“Rich Dad” Robert Kiyosaki concludes his exposition of the secret manipulation of gold.

Dear Malcolm,

Picking up where we left off yesterday, let’s get back into fractional reserve banking and the history that got us to where we are today…

Much of the global banking system runs on what is known as fractional reserve banking — a system that has been running the world for thousands of years. The following is a simple explanation of the system.

Imagine, a thousand years ago you are a shop owner. You have 10 gold coins. You need to travel a thousand miles through rough country with the likelihood you’ll run into some bad people to buy goods for your store.

You go to a local “banker” who agrees to hold your 10 gold coins in his safe. The “banker” issues you a piece of paper saying that you have deposited 10 gold coins with him.

You then travel a thousand miles through rough country with only a piece of paper. Your gold coins are safe.

You then buy new merchandise for your store, give your piece of paper to the person who sold you the merchandise and head home.

The person who sold you your merchandise goes to his “bank” and collects his gold.

After a while, both you and the person who sold you your merchandise realize that paper is much more convenient than gold coins. You both leave your gold with your bankers and use your bankers’ CDs, or certificates of deposit, as paper money.

People who need money go to your banker and ask for a “loan.” The banker lends out nine of your 10 gold coins. The one gold coin he holds in his vault is the “fractional reserve.” In this example, the fractional reserve is one coin, or 10%.

This is where it gets exciting. The person who borrowed 9 of your 10 gold coins goes to his bank and deposits your 9 gold coins. His banker then lends out 8.1 of the 9 coins to other borrowers, who do the same thing with their bank.

Your 10 (real) gold coins could easily become 1,000 (fake) gold coins. And everything is fine — as long as no one wants real gold coins. This is the modern banking system.

The fractional reserve banking system of banking applies to everything, not only money or gold. The entire banking system is based on counter-party trust.

This fractional-reserve gold banking system has worked very well for governments for many years. But in recent months, with the virus epidemic shutting down economies, there has been an increased demand for real metal.

This, we believe, is collapsing the fractional-reserve gold banking system because it doesn’t have the metal to back up all the paper gold that it has sold.

Invest in Real Assets

Rich dad’s simple definition of assets and liabilities is this: Assets put money in your pocket. Liabilities take money from your pocket. After realizing what the government was up to in 1971, rich dad came up with his #1 lesson, which is: “The rich do not work for money.”

My rich dad realized money was toxic, designed to steal the wealth of anyone who worked for money, saved money, or invested money in government-sponsored investments such as 401(k)s, IRAs, stocks, mutual funds and ETFs.

As I said, all paper assets are a form of derivatives. They are not real assets. They are fake assets. One reason my wife Kim and I were able to retire young is that we invested in real assets, not Wall Street’s financially-engineered, fake assets.

I invest in real assets where the government wants me to be a partner. By investing in real assets the government wants me to invest in, I pay little to zero taxes, legally.

Get on Your Own Gold Standard

My friend Jim Rickards uses the metaphor of an avalanche to describe the coming crash and possible collapse of the dollar.

For years, snow accumulates on the mountain peaks above a village. Rather than detonate small charges, causing small avalanches that would ruin the ski season, the powers that be keep building barricades to attract more skiers. Meanwhile, more and more snow accumulates, and the threat of the “big one,” a catastrophic avalanche, grows every year.

Then one day, a tiny snowflake lands on a mountain peak, and the village is buried under tons of snow. This avalanche metaphor has been going on since 1971, the year President Richard Nixon took the U.S. dollar off the gold standard.

After each market crash, rather than fix the problem, our leaders print more fake money — the mountain of debt grows taller and deeper, and the problem grows more ominous every year.

Rather than snow, the world village is about to be buried under an avalanche of debt, fake investments and fake money.

Today, billions of people are living beneath the avalanche. They are trapped in a central banking system owned by the mega-rich. The central banks are not elected by the people and do not have to answer to the people. That is why gold and Bitcoin are a threat to central bankers.

Getting on your own gold and silver standard — before the last snowflake, before the avalanche — gives you a way off the mountain. If the avalanche knocks out the electrical system, government money and people’s money are toast. ATMs will shut down, Wall Street will close, and people’s money will disappear when the World Wide Web disappears.

Always remember, gold and silver were here when the Earth was formed, and gold and silver will be here when we are all gone.

Regards,

Robert Kiyosaki