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Learn The Laguage of Money

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imagesI have been following Robert Kiyosaki’s online collaborative work The Conspiracy of The Rich and this post reviews his new rule of money number 6 – Learn The Language of Money.

He argues that various professionals have their own language that people entering them quickly learn to adopt. It’s the same for the rich, only about 10% of the population know and understand the language of the rich.

The remaining 90% have been through standard education where the rich removed the language of money and replaced it with calculus and algebra which are pretty useless to most people outside of school/college.

He advises spending a little time each day learning the language of the rich for two reasons. Firstly if you are going to become an entrepreneur then you need to speak and understand the language of the rich. Even if you are not going to become an entrepreneur learning the language of the rich will stop you being hoodwinked by that language.

He advises to avoid false prophets who advise you to, “Save money, buy a house, get out of debt and invest for the long term in a well- diversified portfolio of mutual funds.”

He points out it would not cost a lot of money to educate kids in the language of money and in turn more of them would want to become entrepreneurs and create real jobs.

Ending on one example of how words form our reality and why learning the language of the rich is so important:

  • Poor Person – I will never be rich
  • Middle Class Person – I’ve got a high paying secure job
  • Rich Person – I’m looking for good employees to work for me

THE NEED FOR SPEED

We are now up to New Rule of Money No. 5 from Robert Kiyosaki’s online collaborative work, The Conspiracy of the Rich. This is in Chapter five of the book in which Robert discusses the evolution of money. he explains we have gone from real money to magic money.

The basic stages we have gone through are:

  • Barter – Where no money was involved and we exchanged one type of goods for another. He does add an very interesting side note, if the economy continues to tank then there will be a re-emergence of bartering again even maybe exchanging working on someone’s house repairs for example in exchange for food – not that far fetched and shows how fragile our digital economy has become.
  • Commodities – In order to speed up trade tribes/people got together and agreed on tangible items that ‘represented’ a certain value at first early forms were sea shells, beads etc. This sped up the process because you could carry the agreed commodity – glass beads for example in your pocket instead of hauling round chickens.  Today gold and silver are the only commodities that represent money internationally.
  • Receipt Money – To keep precious metals safe rich people would hand it to people they trusted and in return get a receipt for it. They would then go to a representative of that trusted person elsewhere and exchange the receipt for precious metal. The Knights Templars were amongst the first to do this for pilgrims and it was the earliest form of banking. This evolved so that the receipt itself could be used to buy things – hence derivative – something from something else. Now rather than move the precious goods the bankers in the two cities would simply reconcile their record. We do the same today with cheques [note the correct English spelling in spite of Microsoft’s attempt to make me change]
  • Fractional reserve receipt money – This is where it gets tricky. The best way to explain is by example. The bank has £500 of precious commodities in it’s vault. But they have $1,000 receipts in circulations that could claim the $500. So in this case they created a fractional reserve of $2 for every $1 in circulation. The banks collected interest on the money they did not actually have – the £500 difference. As Robert says if you or I did this it would be classed as theft but for banks it’s perfectly legal.
  • Fiat money – Technically before Nixon in America and Harold Wilson in the UK took their currencies off the Gold Standard their currencies were a derivative of gold. After being taken off the gold standard the currency becomes a derivative of debt. Fiat money is money backed by government good faith and credit. If anyone tries to alter that then the government has the power to put them in jail for fraud or counterfeiting. In other words the government has the juice to say you pay your taxes in our currency or else. So we arrive at digital money – money at the speed of light.

 

The reason for rule number 5 – The Need For Speed explains why some people become billionaires overnight and other still work for $7.50 an hour, it the differential in speed with which they acquire money. A high school child with a web business working 24/7 can make more money than a medical doctor. Crucially our thinking has in large yet to catch up in speed to this.

People who make money on the web are working metaphysically the other is physical. Metaphysical work is creates wealth exponentially, whereas physical work creates wealth in a linear fashion.

I will end with the following quote from Robert, “Those who will succeed in the future will be the entrepreneurs who who understand how quickly business and money are changing, and who have the ability and flexibility to quickly change and adapt”.