In this post I share a few lessons learnt from listening to the book Fake fake money, fake teachers, fake assets by Robert Kiyosaki. It’s available on Audible. I found it very enlightening and inspiring. Here are just a few key points.
Real money is not the same thing as currency
Money holds value but currency does not, at least not very well. Money and currency both serve as a medium of exchange. Gold and silver are examples of real money while fiat currency like US dollar is a currency.
Fiat money has counterparty risk while gold does not
This means fiat currencies have value due to some person or group of people being perceived as capable of enforcing that value. It means the person or people producing the currency can default at any time. Real money like gold or silver don’t have such risk though. They have intrinsic value.
Fake teachers vs real teachers
Fake teachers are teachers who do not have real world experience in what they teach. They are not insiders. They just teach out of textbooks. Real teachers teach from experience. Real teachers encourage students to make mistakes and learn from those mistakes.
Schools discourage people from making mistakes
In schools, students are rewarded for doing things correctly and punished with low grades when they make mistakes. They are given grades which show how smart they are compared to others. This creates good employees, but discourages students from taking risks. It turns out that taking calculated risks is very important to be successful in business and life in general. In life we learn by making mistakes. When you learn to ride a bike, you ride, fall off, get back on top of it and try again until you master it. So, to become very successful in business, school is good to have, but you would need to learn a lot outside of traditional school setting.
Schools generally favour individual achievement over cooperating
In schools students are generally expected to work on their own. When people cooperate to do things together, it is often called cheating and the students are punished. As a result, if one wants to become an employee or small business owner, lessons from school are often sufficient. But if one want to become a big business owner, one would need a ill-prepared. This is because the leadership skills required to bring together many skilled people to achieve big goals is not something taught in schools.
US dollar used to by backed by gold
In 1944, 44 countries came together and agreed that the US dollar should be used as a reserve currency backed by gold. However, in 1971 president Nixon took America off the gold standard. As a result, all the world’s currency became fiat currency.
Success and failure go hand in hand – they are two sides of the coin
One will always keep succeeding and failing no matter how successful he/she become. So, never be afraid of failure. Keep trying to succeed.
Humans live a dual reality
Humans live a dual reality. Good only has meaning in the context of bad. Genius and Idiot are two sides of the same coin. Something that looks smart in one context could be stupid when looked at from a different context.
There isn’t just one right answer
There are often many answers to the same question, depending on how you look at the problem.
We are important participants in the money printing process
There has been a lot of money-printing going on in the world economy in the past several decades and we are an important part of it. Whenever we spend money on a credit card, we are in essence printing money into existence. We are printing money which never existed prior to that and which we must pay back eventually to the bank. Whenever, we invest in a house by buying it and letting it out, we are also, in a way, printing money. This is money that comes into our pockets. The same thing happens if we write a best-selling book and recieve royalies from sales. We print money for ourselves. When taking bad debt, we print money for the creditor.
You need two things to tell whether something is an asset or liability
People often get confused and misled over whether something is an asset or not. The layman’s definition isn’t very helpful. Here are the two key things to consider when deciding if something is an asset or liability
There is usually cash involved and that cash must flow from one party to another. If the thing makes cash flow towards your pocket, then it’s an asset. If it makes cash flow out of your pocket, it’s a liability. Pure and simple.
In conclusion, as you labour in life and get rewards in terms of currency, money, etc, if you want that money to hold its value, you need to make sure you store a reasonable portion of your wealth in the form of real money. If you want to become wise, you need to learn from real teachers. If you want to become truly wealthy, you must invest in real assets.