If consumer confidence improves enough in the US where people start committing to large ticket purchases, companies will begin hiring again.  If companies begin hiring again, the economic problems we are facing right now will begin to fade.

In most countries in Europe, government taxation is a very big drag on the economy.  The people also tend to work fewer hours per week.  There is also a lot less manufacturing.  All of these things are more links in the chain that is going to keep Europe shackled for the next decade.  Unfortunately, the US is not immune to problems in Europe.  The worse their economy gets, the worse our economy gets.  The world is flat and very much interdependent.

The United States economy is much more elastic and much more resilient than other economies in the world.  If need be, the United States can monetize its way out of its debt problems.  Hopefully that doesn’t happen.  If it does though, you had better own gold or something else that doesn’t lose its value.

If people in the US don’t wake up and start holding politicians accountable for overspending, the United States will soon be in the exact same boat as Europe.  Then we will not be able to get ourselves out of messes like this.

One problem I always had with Kiyosaki’s message in the book was his lack of clarity about taking on debt.  I distinctly remember that the overall message of his book was not to be afraid of debt.  He said smart people are in debt.  He said poor people try to avoid debt.  I always felt that his book was way too simplistic in its approach on this subject and that it would leave people with a false sense that it was okay to be way in debt as long as you are trying to make money in the process.

This message is Tom Foolery.

What Kiyosaki should have been clearer about was some simple principles that are made known to anyone who builds businesses.

A good business model involves creating a system where you can create value that people will pay for on an individual basis.  In other words, you create a product or service that someone is willing to pay you more for than it costs you to produce.   This is the fundamental basis for any business model.

It is okay to borrow money to produce that product or service so long as you can still make a profit on it after paying back the loan and you are able to sell whatever that product or service is.  The business model must be profitable though before you can scale it up.  If you borrow huge sums of money to scale up an unprofitable business model, you simply drive yourself to bankruptcy at a much faster rate.

In fact, part of a bank’s responsibility before making a loan is to see that your business model is sound so that they can expect to get their money back from you along with interest.

Kiyosaki fails to make this point clear in my opinion.  Obviously he understands this principle.  He just didn’t communicate it properly.  Instead his message attained an image that debt is good and people should welcome it with open arms.  His one caveat is that the debt must be for assets and not liabilities.  If someone needs to be taught that, then they should not be borrowing money for anything period.

Now people label guys like Peter Schiff and Jim Rogers as being overly bearish on the US economy. However, these two guys predicted what was going to happen to the US economy in the financial crisis. They predicted it. They were preaching about it when everyone in California and Florida was out flipping houses. These guys said the financial crisis was eminent and unavoidable so long as our goverment and Federal reserve continued its policies of lose money.

I remember thinking these guys must be nuts because everyone was making money, the economy was soaring, unemployment was really low and there were plenty of jobs around.

Then the market collapsed. Fortunately I got out early so I didn’t get killed like everyone else. I wish in hindsight I had gone short the market. Anyway, with all the news of impending financial disaster, I began doing more research on the crisis and how it came to be. Low and behold, people like Peter Schiff and Jim Rogers were right all along. They put their own money behind waht they were saying publicly. Thats how you know they weren’t lying. They believed this would happen and it did.

Now people are warning that the crisis will persist because of the lose monetary policy of the Fed. Do your own research. make your own decision. I am inclined to believe Schiff still knows what he is talking about.