Jun 24, 2022
With price levels continuing to spike, the Fed is no longer using the word ‘transitory’ to describe inflation.
U.S. consumer prices jumped 8.6% in May from a year ago, marking the fastest increase since December 1981. That could give the Fed more reason to continue raising interest rates — something that’s already casting a giant shadow over the stock market.
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It’s a vicious cycle criticized by many investing veterans. And Rich Dad, Poor Dad author Robert Kiyosaki is one of the latest experts to sound the alarm.
“When inflation goes up, we’re going to wipe out 50% of the U.S. population,” he told Stansberry Research earlier this year.
Let’s take a closer look at what Kiyosaki means by that.
More: What is Robert Kiyosaki's net worth?
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Consumer crunched
Kiyosaki isn’t exactly pleased with the current state of the U.S. economy.
“America has stopped producing products, we produce bubbles,” he says, adding that we now have bubbles in the real estate market, the stock market, and the bond market.
The author also criticizes President Joe Biden’s decision to halt the Keystone XL oil pipeline, which he believes is a major reason energy prices are so high.
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And that does not bode well for the average Joe.
“The average American doesn’t have 1,000 bucks,” Kiyosaki says. A recent Bankrate survey showed that most Americans do not have enough money set aside to cover an unexpected $1,000 expense.
It also spells trouble for those who want to enjoy their golden years. When the bubbles burst, Kiyosaki says, the stock market will crash. So those relying on their 401(k) plans “are toast.”
“We don’t have a retirement, our pensions are bust.”
Time to protect yourself
Given his grim outlook, it’s no big surprise that Kiyosaki is a fan of safe haven assets like gold and silver. Precious metals can’t be printed out of thin air like fiat money, and they’ve been helping investors preserve their purchasing power for centuries.
The price of gold is up about 8% year to date. Russia’s invasion of Ukraine has given investors a new reason to check out the yellow metal.
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While Kiyosaki owns gold — he first purchased the yellow metal in 1972 — he prefers silver in today’s economic environment.
In a tweet in March, Kiyosaki revealed that he had purchased 2,500 American Silver Eagle bullion coins and offered his bullish reasons for doing so.
“Gold already moved up. Bitcoin still too high,” the tweet says. “Silver 50% below all-time high. Silver an industrial metal as well as $.”
More: 3 shockproof sectors to help protect your portfolio
Read More: Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Bubble tactics
Bubbles tend to pop — eventually. When they do, many people see their wealth take a significant hit. But large declines also create opportunities for those who are willing to buy the dip.
“The good thing about a bubble is when they burst, everything goes on sale,” Kiyosaki says.
During the financial crisis of 2008, the author started “buying real estate at bargain prices.” Based on how much real estate has gone up since then, it’s fair to say that was a sharp move.
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Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.
