Let’s dive into the root causes of poverty.
Poverty often means having more problems than solutions. It’s not just about financial issues; today’s challenges include drug addiction, poor relationship choices, crime-ridden neighbourhood's, lack of job skills, transportation problems, and unaffordable healthcare.
Among these issues, high debt and low wages significantly contribute to poverty, preventing us from achieving our dreams.
Is this the kind of life we want?
Many people are caught in an illusionary economy that seems stable but is based on shaky foundations.
Robert highlights how the job market has shifted from manufacturing to services. While there are now more jobs in the service sector than in manufacturing, companies like General Motors have been replaced by Walmart as major employers. Fifty years ago, financial success was achievable with minimal education, but is that still true?
What changes have occurred in the rules of money?
A major reason for today’s financial struggles is President Nixon’s 1971 decision to remove the U.S. dollar from the gold standard. This move transformed the dollar from real money into mere currency.
Robert explains that throughout history, currencies lose value because governments print too much money. He gives examples like the U.S. Continental currency from the Revolutionary War and Germany’s currency after World War I, both of which became worthless.
He warns that programs like Social Security and Medicare are creating significant financial problems in the U.S., and printing more money will only worsen the situation. When the U.S. left the gold standard, it led to more debt, making it harder for savers and easier for borrowers.
According to Gresham’s Law, " When bad money enters circulation, good money goes into hiding."
Another shift happened in 1974 when companies moved from offering lifetime pension plans (defined benefit plans) to defined contribution plans (DC plans). Defined benefit plans, which guaranteed lifelong pensions, are now rare and costly.
Why do the rich keep getting richer?
The rich view financial problems as opportunities for learning and growth. They know the importance of financial intelligence and face challenges head-on rather than avoiding them.
How do the poor handle money issues?
The poor often see money problems as overwhelming and feel they are alone in their struggles. They believe that having more money would solve their issues but fail to improve their f inancial knowledge, which only worsens their problems.
How do middle-class individuals deal with financial problems?
Robert describes the middle class as "prisoners of money." They often believe that academic or professional qualifications will protect them from financial difficulties instead of solving their money problems.
What about the wealthy?
When wealthy individuals face financial problems, they draw on their deep financial knowledge and experience acquired over time. Rather than avoiding the issue, they consult experts to find solutions. The wealthy persist through challenges, learn from them, and as a result, increase their wealth.
Many of us work for others instead of for ourselves. The poor and middle class often work for the rich without solving their own financial problems.
