Chapter Five Most frightening in the new economy is the compounding interest on trillions of dollars of debt. I do not know how this is sustainable. If interest rates rise, as they did in the 1980s, the world will go bust when U.S. taxpayers say, “Sorry, we can’t make the mortgage payment on the national debt this month.” When that happens, the real economic crisis will surface. The power that debt wields over an economy has already occurred in Japan, Latin America, Mexico, Russia, Iceland, Greece, Spain, Italy, Portugal, and Ireland. America, England, and Europe are soon to follow. Welcome to the new economy.
The Three-Legged Stool In the old economy, financial advisors often spoke of the three-legged stool of retirement. One leg was personal savings, one leg was a company pension, and the third leg was Social Security. The three-legged stool supported the World War II generation, but for millions in the babyboom generation in the United States, their three-legged stool will have no legs. FAQ What happens if I work for money? Short Answer The more money you make… the more money you lose. Explanation Two things happen for people working for money. 1. They get caught in the cycle of hard work, higher taxes, debt, and inflation. They look like rats in a pet store, running furiously on the wheel to nowhere. 2. They stop working. Many people simply say, “Why work any harder? If I make more money, the government just takes more. Why work if I can’t get ahead?”
by Rich Dad, Robert Kiyosaki