Trump’s Report Card: The Good & The Bad -Robert Kiyosaki

(upbeat music) – [Announcer] This is
the Rich Dad Radio Show. The good news and bad news about money. Here’s Robert Kiyosaki. – [Robert] Hello, hello
this is Robert Kiyosaki, the Rich Dad Radio Show, the good news and bad news about money. So our show today is about
how is President Trump doing? You know, some people love him, some people say he’s doing a great job. Some people say he’s horrible, he’s the worst they’ve ever seen, and some of them say we’re
going on the road to hell. So it’s going to be a
very interesting show. It’s kind of a report
card, an update on how the Donald is doing. So our guest today is a man who knows what he’s talkin’ about. It’s David Stockman, he’s
a best-selling author. He is a Washington insider. He was a former Director of the Office of Management and Budget
under President Reagan, some people say the greatest
Republican president we’ve had in modern times. So David Stockman, he wrote the book “The Great Deformation, The Corruption of Capitalism in America”. And I sent David a picture of my book of “The Great Deformation”. It has tabs all over the place. That book you as an anchor to
hold an aircraft carrier down, it’s so big.
(laughing) And I went through that
book and it blew my mind to read the book, “The Great Deformation”. He wrote another book called “Trumped, A Nation on the Brink of Ruin and How to Bring it Back”. And he’s the author of a
new book, “Peak Trump”. He likes this guy a lot.
(laughing) “The Undrainable Swamp
and the Fantasy of MAGA”, which is Make America Great Again. So David Stockman is one of
my favorite, favorite guests because as I said, he was on the inside of what they call the Reagan Revolution, you know, it’s when Reagan
pulled America out of a great, we were screwin’ up back in those days, horrible, horrible high inflation, the nation was coming apart. So Reagan is credited for bringing America back together again. So he’s going to be speakin’
today about a friend of mine, the President Donald. And I said, David, you
can say anything you like because it’s the Rich Dad Radio Show. We have no political
affiliation, right Kim? – [Kim] Yes. And David’s a wealth of information, so we’re going to get started right away, because David actually has
been in Washington since 1973. So he’s seen a lot, he’s
seen a lot of presidents, been around a lot, and he’s talking from
really his experience on what’s happening, not just an opinion. So David, welcome to the show. – [David] Great, happy to be with you. – Thank you.
– Got lots to talk about, that’s for sure.
– We do. – [Robert] So what is “Peak Trump” about, “The Undrainable Swamp and the Fantasy of Make America Great Again”. You know, that’s, I
mean, has the swamp won? – [David] I think it’s pretty simple. If you remember on the
eve of the campaign, Trump was campaigning from
one side of the country to the other. He said, we’re facing
one big fat ugly bubble. He was right, but at that
point the stock market, the S and P 500, was 2140. He correctly identified that we had an unsustainable
bubble on Wall Street. Main Street was in big trouble,
that’s why he got elected, that’s why people in Wisconsin, Michigan, Western Pennsylvania, the old industrial heartland
of America voted for him. But then once in office, he made a gigantic rookie mistake by embracing the bubble he inherited when the risk is, I think, overwhelming that it’s going to blow up in his face. In other words, two years later,
September 2018, last fall, the S and P 500 peaked at 2940. In other words, it was up 800 points in the first two years (laughs) and it was only a worse,
more dangerous, you know, less sustainable bubble than
the one that he identified during the campaign. – But–
– Now, some people want to say, well but
he’s changed everything. But the problem is, he hasn’t. I mean, I think he had the intention, I think he was responding
to an enormous failure of mainstream Keynesian
liberal Washington policy. But he’s only made the deficit worse. He inherited a $700 billion
deficit, which was terrible this late in the business cycle. You know, we’re in year
10, we’re in month 115 of this so-called recovery expansion, the second-longest in history. At that stage of the game, even the Keynesian professors always said, you got to reduce the deficit
or even balance the budget. But instead of doing the
right thing about that, he (laughs) you know, doubled down, put through the tax cut, which was fine, but it wasn’t financed. It should’ve been financed
with spending cuts or a more benign source of
revenue like a consumption tax. Didn’t do that, just added
$300 billion of deficit on what he inherited for the current year. Then he said, we need more defense. Well, that was crazy. The reason I called the
book “The Undrainable Swamp” is the truth about the Washington swamp, and he’s absolutely right-on
when he talks about that, is that the deep end of the swamp is on the other side of the
Potomac, over at the Pentagon. That’s where the real waste, and that’s where the whole military-industrial-surveillance
complex lives, all of the defense contractors and people that are living
off the taxpayer’s dollar. But he doubled down on
that by adding $80 billion to the defense budget, which
was already $600 billion and far more than we needed. But, and here’s the big but, to get it, he had to give the mainstream Republicans, who, I call them RINOs, Republicans In Name Only
(laughing) because they’re really, you know, they’re unwilling to stand
up to the spending monster. And the Democrats, he
gave them $65 billion of increased domestic spending in return for his $80 billion of
defense, per year now. And then we had all those
disasters, as you remember. The hurricanes and floods
and so forth last year. So they threw another $100
billion on top of that and didn’t find any way to finance it. They just borrowed the money. So what I’m saying is that he
inherited a very bad situation at $700 billion of deficit this year, raised it to $1.2 trillion, 6% of GDP. Unheard of at this late
stage in the cycle. And then, to add insult to injury, both Trump and the Republican
majority on Capitol Hill utterly failed to recognize that the Fed had delayed and deferred and dithered on normalizing interest rates and its balance sheet
for so long, you know, because they were trying to
help Obama look good, I think, at least that’s what Trump said. (laughs) I think it’s a fair criticism. They had reached the point
where they had to pivot from quantitative easing, where they were buying
up the debt in the market and thereby helping finance
the treasury’s borrowing, to reducing their balance sheet which means that they’re
going to be selling debt or government bonds into
the Wall Street market. And thereby putting even more
pressure on interest rates. Now, to put this in quantitative terms–
– Wait, so what, so what– David, David, David, when they buy, when the Fed buys US bonds, treasuries, from the US Treasury, that creates a bubble in the
bond market, is that correct? – [David] Absolutely, because
it’s another source of demand that’s based on fiat credit.
– Right, fake money. – [David] In other words,
if you’re an investor, you want to buy treasury bonds, you either got to sell something
else or save some new money in order to have the
means to buy the bonds. But the Fed, the Fed just says, I want to buy a billion bonds today, $1 billion worth of bonds, and I’ll print $1 billion worth of credit and give it to the Wall Street dealers that sell me the bonds. So that really creates an
artificial savings supply that obviously, then, the law
of supply and demand works, you know, (laughs) it wasn’t repealed. If there’s a lot more
demand for treasury debt because it’s all coming from the Fed, then obviously bond prices are improved. The yields go down, you get a bubble. And then it spreads to
the rest of the market because–
– But what happened, so David, people were borrowing money because the yield was so low. – Right, yeah.
– And so that, so that created a bubble
in the stock market, real estate market, the
private equity market. Everywhere that when the Fed
was in quantitative easing, they created this bubble out of fake money floating around the place. Now they’re in quantitative tightening, which means they’re selling their bonds back into the market. What does that do now? – [David] It reverses the dynamics, it reverses the flow. (laughs) In other words, when the
Fed was helping to buy, it was driving prices up. Now it’s selling. Obviously when someone
starts selling a lot of paper that used to be a buyer (laughs) that changes the supply and
demand dynamics of the market. So what’s happening now is there’s enormous downward
pressure on bond prices, and yields have gone up. Now, I realize that they
were at 3.25 on the 10 year a few months ago. But on a trend basis,
yields have been going up for the last year and a half as the Fed has begun the process of shrinking its balance sheet. And when you–
– What does that mean to Main Street? You’re talkin’ to me here,
I need to understand. – [David] Yeah. What it means is that the 10 year bond of the US Treasury is what’s
called the benchmark security. And what that means is that if the treasury bond is yielding, let’s say, 2.8% interest today, then almost everything
else in the bond market gets priced on a spread, in other words, a number of basis points above that. ‘Cause you know, the
treasury is considered the risk-free security, so if you’re a double A corporation, then if the treasury’s at 2.8%, maybe you can borrow at 3.8%. – [Robert] Yeah, so the
cost of money goes up, so the people–
– Yeah. So everybody’s cost of borrowing cost is going to go up commensurately, and sometimes far more
– Does that– – [David] Than the increase
in the treasury yield. – [Robert] But doesn’t
that slow down the economy? – [David] Yeah! Because why did they do it? Well, they said we’re trying
to goose the housing market and force mortgage rates lower so more people will borrow
to either buy a new home or to trade up from the one they’re in. And same way they were tryin’ to stimulate corporate borrowing. But see, the thing is, it backfired. The household sector was so indebted at the end of the crisis, still had $15 trillion of debt, that it didn’t, the household sector, except for the top 10%
or so of households, were not in the position
to borrow a lot more money even though the Fed was lowering the interest rates dramatically through this QE. – [Robert] So then now
they’ve raised interest rates. – [David] (laughs) Yeah. – [Robert] And then Trump
yells at this guy, Powell, saying, hey, don’t raise interest rates. – [David] Yeah. But see, the thing is, it didn’t work. It actually caused the
bubble to be enlarged, to be amplified because even the corporate
sector said, oh, you know, the yield on our bonds is
going down quite substantially because the Fed is so, got
its heavy hand in the market. But instead of borrowing
money to invest, let’s say, in new plants or equipment or technology or intellectual property, the overwhelming share of
corporate borrowing, in response to the Bernanke-Yellen
interest rate suppression, as we call it, was to borrow from Wall Street and buy in their own stock or funds– – [Robert] So the price
of the stocks went up. – [David] Yeah. So what I’m saying is, it never got out of the
canyons of Wall Street. The Fed was trying to put
this money into Main Street. Households couldn’t borrow much more, so it didn’t get to Main
Street through the households. – [Robert] So the rich got richer! – (laughs) Yeah, exactly.
– And the poor got poorer. – [David] No, the 1% got richer. Let me just give you a number on this, which I lay out in my book. And it’s quite dramatic. If you take the median household wealth, obviously this is, you know,
the very center household, there’s 120 million households, so this is the 60 millionth
household (laughs) at that point. The average house, the
60 median household, in 2007, on the eve of the crisis, had a net worth of $120000. Which isn’t a lot, if you
consider what it costs to retire, but that’s what it was. Today, after all of this money pumping, after all of this so-called recovery and this huge boom in the stock market, we can talk about it. The median real wealth of
American households is $80000. In other words,
– (laughs) – [David] It’s down by nearly a third. That’s for the median.
– And the 1% is up. – [David] Well, that’s a
third, that’s nearly a third. (laughs) Okay? – [Robert] Okay, so wait a minute. So, go ahead Kim. – [David] So the median’s,
let me just finish this. So the median’s down by a third even though the stock market
is doubled in real terms during the same period. So who got all the winnings? – The rich.
– (laughs) The answer is the 1% and the 10% that own, respectively,
40% and 85% of the stock in the stock market, okay? So this thing was perverse. It was upside-down Robin Hood. It was done in the name of
bailing out Main Street. It never got out of Wall Street. It created the greatest bubble
ever in financial assets. That was captured by the 1%
and the 10% top households. Main Street is no better
off than it was in 2007, in many ways, worse off. And that’s why they voted for
Trump, but the problem was, Trump (laughs) wants the
Fed to keep doing more of what caused the problem! – [Kim] So when you go back, David, you talk about this rookie
mistake that Trump made. And in your book “Peak
Trump”, you talk about, had Trump, on the campaign
trail he’s saying, you know, we’ve got this stock
bubble, we need to handle it Had he done what you said
Reagan did when he took office, which was what? He said, we’ve inherited this mess. Instead of embracing it. – [David] Yeah. I said he really needed
to have taken a page out of Reagan’s playbook,
and I was there, (laughs) you know, and actually half the time have participated in writing the speeches and press releases and so forth. But he never stopped reminding the public that Jimmy Carter had left
a huge mess on his doorstep. The Democratic policy had taken the country
to the brink of ruin. And for two or three years, he just preached that line over and over. He didn’t take responsibility, he didn’t embrace the economy he inherited because he knew it takes
years and years and years, you know, to turn the ship of state in this $20 trillion economy. But Donald Trump, unfortunately, and I’m not negative on him. As I say, I voted for him. So this is about his
policy, not about him. But the problem is, he’s
got such an overleaning, gigantic, impulsive
ego, that if the surface – Really?
– (laughs) – It’s going to look like
like they’re favorable, he embraced them. And it was like, a big trap. (laughs) You know, I think, you know, they didn’t do this intentionally. But you know, the Fed
was basically saying, here’s the bubble, own it if you want. But it’s not going to last. And of course, we’ve had
a fairly decent correction since the peak. You know, I identify it,
September 2018, the market peaked and I think it’s all downhill. You know, not in a straight line, but you’re regularly going
downhill for many years to come. And that’s going to be
Trump’s political problem. – [Robert] So one of the questions that confuses me personally, is if the stock is, if
the economy is so bad, the debt is so bad, why
is unemployment so low? You know? Because a lot of people say,
well, he’s doing a good job because unemployment is low. Now, they hate him but
they’re happy they have jobs and the pay raises are–
– So, you know, the short answer to that– – Wait, wait, David.
– We were gonna take a break. – Hold up, hold up, hold up.
– And I also, when we come back from the
break I want to find out, because there are some
things Trump is doing well, that you think so. We want to go into that too. – [Announcer] You’re listening
to the Rich Dad Radio Show with Robert Kiyosaki. (upbeat music) – [Sponsor] Don’t be like Charlie. Charlie is that do-it-yourselfer
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$100 off your formation fee. That’s, – [Robert] What is your
number one expense in life? Your number one expense. It’s taxes. And I want to ask the question, is how come there’s no
financial education in school, but why isn’t there
education on taxes either? You know, they tell you to
save money, which is stupid. They tell you to invest in the stock market, which is stupid. But what do they teach you about taxes? So here we have Rich Dad
advisor, Tom Wheelwright. We’re talkin’ about his
revision for his book, “Tax-Free Wealth”. Welcome, Tom. – [Tom] Thanks, Robert. – [Robert] So what is
“Tax-Free Wealth” about? What’s different this time? So, revised edition. – [Tom] Well, so what we did was, this is the first major tax
reform we’ve had in 30 years, 2017. – [Robert] ’86 was the last one. – [Tom] ’86 was the last one, back when I was in Washington DC. – [Robert] So many guys got wiped out because of that tax change. – [Tom] (laughs) They did, they did. It wiped out an entire
industry, savings and loans. This new tax law is just as big, but in a very different way. It affects different industries. You know, the tax law’s
always a series of incentives. And the question is
always, which incentives and which ones apply to me? And so, the key to
revising “Tax-Free Wealth” was what is, what changed
so much in this new tax law that we can absolutely
take advantage of the, I mean, seriously, the amazing incentives. For example, I mean, the bonus
depreciation, for example, for real estate, is unbelievable. You buy a $1 million apartment, get a $300000 deduction or
more the very first year. – [Robert] So if you
want to make more money and pay less taxes like
Donald Trump and myself, get Tom’s book, “Tax-Free Wealth”. (energetic rock music) – [Announcer] Log on to while you listen. Now, back to Robert Kiyosaki. – [Robert] Welcome back. Robert Kiyosaki, The Rich Dad Radio show, the good news and bad news about money. Our special guest today is David Stockman. He’s a best-selling author,
he’s a Washington insider, he’s a former director of the Office of Management and Budget under President Ronald Reagan. So David Stockman is an insider. He wrote the book “The Great Deformation”, a book I walk around with to show proudly that I read the whole thing. It’s so big. But also the book called “Trump, a Nation on the Brink of Ruin and How to Bring it Back”. (laughs) And his new book is “Peak Trump”. You know, has he already peaked? And the reason that the
show is so important, we have to know what’s
going to happen now, because I don’t think, or
it can’t get much worse. I was talkin’ to my
friends a few days ago, said, we’re basically a house of cards, and the foundation is
getting weaker, not stronger. And that’s why David Stockman
is a guest on this show. You can listen to the
Rich Dad Radio program anytime, anywhere, on iTunes or Android, and you can listen to this program again, because all of our programs are archived at And we archive it for one reason. It’s because we’re an educational program. We’re not political, we’re not religious, and we have nothing to sell you. So the Rich Dad Radio Program is archived so you can listen to it
again so you can learn again, because “Peak Trump”, the latest book by author David Stockman, crucial book, because I
think and many people think we’re at a turning point
in the world economy, where we go up or where we come down. That’s the question. So listen to this radio program
again at Listen to it with yourself,
your friends and your family, discuss it, and you’ll
understand what’s going on in the world of “Peak Trump”, or MAGA, Make America Great Again. I don’t know if that’s happening. So our guest, again, is David Stockman. And he’s going to answer the question, if the economy is so bad,
why is unemployment so low? What is really going on? Any comments, Kim? – [Kim] Well, I just want
to turn over to David. Why is, if the market’s and the economy, and I still don’t understand why because the stock market is up, they say the economy’s doing well. But unemployment they say is low. Is it really low, is
the economy really good? – [David] Well, no. I don’t think the economy’s good at all. I’ll answer the unemployment
thing in a moment, except to say the data put out by the BLS, the Bureau
of Labor Statistics, isn’t worth the paper to
blow it hell with. (laughs) – [Kim] There we go, there we go. – [David] And I can
give you some statistics which document that. But the idea that because the stock market’s
up, the economy’s booming, it can be refuted with a comparison that is literally startling. If I go back to late 2007,
on the eve of the crisis, before we had the whole
Lehman bankruptcy meltdown, subprime catastrophe
and the Great Recession. If you start right before
that, the NASDAQ 100, which is the technology
sector of the stock market, where all the boom has
been, you know, (laughs) with Facebook and Google
and all the rest of them. It’s up 200% in that 11 year period, 200%, even when you adjust out the inflation. That is a staggering increase, 200% even if you take the
inflation out of the stock prices. – [Kim] From 2007 to today. – [David] To today. On the other hand, if you look at industrial
production in America, which is a good proxy for what’s happening on
the Main Street economy, because that’s not just manufacturing, that’s construction,
that’s energy and mining and oil and shale and
electrical power production and so forth. It’s up 3%.
– (laughs) – [David] Now, how do you
get the Main Street economy, in 11 years, only up 3%, when Wall Street is up,
in real terms, 200%? Another statistic. During that entire period, despite what they’re tellin’ you about the unemployment rate, which you know, is an
apples and oranges count, I look at labor hours employed. Because you know, the BLS counts a part-time
job at McDonald’s, 10 hours a week, the same as a, you
know, 50 hour a week job with overtime at a steel plant, where the worker earns,
let’s say, $50000 a year, versus the guy runnin’ the hamburger stand that may be making $10000 a year. In other words, you
can’t compare these jobs, and that’s the problem. But when you look at
labor hours, at least, you’re counting a common metric. Now, I bring that up because
in that entire 11 year period, total increase in labor hours
utilized by the US economy is up by only 8%. So again, stock market up 200%, total labor hours put to work
and paychecks earned, up 8%. Finally, look at median
household income after inflation. And this goes to your
wage question as well. It’s up 0% from 2007 to the present time. So again, 200% on Wall
Street, 0% on Main Street. And even the wages are going up by 3%. Inflation has been going up (laughs) by 2%, 2.5%, and there isn’t
very much left after inflation, given the fact that even
the BLS inflation index understates what’s really going on. – [Robert] So it’s just more fake numbers and fake, you know.
– Yeah. And well, you know, I call them, yeah, you could call them fake numbers. They’re numbers that were designed
– Deceptive, yeah. – [David] To reflect a
Keynesian economic policy that the Fed adheres to. But it doesn’t reflect the
reality on Main Street. – [Robert] Right. So David, when you use the word Keynesian, do you mean printing money? – [David] Yeah. I mean printing money, I mean, the Keynesians believe
the more you borrow, the wealthier you are. The more the government
injects into the economy, even if it’s just borrowing
money from future generations, it’s all making things better. I reject that. And that’s why we’re in
such a great crisis today. – [Robert] So David, let me ask you this, because we’re speakin’ about Trump. What did you think of the
shutdown over the wall and all this thing about the budget? What’s really goin’ on? – [David] Well first of all, I think he wasted a great crisis. (laughs) In other words, I’m not opposed
to a government shutdown if you use it as leverage to try to get the budget
doomsday machine under control. And by that I mean the entitlements
run on, year after year, without any Congressional action. So we’re going to go bankrupt through the automatic entitlements unless someone throws
the rocks into the gears and tries to stop the system. And the only way you can do that is leverage the debt ceiling. And if you have to shut
down the government, do it. But that isn’t what happened here. Instead, he was trying to build this wall. I’m sorry, I don’t agree that
the wall makes any sense, is necessary. I think it’s a big waste of money. It’s a total delusion. But he shut down the government, which is something that
gives him leverage, for something we didn’t need, and actually is going to add to spending. – [Robert] But you said
something that few people know. These entitlements are on
automatic ratchet-up, right? – Yeah.
– I mean, you can’t stop them. – [David] $2.5 trillion a year, that’s Social Security,
Medicare, Medicaid, federal pensions for military
and civilian employees. – [Robert] So we’re going bankrupt. – [Kim] So you’re talkin’
about welfare state and warfare state. – [David] Yeah, yeah. And the warfare state, (laughs) and that’s the other area
where Trump, I think, was totally, you know, mistaken, went in the wrong direction. The warfare state already
cost $600 billion, that was the defense budget. But if you put on top
of that the $200 billion we have to spend on veterans, but that’s really just
deferred cost of old wars, because you end up with
veterans that have medical care and income support for life. And if you add to that the cost of all our security assistance, foreign aid, operations
of the State Department, Voice of America, all the rest of it, I’m going to tell you, it
adds up to $1 trillion a year. So now, listen to this. You got $1 trillion of
warfare state spending, and it keeps going higher. And Trump has added $100
billion to that already. You have the welfare
state at $2.5 trillion, on automatic pilot,
all these entitlements. And then you have a $22
trillion national debt and rising rapidly that will create interest
costs, which is also automatic unless we want to default, cause the whole world (laughs) you know, go to hell in a handbasket. It’s going to hit $1/2 trillion
a year soon this coming year and be $1 trillion a year
a few years down the road. Now, that is a doomsday machine, when you’re spending
$1 trillion on interest from stuff you already
borrowed and wasted years ago. $2.5 trillion on the welfare state, and $1 trillion on the warfare state. That’s the swamp, okay? And the problem is, Trump really has not
effectively taken on any of it. He has, the spending
level for the whole budget was $3.9 trillion when he came in, it’s going to be $4.5 trillion this year. It’s going up just like it always did. – [Robert] So we’re going bankrupt, the US is going bankrupt. – [David] Yeah, yeah. And we’re doing, (laughs)
we’re going bankrupt, we have been for a long time. But what’s new? And that’s what people
really need to understand is that for many years the
Fed was easing the pain because it was buying up
all this treasury debt that was being issued to fund the deficit. And so therefore, it created
the illusion of a free lunch. In other words, you
could have big deficits, it didn’t hurt interest rates, it didn’t squeeze out private investment. That was what I learned
as a young Congressman in the ’70s and in the Reagan
administration in the ’80s, that if the deficit gets out of control, there’s only so much savings available. The government gets first dibs, obviously. It’s got the sharpest
elbows and best credit. And you squeeze out everyone else, and that causes private
investment to fall, businesses to be hurt, the
private sector to be undermined. And that’s what caused
people to understand, you couldn’t just run these giant deficits year in and year out. The Fed stepped in, and
we talked about it before, after 1971, and Nixon taking
us off the gold standard, which was a built-in discipline. Fed stepped in and started buying. Now, here’s a number that’ll startle you. When Greenspan took over,
and he’s the real villain, and then the rest of
them only did what he did and doubled down on it. But when he took over in 1987, the balance sheet of the
Fed was $200 billion, it had taken about 84 years to build it up from when the Fed opened in 1914. At the peak of QE a couple years ago, the balance sheet was $4.5 trillion. In other words, it went from
$200 billion to $4.5 trillion. You know, that’s $4.3 trillion of money they printed in 30 years to buy up treasury debt and
make it easier to run deficits. – [Robert] Right, so
David, so David, David, you know, this is–
– But now they’re not doing that. Now we’re at the end of that. – [Robert] I understand
David, but this, look, we’re speaking over the head of me and my audience here.
– Okay. (laughs) – [Robert] Because the numbers hurt us because I can’t count to 10 anyway. – [Kim] (laughs) – [Robert] So the point
here is this, okay? So the point here is this, because you talk about something
I talk about all the time, is the baby boom generation
is the first generation really without a pension,
because it went from, that’s when the 401K kicked in. But what we also have, you know, state pension plans like CalPERS, which is California’s state
employee pension plan. Which is underwater $1 trillion. So if you were a government
employee in California or you’re a resident of
California right now, and you knew that millions
and millions of baby boomers are going to start to collect
from their retirement plan, are they going to make it? I mean, if I was an employee
of CalPERS right now, I’d be wonderin’ if the
government can pay for it, because the state government
cannot print money. – [David] Right, well– – [Robert] And the Fed, wait,
wait, wait, one more thing. So if I’m a taxpayer living in California, am I going to pay for those retirees? Those are the questions. We got to get down to the,
you know, the brass tacks, you and me. – [David] Yeah. Well, I think you’ve identified
the elephant in the room. What’s going to happen is the state can’t afford these pensions. I mean, when you look at
the future projections, and it’s just not
CalPERS, it’s nation-wide, state and local pensions are underfunded by $3 or $4 trillion. And it varies from state to state as to what their constitutions say about the priority of pension obligations versus other government programs. But the two things that are
going to get hit really hard, besides the pensioners, who are going to face possible
restructuring of their plans, or reduction of their benefits– – [Robert] But that means, states like New Hampshire
cut their pensions. – [David] Yeah, well some states can, and some states will try and
they’ll be taken to court by the Public Employees Union. And then it’ll be fought out in court, and who knows what’ll happen. – So let’s–
– But you can’t square the circle. Taxpayers in these states are going to get hit with whatever bill the courts decide has to be paid. And people who use services
provided by the state are going to (laughs) suddenly find that services have been sharply reduced because the money had to be reallocated to whatever the courts
say is going to be needed for the pensions.
– So if– – [David] So we’re going
to be in a big, big mess that’s only going to get worse
as the baby boom retires. That’s state and local,
what you’re talking about with CalPERS, et cetera. But federally, it’s the same thing. I mean–
– Right, so, yeah, yeah, so, but let’s, when you speak about the Fed, let’s speak to the guy on the ground. If you are a resident
of California right now and you are, let’s say, a
teacher in California right now, what would David Stockman say
to them about their future? – [David] Well, I think
that there is a risk that when the rubber really meets the road that there’ll be some
kind of forced settlement that comes out of the courts in which everybody takes the pain. In other words, employee benefits get
restructured or cut back, taxes get raised, and
services get reduced. There is no other way to do the math when you’re (laughs) $4
trillion in the hole nation-wide and $1 trillion or so, as
you say, in California. – And so, the baby boomers–
– Nobody can count on anything, okay? – [Robert] Right. So the point here, the point,
the big point here is this, the Fed can print money,
borrow money, do what it does, but states cannot. – That’s absolutely right.
– That’s the big difference. – [David] And that’s why
the real debt problem, at the end of the day,
is at the federal level. Because even the Fed can’t print forever. They’ll blow up, you know,
if they tried to do this in large magnitude for
decades and decades, you’d blow up the whole system. But they’ve recognized that
they went too far, too long, and that’s why in October 2017, and I just think the date
needs to be circled in red on everybody’s calendar. That’s when the Fed finally
said, after 30 years, we’re not going to be
buying any more bonds, we’re going to be selling them. – Quantitative tightening.
– We’re going to shrinking. – Tightening.
– That… – [Robert] So, I don’t know how to say this, but your latest book is “Peak Trump”. And if you had a crystal ball right now, how much have we, has Peak Trump got? – [David] Well, he’s in
the down slope already. In other words, I say
(laughs) September 2018, when the great bubble, when the
Trump bubble finally peaked, that was the peak. And it’s all downhill from here. And I think as we get into
the next budget crisis, which is coming up–
– And this is bigger, this is bigger than the
shutdown we just came through. – [David] Oh no, yeah, the shutdown was just like spring training for what’s going to come
with the debt ceiling. And the Democrats are
going to be out for blood, and they’re going to try to force Trump to put all kinds of new
money into their programs. He’s going to try to put
money into his sacred wall. It is going to be one horrendous mess. It’s going to last all spring and summer, it’s going to scare the
hell out of everybody, even on Wall Street. And that’s when I think the day of reckoning is going to begin, in the next 12 months. – [Robert] And so David, is
that why socialism is rising? You have, you know, Kamala Harris and AOC.
– Yeah well, that’s another risk, that’s another risk. When people see the size of this deficit and then the shock in the bond market and then Washington finally
is forced to do something about the deficit, they’re going to, they
liberals and Democrats are going to want to soak the rich. – Yep, so–
– Yep. – And that–
– And that’s their, that’s their proposal right now, free healthcare, tax the rich. It’s already, it’s socialism. – [David] Absolutely. (laughs) And it would
only make matters worse. And, but what it will do is create a massive blow to
confidence in Wall Street, because these guys down
there are just oblivious to the storms that are coming up the, a hail of quarters, I call it, from Washington towards Wall Street. – [Robert] So David,
David, we’re out of time. I loved it. Would you come back again? I love talking to you, man. – [David] (laughs) Okay. – Now we–
– ‘Cause we’re an educational program,
we’re not political, we’re not religious,
and we don’t take money. You know, Trump’s a friend. I voted for him, you voted for him. But I think we’re speakin’
to the American public now about to wake up and smell the coffee. Final words, Kim? – [Kim] Well, I did want to go into, but we’ll have to, you’re
gonna have to get his, get David’s book “Peak Trump”. I wanted to go into what
Donald was doing correctly. (laughing) But I don’t think it really
matters all that much right now. But read “Peak Trump” and find out, because he was doing some things well. And he just kept getting
– Absolutely. – Stomped on.
– I’ll just say, yeah, he was trying to roll back the empire. We can’t afford to be a global
empire and global policeman. And he is trying to get us out of Syria, he’s trying to do a deal with Korea, which I think is the right thing. And he wanted to withdraw
from NATO, which we should’ve. You know, it’s obsolete, the
Cold War ended 30 years ago. He wanted to do all those things, and they stopped him at every turn. So the good things he’s
trying to do, they stopped. The bad things he’s doing, they
want to, they want more of. So you know,
– (laughs) – [David] It’s not a winning competition. – Hey David–
– No, it’s not. – [Robert] David, keep
up the good fight, man. Keep up the good fight, thank you. – [Kim] Thank you, David. – Thank you.
– Great to be with you. – You too.
– All right, thank you. – [Robert] And when we come back, we’ll go into a more
popular part of our program, which is Ask Robert. We’ll be right back. – [Announcer] YOu’re listening
to the Rich Dad Radio Show, with Robert Kiyosaki. (upbeat music) – [Sponsor] Don’t be like Charlie. Charlie is that do-it-yourselfer
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$100 off your formation fee. That’s, (lively music) – [Announcer] Your financial
education continues. Now back to Robert Kiyosaki
and the Rich Dad Radio Show. – [Robert] Welcome back, Robert Kiyosaki, the Rich Dad Radio Show, the good news and bad news about money. Once again, I want to thank
our very special guest today. David Stockman is a best-selling author and Washington insider. When I mean inside, he was inside. He was next to Reagan
in the Reagan Revolution which pulled America out of
very serious financial problems. We had inflation going, I mean, interest rates at 20-something percent. And everything was going to hell. So it was David Stockman who was there when Reagan did what he had
to do with, I think, Volcker, and changed the whole US economy. So Stockman knows what he’s talkin’ about. He’s the author of the latest book, “Peak Trump, the Undrainable
Swamp and the Fantasy of MAGA”, which is Make America Great Again. He voted for Trump, he likes Trump, but he says Trump is a rookie right now, he’s getting hammered. His book prior to that was “Trumped, a Nation on the Brink of Ruin
and How to Bring it Back”. Doesn’t sound likely.
(laughing) And the book I loved was
“A Great Deformation, The Corruption of Capitalism in America”. You need to boat anchor, this is the book. But I tell you what, (laughs) this book will open your eyes. It’s exactly what David was talkin’ about is what happened when the Fed
started quantitative easing, or printing money. And David’s website is Once again, you can listen
to the Rich Dad Radio Program anytime, anywhere, on iTunes or Android. And all of our programs are
archived at Please go to, replay David Stockman’s interview, because we’re an education company. If you listen to David
Stockman one more time, you’ll learn twice as much. And the most important thing is get your friends, family, and especially business associates to listen to this interview
with David Stockman, especially if you live in
California or Illinois, because your pensions are about to explode with the rest of the US economy. So once again, you can
listen to this radio program, go to And now, you can submit
your questions to Ask Robert at Ask Robert is where you get
the time to ask me a question. Final comments on David, Kim? – [Kim] Well, I just think David nailed it when he said that Trump,
when he was campaigning, said, you know, we have this
bubble, we got to fix it, it’s a mess, the nation’s in a mess. And he got elected and then his
ego just could not allow him to take credit for the
stock market going up and everything that he
should be not embracing. And he said, he could’ve taken a piece
out of Reagan’s playbook, which said, hey, I’ve inherited this mess, we need to fix this mess and
just stay on point with that. Then maybe something
could’ve really happened here But he had to take credit
for things that were good, and so I just think he nailed it. The ego just would not allow
him not to take credit. – [Robert] And David Stockman
says he voted for Trump, I voted for Trump.
– I voted for Trump. – [Robert] I’ve written
two books with the guy. If it wasn’t such a serious
problem it’d be funny. (laughs) You know, this
thing is a comedy show as far as I’m concerned. But we’re in serious trouble.
– Yes, we are. – [Robert] But anyway, please listen to the Rich
Dad Radio Program again with David Stockman. I think you’re, because he went into very, very high-level
stuff about the bond market versus the stock market versus
the economy and unemployment. And those things are very sophisticated, heady types of level of economy, that most, I would say
99% people have no idea what he was talkin’ about.
– And I think 99% of the people think that
it’s going to somehow miraculously be fixed. – [Robert] Or that raising
taxes is going to fix this. – [Kim] That’s what they’re going to do. – Tax the rich.
– And if you look at David’s statistics and
listen to this show again, how the bottom 90% have gone down, where the top 1% have gone up, it’s just, it’s not going to get better. – [Robert] Right. And that’s why the “Rich
Dad, Poor Dad” book was what the rich teach
their kids about money the poor middle class do not. And lesson number one
in “Rich Dad, Poor Dad” is the rich don’t work for money. Anybody working for money
is getting hammered today. They’re getting hammered,
it’s really, really sad. If you have a 401K or
a state pension plan, you’re in very serious trouble today. Because they started
printing money in 1971. So going to Ask Robert. Melissa, what’s the first
question for Ask Robert? – [Melissa] Our first question today comes from Reiko in Michigan. Favorite book, “Cashflow Quadrant”. Says, Robert, you explained the difference between bad debt and good debt. Which one is our national debt and why? – [Robert] That’s a fantastic question because as, if you’ve been
paying attention to the news, it’s all of this, you know,
from Kamala Harris and AOC, they say, let’s just tax the rich, 70% tax if you make over $10 million. The definition of bad debt or
good debt is who pays for it. You see, Kim and I borrow money, like we may borrow $20 million
to buy an apartment house, but we don’t pay for that
debt, our tenants pay for it. So when we have a national debt, the question, who pays for it? (chuckles) Well, the
working class pays for it. – [Kim] Yes, through taxes. – [Robert] You see, what
AOC and Kamala Harris and the rest of the communist
republic are talkin’ about is they want to tax the rich. If you’re makin’ $10
million a year, sports fans, which is a 70% bracket, you’re smart enough to hire tax advisors. And the rich don’t pay taxes. If you understand that,
you’re smart enough to know that if I’m making $10 million a year, I can afford to pay $200000 a
year for a smart tax advisor. And so, all of these
guys, these socialists, and I’m sure they’re good people, they’re very, I’m sure
they’re kind, mean well, they want free healthcare, free manicures, free pedicures for everybody, free food, free gasoline, you know? Tax the rich, because
they’re going to pay for it. I think they’re in la-la land. – [Kim] Well, it’s happening
in California right now. They want to keep taxing the
rich, and the rich are leaving. So (laughs) there’s a lot
of options for the rich if it goes that way, and it’s going to come back down to the middle class and the poor, especially the middle class. They’re going to get
stuck with this tax bill. – [Robert] So the national
debt, the question, it’s good debt if you don’t pay for it. But it’s bad debt if you pay for it. And the poor middle class
are going to pay for it. You pay for it in sales
taxes, highway taxes, tax on the, there’s 76 different
taxes that everybody pays. But when it comes to income tax, the rich are rich enough
to hire tax advisors. That’s why we have Tom. We all write on here,
called “Tax-Free Wealth”. If you want to find out how
the rich do not pay taxes, get Tom’s book. But don’t get angry, get educated. – [Kim] So what if, Robert, what if, because we’ve had guests on
this show like Richard Duncan, who talks about, if you’re going, if the government’s going to have debt, if you’re going to spend money, then spend it where there’s production, spend it on things that create money. – Yada, yada, yada.
– Then it could be good debt. – Yada, yada, yada.
– That could be good debt. – Yada, yada, yada, yada.
– Put the nation back to work. – Yada, yada, yada, yada.
– (laughs) – [Robert] Never happened. Never happened, sports fans. – [Kim] But if it did, it
could be good debt. (laughs) – [Robert] Yeah, in theory, I want free manicures and
free pedicures for everybody. I want free filet mignon and free housing and free education and free Medicare, and we’ll tax the rich. – [Kim] That sounds like communism. – [Robert] I don’t think
that’s going to happen. Everybody uses Venezuela, one of the richest countries in the world, they’re completely bankrupt
because of communism and socialism and corruption. We’re not that far away, sports fans. So Trump, he’s, (laughs) it would be funny if it wasn’t so serious, but he spurred all of these communists to come out of the woodwork. And they’re good people. You know, that work on, the
way we solve this problem, we’re going to tax the rich. And we’re going to give
you all these benefits, like free healthcare, free
manicures, free pedicures, free food. And what that does, it
attracts more immigrants. Nothing against immigrants, but if you’re living in some squalor and you found that across the border was you could get free healthcare, free food, free car, free housing, free education. – [Kim] Free cellphones. – [Robert] Free cellphones, I’d climb that wall too,
or I’d swim the river. And that’s what’s happening. You look at what’s happening
all over the world, immigration problems driven
by life, the costs of living. That’s it. They’re not bad people either. You think those people on
those caravans from Guatemala want to leave Guatemala? No, they’re being, they are
being murdered over there. But they also want a better life. We create more free stuff,
we attract more of the same. Already there was some city
in New Hampshire or Vermont that said, please stop coming. The word got out they had,
like, free food or something, everybody moved there. They can’t afford it! The town has, I think 6000 people and they have 7000 people
move in for free food or something like that. I’m not, I’m being facetious. But what happens is immigration
is driven by lifestyle. They want a better life
and they can’t afford it. That’s the big problem. So that’s good debt and
bad debt and national debt. Who pays for it? And everybody wants
the rich to pay for it, they’re never going to pay for it. Next question, Melissa. – [Melissa] Our next question
comes from David in Illinois. Favorite book, “Rich Dad, Poor Dad”. He writes you and Kim a note. Dear Robert and Kim, thank
you for all that you do. I was blown away when I
read “Rich Dad, Poor Dad”, and I believe it should
be taught in schools. My question is, I’ve just sold my house, and seeing how the market is looking, I believe a correction is coming as well. I was wondering about taking my gains into tangible gold and silver while waiting for a correction, then cash it out and
invest it in real estate. What’s your advice on this idea? – [Robert] Our advice is always the same, you’ve got to get your own education. We’re not financial
advisors, we don’t do that. You have to look at your
income to expense ratios. You know, if you have $1000 coming in, how much is going out? You know? And you’ve got to massage that. So the thing with gold and silver is generally that the rule of thumb, and we don’t recommend it, is 10%. But the way I look at it is this. The question is, if
David Stockman is correct and they keep printing
more and more money, what does that do to the value of money? – [Kim] It goes down. – [Robert] Goes down. So that’s why, for the last, I mean, since Kim and I have met,
all we do is buy gold. We don’t save cash, we
save gold and silver. We have short-term cash,
you know, for operating. But our long-term savings
is gold and silver. And I want to remind people something. Not that long ago, less than 10 years ago, gold was only $500 an ounce. It’s now $1300. While the rest of the
purchasing power of the dollar has gone down. So just look at the
charts on gold and silver and things like that. You’ll find out, the more we
print money to pay our bills, the more valuable gold and silver gets, but the less valuable your savings become. That’s what you have to know. Final words, Kim. – [Kim] And the other
piece of that question is about real estate. I mean, if there is a recession, real estate could get very cheap, there could be a lot of
great deals out there. But if you don’t know what you’re doing, you can lose a lot of money. So just because the real
estate market crashes, if you don’t have some
experience and education, that might not be the
best opportunity for you. – [Robert] Right. So thank you for your questions. We don’t give financial advice, but we have people who are real people. You know, my book’s coming out called “FAKE, Fake Money, Fake
Teachers, and Fake Assets” is coming out soon. But most people are
listening to fake teachers, and that’s why we’re in
serious, serious trouble. So once again, thank you for listening. Thank you to David Stockman. Get his book, “Peak Trump”. His website is And submit your questions to
Ask Robert at Thank you for listening.

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