff on Better Business Bureau by people who spent like $40,000.
Peter: Jesus Christ.
Michael: It's just an internet comment. I don't know, if this is real, but there's this poor woman who talks about the years long effort to get her money back that she goes to the municipal authorities and they're like, “Oh, we don't really do white collar crime.” She goes to the state AG. He's like, “Well, technically, you signed up for it.” She tries her bank, that doesn't work, and she's like, “I spent $18,000 and I got nothing.”
Peter: Just a full-on scam.
Michael: I guess, technically, there's lessons. You get a mentor, they do provide something.
Peter: If you get to the top level, they teach you that Xenu is-- [Michael laughs] I can't remember it exactly.
Michael: In the CBC expose, they talk to somebody who falls for this and it's like, they don't say where she's from, but she's immigrant in Canada. She seems to be from somewhere in Eastern Europe. She's been doing these low level, poorly paid service jobs for years. She's in her 50s and she starts looking at her bank account and she's like, “I don't have anything saved for retirement.” And so, she gets a flyer or whatever for this how to invest in real estate seminar. She goes thinking like, “Hey, maybe this is a solution.” I don't think she ended up getting scammed out of too much money. Luckily, I don't think she had enough, honestly, to get scammed out of too much, but it's like, these are the people that they're going after with this business model. It's people who have a real need and people who believe you when you tell them like, “Hey, you can get rich nights and weekends.”
Peter: You can see something real. Investing in real estate, that is something that normal people do and get wealthy. If you're a millennial and your parents are comfortable, it's probably because they bought a house in like 1985.
Michael: Yeah, no shit.
Peter: So, this sounds real. It sounds like a way that normal people get rich because it is.
Michael: Yeah. I also think this whole thing that there's something rich people know that you don't. I think that's also a very tempting message, because yeah, you look around America at how unequal things are and you're like, “There must be some secret to this.” I struggle to convey how much contempt I have for the people that do this.
Peter: Oh, yeah. They're disgusting.
Michael: This is what really frustrates me about the rise of this book into popular culture. So, this guy's a total nobody. The only thing he's ever made money on is these seminars.
Peter: So, this is a scammy seminar as a book. It's a natural extension.
Michael: Yes. This is basically how Oprah plucks him from obscurity. Without Oprah-
Peter: Got it.
Michael: -he's still a C list motivational speaker.
Peter: She's doing the same thing at scale. She's selling bullshit to her audience in the same exact way like, “I, Oprah, am a billionaire and how did I do it? Vibes, mindset.” That's her pitch.
Michael: So, to get back to the book, we're now on page roughly 80 of a 200-page book. We finally get to something resembling actionable advice. So, he starts by giving you some of the worst fucking advice I've ever seen. He lists a bunch of myths. He's like, “These are common misconceptions that a lot of Americans have.” So, this is a list of them. “Your home is an asset. Get a bill consolidation loan and get out of debt. Work harder. Save money. When I get a raise, I'll buy a bigger house. Mutual funds are safe. Tickle Me Elmo dolls are out of stock, but I just happened to have one in back and another customer has not come by for it yet.”
Peter: What?
Michael: What?
[laughter]
Peter: Okay. So, let's put the Tickle Me Elmo one aside for a moment.
Michael: Yeah, step that aside.
Peter: Every other thing in there is a solid piece of financial advice that he is saying is, in fact, a misconception.
Michael: Save money.
Peter: He's saying that save money is bad advice. "Your home is not an asset. Your home is," what? What does he think it is?
Michael: A liability, Peter.
Peter: A liability.
Michael: He had a whole tedious section about, "How you think your home is an asset, but it's actually a liability."
Peter: Because you have to pay interest on your mortgage? I don't get it.
Michael: He has this weird thing where he says, friends of his had to pay a $1,000 a month in property taxes and it wiped out the value of their house or something. I'm like, “How much is their fucking house worth?”
[laughter]
Michael: He talks about living in Phoenix in the 1990s and watching Good Morning America, and some financial guru comes on, and he says, “His advice was to save money. Put a $100 away every month, he said, and in 40 years, you'll be a millionaire. Well, putting money away every month is a sound idea. It is one option. The option most people subscribe to. The problem is this. It blinds the person from what is really going on. They miss major opportunities for much more significant growth of their money. The world is passing them by.”
Peter: Oh, God. It blinds them from what's really going on.
Michael: What the fuck does that mean?
Peter: Let me show you the secret knowledge of running scam seminars. [Michael laughs] This is genuinely dangerous in a obvious way, but the best way to illustrate it, I think, is imagine a society where everyone follows this advice, a society as we know it would collapse.
Michael: You knew he was going to get to this place. There's a section on retirement savings where he says, “Don't invest in mutual funds because they're all scammers and the fund managers are trying to fuck you over.”
Peter: What?
Michael: And then he says, “When I speak to adults who want to earn more money, I suggest taking a long view of their life. Instead of simply working for the money and security, which I admit are important, I suggest they take a second job that will teach them a second skill. Often, I'd recommend joining a network marketing company, also known as multilevel marketing.”
Peter: Hmm, yes.
Michael: It's like, “Okay, I did. This is where I did a control F for timeshare." I'm like, "Where is he taking me next?”
Peter: What I would suggest is actually being scammed. It's not just running scams. It's also being scammed, the yin and the yang of being a rich dad.
Michael: So, after he gives you all of this atrocious advice, we finally get to the first piece of actual financial advice in the book. When you find subreddits and stuff where people talk about this book, a lot of people defend this book by saying that, “This is an actual, genuine piece of wisdom.” So, his number one rule for financial security in your life is, “Buy assets, not liabilities.”
Peter: Okay. Yeah.
Michael: He says, “Rich people acquire assets. The poor and middle class acquire liabilities, but they think they're assets.” So then, I'm not fucking kidding. There's 40 pages go by before he tells you what a fucking asset is.
Peter: Oh, my God.
Michael: He gives it to you in these vague terms. He's like, “An asset puts money into your pocket, but a liability takes it away.” When his all his fucking charts[?] and you're like, “Right. What specifically do you mean, Robert?”
Peter: It seems to me like there's a very good shot that he doesn't actually have a coherent definition of what an asset is and what a liability is.
Michael: Do you want to get to it? It's eight parts, Peter. He finally gives it to us. "Ultimately, an asset is something that earns passive income for you."
Peter: Okay.
Michael: He finally gives us a list. He says, “One, businesses that do not require my presence. Two, stocks. Three, bonds. Four, mutual funds. Five, income generating real estate. Six, notes, parentheses IOUs. Seven, royalties from intellectual property such as music, scripts, patents. Eight, this is the best one. And anything else that has value, produces income, or appreciates and has a ready market.
Peter: Yeah, okay, sure. That's the catch all.
Michael: [laughs] So, it's like stocks, bonds, real estate, and everything.
Peter: Tickle Me Elmos.
Michael: Great, Robert. He then literally goes into a whole thing about Tickle Me Elmos.
Peter: I was going to say, “Should we circle back to Tickle Me Elmo?” So, I'm glad we got there.
Michael: So, he basically says that talks about the run on Tickle Me Elmos. Scalpers were selling these stupid toys for, I don't know, $10,000 or something. It was a big deal for whatever Christmas it was. You're again just inviting people to get scammed, basically. He mentions baseball cards. I don't know if that's an investment, Robert.
Peter: Well, the baseball card market notoriously collapsed through 1980s and 1990s and is now a tiny fraction of what it was.
Michael: Oh, I didn't know this.
Peter: So, great hot tip. Don't buy houses, buy baseball cards.
Michael: So, his second money making tip is avoid paying taxes.
Peter: Hell yeah. That's what I'm fucking talking about.
Michael: It's not really a money-making strategy. It's more like, this is advice to already rich people.
Peter: Right. There's no hot tip on how to avoid paying your W-2 taxes, you know?
Michael: Yeah, exactly. If you're an employee, your boss reports your income and you report your income.
Peter: Ha-ha. Mr. IRS, I actually don't owe you any taxes because I was working for free for my friend's dad, okay?
Michael: Yeah. [laughs] So, this one starts with another little piece of dialogue.
Peter: “When does your dad pay his bills?”
Michael: “The first of the month.”
Peter: “Does he have anything left over?”
Michael: “Very little.”
Peter: “That's the main reason he struggles. He has bad habits. Your dad pays everyone else first. He pays himself last, but only if he has anything left over.”
Michael: “But he has to pay his bills, doesn't he? You're saying he shouldn't pay his bills?”
Peter: “Of course not. I firmly believe in paying my bills on time. I just pay myself first before I pay even the government.”
Michael: “But what happens if you don't have enough money?”
Peter: “The same. I still pay myself first, even if I'm short of money. My asset column is far more important to me than the government.”
Michael: “But don't they come after you?”
Peter: “Yes, if you don't pay. Look, I did not say not to pay. I just said I pay myself first even if I'm short of money.”
Michael: What is he saying?
Peter: What the fuck is going on here?
Michael: What the fuck? He keeps doing this weird thing where he's like, “Pay yourself first,” but he doesn't say what the fuck that means.
Peter: What that means is like, you are from time to time stiffing your employees or the government. But then when this child is like, “Isn't this illegal?” He's like, “Whoa, whoa, woah, I never said I don't pay them. Wink, wink, wink.”
Michael: I am going easy on him and I'm cutting a lot of the stuff where he talks about how much he fucking hates taxes. [Peter laughs] Huge portions of this book.
Peter: Shocker, shocker.
Michael: He just straight up lies. He says over and over again. He's like, “The more money you earn, the more the government takes.” But we have marginal tax rates in the United States. He also says that when his dad died like, “I didn't even get any money because the government took it all.” America has an estate tax that kicks in at $12 million. Hawaii has an estate tax that kicks in at $6 million.
Peter: Right. I thought his dad was broke as hell and now he's complaining that the government took it.
Michael: All of the actual advice in this is, it's just scammy advice for rich people. So, he says, “You should set up a corporation for legal liability stuff and then you can write off your expenses.” So, he says, “By owning your own corporation, vacations are board meetings in Hawaii. Car payments, insurance repairs are company expenses.”
Peter: This is tax fraud.
Michael: “Health club membership is a company expense.”
Peter: Tax fraud.
Michael: “Most restaurant meals are partial expenses, but do it legally with pre-tax dollars.”
Peter: Transparently tax fraud. This is like the third time that he has described something that's patently illegal and then just put a line at the end of it that's like, "But not in an illegal way."
Michael: Right. Also, he's got these little tips. One of his little tips is, "I always make offers with escape clauses. In real estate, I make an offer with the words, subject to approval of business partner. I never specify who the business partner is. Most people don't know, my business partner is my cat.”
Peter: Also, fraud.
Michael: If they accept the offer and I don't want the deal, I call my home and speak to my cat.
Peter: This is just also fraud.
Michael: Numerous people who actually make money investing in real estate and flipping houses have been like, “No one would accept a weird clause in a contract,” that's just like, “I need approval from my partner and I'm not going to specify who the partner is.”
Peter: Look, I'm a lawyer. I could write a book on how to try to sneak weird deceptive language into contracts. I wouldn't say it's a way to get rich. I would say it's a way to be an awful person.
Michael: His third piece of advice is flipping real estate, which like invest in real estate.
Peter: Sure. Yeah, whatever.
Michael: I'm not really going to go into this. He has a whole probably fucking fake story about how he's jogging through a neighborhood in Oregon, and he sees the house for sale by owner, and the owner wants $65,000 for it, and he's like, “I'll give you $45,000.” The guy's like, “I'm desperate to sell. I'm moving to California. You can have it.” He sells the house for a profit because Portland is undergoing a housing boom. And then he buys an apartment complex in Phoenix that's owned by some Germans and they're not even there and they were desperate to sell. And like, “They wanted $450,000 and I only paid $300,000.”
Peter: Huge part of this book is just finding desperate people and taking advantage of them and then blaming them.
Michael: And also, fundamentally, it's like, “Well, buy undervalued real estate.”
Peter: Yeah. You should all be jogging all the time.
Michael: Sure.
Peter: [crosstalk] be on the lookout for a house that's on sale and just kind of vibe out the desperation of the owner. That's business mindset.
Michael: We're now going to watch a clip.
Peter: Fuck you.
Michael: This is from the Oprah episode.
Peter: Okay.
Audio clip
Interviewer 1: During the commercial break, you said what? Stand up. Say it again.
Paul: You say that you can pay yourself first. How am I going to get somebody to loan me the money to buy a house when I can't pay my and when I can't fully pay my bills as I'm paying them now.
Interviewer 2: One thing that Paul said right there, he starts a home-based business. The tax laws are written against. Tax laws are not equal, if you want what I'm saying is got to get educated here. So, tax laws are not equal. So, if you're an employee and you work harder and harder, the government's going to take 50% no matter what. So, by being a business owner, which is Paul did, he has tax advantages that the middle class and poor do not have. Just saving money and investing is not enough. There is a complete mindset that goes on. I think that's what these people-- [crosstalk]
Interviewer 1: All I was saying, because we all have the mentality in this country. You work harder, you work harder, it will pay off in the end. It does not, because the government always gets theirs.
Paul: Right. Then real estate is the least taxed income you can get. So, when my wife and I were struggling, we saved $6,000, we bought that house thing. I think it went from $46,000 to $105,000. We had $50,000.
Interviewer 1: But I think when people think of real estate, they think about the house that they would want to live in. You start out buying something that you wouldn't necessarily want and you use that to build more income.
Interviewer 2: That's what she did. She bought seven.
Interviewer 1: Build more income.
Paul: That's my idea. I want to buy a three flat, live in the basement, ran off the two top two apartments. [crosstalk] Haven't paid my mortgage for me, but I still need to come up with the original capital to buy the place.
Interviewer 2: That starts with paying yourself first.
[laughter]
[applause]
Interviewer 2: Hey, Oprah.
Michael: This interaction is one of the bleakest things I've ever seen.
Peter: Yes, yes.
Michael: Oprah, who, at this point, probably a billionaire. I don't know what her status has been, but she talks earlier in the interview, she's like, “Well, not having enough money used to be my problem, but now my problem is too much money.” Kiyosaki is just a straight up grifter. This poor guy who asks this super basic question, “How do I come up with some money to buy a house?”
Peter: And then, Robert's like, “Right, that's why you pay yourself first.”
[laughter]
Michael: And they all just move on.
Peter: It was very clear that they then flash the applause sign, and the entire audience erupts into applause.
[laughter]
Peter: Also, this poor salesman who's asking the questions is in a full suit. You could tell he was like, “I'm going to put on my finest business wear to impress the Rich Dad Poor Dad[?] guy.
Michael: Yeah, this guy took a day off to go to a taping of Oprah.
Peter: Oh, God.
Michael: He clearly has the mindset. But Robert confronted with somebody who clearly has it, has nothing to offer.
Peter: All of personal finance, self-help grifting eventually just becomes buy real estate and flip it, because yeah, historically, it's a relatively safe way to make money, if you have money already. You never get the step of, “How do I get enough money to buy a fucking apartment complex,” or whatever they're doing. [Michael laughs] It's so fucking frustrating and telling, because a lot of what these guys are doing is being like, “If you get your mindset set right, you can achieve anything.”
Michael: Get your mind right.
Peter: And yet the “anything that they all achieve is just buying an apartment complex, renting it out for a few years and flipping it.”
Michael: Buy a house in a city that's about to experience a housing boom. Wow, thanks, man. Cool.
[laughter]
Michael: So, his last piece of financial advice is to buy stocks. Very innovative stuff. I'm going to send you some text.
Peter: “Poor people have poor habits. A common bad habit is innocently called dipping into savings. The rich know that savings are only used to create more money, not to pay bills. I know that sounds tough, but as I said, if you're not tough inside, the world will always push you around anyway.
Focus on keeping liabilities and expenses down. This will make more money available to continue pouring into the asset column. Soon, the asset base will be so deep that you can afford to look at more speculative investments, investments that may have returns of 100% to infinity, investments that the middle class calls too risky. The investment is not risky. It's the lack of simple financial intelligence, beginning with financial literacy, that causes the individual to be too risky.”
Michael: You're too risky, Peter, because of your low financial literacy, you as a person.
Peter: A lot going on here. [Michael laughs] He specifically said that having savings was bad advice. And now, dipping into savings is bad?
Michael: I think between the lines, he thinks, every dollar you earn you should pour into “assets.”
Peter: Oh, look, I'm not a math genius, but investment returns of infinity, if I'm doing the math correctly, are not possible.
Michael: He follows this with a fucking probably fake anecdote about how he notices that gas prices are going up. So, he invests in a company right before it strikes oil, and then he gets like 5000% return or some shit.
Peter: What the fuck?
Michael: Right. Invest in a company right before its value goes up. That's very good advice, Robert. I agree.
Peter: This is literally an episode of Always Sunny in Philadelphia, [Michael laughs] where they buy gasoline and then try to resell it.
Michael: Okay, this is the part of the book that totally changed how I saw the rest of the book. So, he has a section where he talks about his stockbroker. He says, "The really hot deals are not offered to people who are novices. The best deals that make the rich even richer are reserved for those who understand the game." I don't think that's sound like stockbroking works. Then, he says, “Frequently, my broker will call me and recommend I move a sizable amount of money into the stock of a company that he feels is just about to make a move that will add value, like, announcing a new product.”
Peter: Again, dancing around the edges of outright saying it here, but it does appear that he is now advocating for insider trading.
Michael: This was my thought too. I was like, “I don't think that's real advice.” So, I put out a call on Twitter. I was like, “Do I have any followers who are, like, stockbrokers or do securities law?” So, three different people got in touch with me. I sent them all this entire, like, paragraph. All three of them said, “It's something that could be insider trading, potentially, but insider trading is extremely hard to prove.” People who have like, “I have a hunch about this stock.” That doesn't mean that you have any private information necessarily. So, it's hard to say if this is really insider trading.
Peter: I once did securities law-
Michael: Did you?
Peter: -as a baby lawyer. Yeah.
Michael: You haven't given me any stock tips.
Peter: If you want to lose as much money as I have in the last four years and you let me know. [Michael laughs] You basically have one of two situations happening. One, your investment advisor is doing some basic analysis that anyone can do. Any information that he has, the market would also have. Two, he has information that the market does not have. That would be material, non-public information, and him telling you to trade based on it is illegal.
Michael: The other scenario that the stockbroker securities law people told me is that either your stockbroker is some weird dude who just thinks that he's smarter than the market, in which case, you should probably get a different stockbroker.
Peter: For sure.
Michael: Or, he thinks that you're a huge fucking mark.
Peter: He's fucking Jordan Belfort-ing you-
Michael: Yes.
Peter: -and you're like, “Ooh, I have a cool, smart investment advisor.”
Michael: Yeah. So, at one point, Robert says, “I invest in companies whose products are about to get FDA approval, and I get the stocks cheap, and then they explode.” It's like, that is the scam from the movie Boiler Room. [Peter laughs] The reason this made everything click into my brain was one thing that he comes back to a lot in this book is, he tells you to get educated. Financial literacy is his big thing. But what he describes as learning is like reading other get-rich QuickBooks and attending seminars.
So, he says, “What do I do? I go to seminars. I like it when they're at least two days long because I like to immerse myself in a subject. In 1973, I was watching TV, and this guy came on advertising a three-day seminar on how to buy real estate for nothing down. I spent $385, and that course has made me at least $2 million, if not more. I don't have to work for the rest of my life because of that one course. I go to at least two such courses every year.”
So, this is a guy who basically didn't do well in school and had a huge amount of resentment about the fact that teachers were telling him to do better. He had to repeat a grade. It seems like his dad was pretty disappointed in him. His previous book is called If You Want to Be Rich, Don't Go to School? [Peter laughs] which is originally published with a question mark. If you want to be Rich, Don't Go to School? [crosstalk] when it's reprinted, they got the question mark because that's deranged. Then he bounces around to jobs. He goes to Vietnam and comes back. Nothing is really clicking. And then he finds these grifty fucking seminars. It seems like he was believing them. He seems like someone who thinks that he found this secret knowledge, but he's never actually done anything.
All he's doing is repackaging the bullshit that he's been getting in these seminars and pretending that he did it, when actually all that really happened was he absorbed all this grindset bullshit from these seminars. He tried to implement it in companies. All of his companies failed, because this isn't real advice. And then he just became one of these seminar get-rich quick grifters.
Peter: This is interesting for two reasons. One is, again, like, Rhonda Byrne and The Secret. The bullshit is what makes them rich. Pretending that they know how to get rich makes them rich. The other part of this is that this is the first guy who I've seen basically say that you should get scammed.
Michael: Yes.
Peter: Join MLMs, do these seminars, be a mark. This is why I almost think that he's doing this in something resembling good faith.
Michael: Oh, totally. I think he's 100% earnest.
Peter: Right. Because he is at his core, a mark. He turned being a mark into scamming other people, maybe not quite realizing what was happening. He had been the mark and he can't perceive himself as such. So, he starts doing what the scammers are doing to other people. he writes a book with this convoluted, nonsensical advice, gets rich off that proof of concept in his own mind, "Of course, I was right all along." Because he still doesn't understand that it's a scam.
Michael: I wanted to say he's like a Shakespearean figure, like, this tragic figure, but he's never really had a fall. He's not a Shakespearean figure. I think he's more of like a character in a Christopher Guest movie. It's like he's going around telling you like, “If you really want to get rich, you should play three-card monte. Outside of Madison Square Garden, you should go, 'Give those guys 20 bucks, find the red queen.' Great investment idea.” And you're like, “You really believe this, don't you?”
Peter: This is like the Boomer-ed[?], because [Michael laughs] the entire generation basically bumbled their way into financial success Just born into an era where a basic job got you a house, a pension. The markets grow, houses quadruple in value over the span of a few decades, and there you are, a 70-year-old sitting on millions of dollars despite having done nothing spectacular in your life, just following the basic advice. And then you look at millennials and you see that they are struggling. It was so easy for you that the only way that you can make sense of it is to think they are doing something fundamentally wrong. They don't really get it.
Michael: Their problem is they don't believe it enough, because you believe it. He believes it. If you're selling grifty fucking seminars, then yeah, it is all about the mindset, because everything is about being a charismatic speaker. That's the only thing you need to demonstrate. There's no actual skills.
Peter: Right. Then that's why he's this boomer mentality, just boiled down into its essence like its dumbest form.
Michael: It's incredible. He basically becomes the person he always thought he was. He thought he was a millionaire. He made more than $9 million on this book. He's still doing these seminars. Of course, he doesn't actually give the seminars anymore. They're now licensed to this extremely scammy company. There's been a series of lawsuits. He's just delivering the same old bullshit and raking in millions. All of this feeds, his self-conception as someone who has knowledge, but it's just air.
Peter: Yeah. There's something almost ethereal about his existence. Layers of scams placed atop one another until he hits Oprah.
Michael: Totally.
Peter: I would love to see Oprah just on air talking about returning to the gold standard.
Michael: Yeah. [laughs] But okay. Are you ready for the ending twist?
Peter: Oh, hell yeah.
Michael: I could not believe this. So, since the book comes out, he's a Trump guy. He's a fuck Fauci guy.
Peter: Shocker.
Michael: He's distilling even more this become a mark-- every financial scam, he is trying to sell you. In all that time, he's never really given any specifics about who this rich dad is. He avoids the question, he blows up at people when they try to get basic confirmation of this.
Peter: Alludes to Harry Potter. Sure.
Michael: Yes, exactly. In 2019, we find out that rich dad was real. There is a guy named Richard Kimi who dies in his 90s. Robert then says, “This is rich dad.”
Peter: Wow, okay.
Michael: Who knows if any of the stuff in the book is actually true, where there's so much-- He was never a billion-dollar empire. It doesn't appear he ever owned convenience stores. He's still doing a ton of exaggerating and misrepresenting.
Peter: That's good, because if the convenience store thing was true, then that makes it more likely that the child slave thing was true.
Michael: Yeah, that's what I'm hoping. Also, this Richard Kimi guy actually seems okay. He's a Japanese-American guy growing up in Hawaii, and he basically realizes that all of the tourism industry in Hawaii is geared toward the high end. It's all rich people. Somehow, he scrapes together enough money to buy some land or buy a building or something, and he opens a hotel for middle-class people, and he works like he's the front desk person doing baggage, working his ass off. He basically creates the middle-class tourism industry in Honolulu. And eventually, that becomes a larger hotel and then becomes a chain of hotels. He just goes from there. It's an actual American success story.
Peter: Right. Like, identified an underserved market, created a product, and executes, and it works.
Michael: He actually did the thing that Robert never did. The other weird thing about this is that apparently there was-- I don't know if this is ever written, but there was a gentleman's agreement between Robert and this Richard Kimi guy to not reveal his identity and Robert stuck by it.
Peter: Wow.
Michael: This is the one likable thing I've ever learned about it.
Peter: Oh, shit. Probably because it wasn't a gentleman's agreement. The guy was like, “If you say that I'm the sociopath in Rich Dad Poor Dad, I will sue you into the fucking ground.” And Robert was like, “All right.”
Michael: Yeah. I do wonder if that's what's really going on, because he is a huge piece of shit in the book.
[laughter]
Peter: Oh, my God. I cannot believe that he had a real successful mentor and he's just like, “Okay, don't pay your taxes. That's what you're learning." [Michael laughs] [crosstalk] dad ever write a response book? Cool Son, Dumb Son. [crosstalk]
[laughter]
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[Transcript provided by SpeechDocs Podcast Transcription]