Robert Kiyosaki, a best-selling author and seasoned investor, has a distinct philosophy on debt and investment. In a Nov. 30 Instagram reel, Kiyosaki elaborated on his debt philosophy, highlighting a critical distinction between assets and liabilities. He said many people use debt to buy liabilities, while he uses debt to purchase assets. To illustrate his approach, Kiyosaki said his luxury vehicles, like a Ferrari and a Rolls Royce, are fully paid off, categorizing them as liabilities rather th
No bank in the world is going to hand anybody millions (never mind over a billion) without some reasonable assurance it can be paid back one way or another.
If he was in real estate, they’re taking his property.
IIRC, the advice was basically a recipe for overleveraging yourself in debt trying to make money with “throw everything and see what sticks” (and then blaming them for not being “savy” enough when it becomes apparent they can’t manage the debt.)
Which is what happened to a friend of mine that kept bouncing from one self help book to the next (he was a big fan of what’s-his-but-zero-debt-guy until his church group read it.)
“It really resonated with what you said… I have a responsibility to my kids!”
“Uhm, I was talking about not having a third when you already need help with two.”
“No no. I get it now…” (and now we’re not friends because he asks for advice, doesn’t listen to it and blames you for when it doesn’t work. It also wasn’t about finances per se.)
It was basically instructions on how to become a grifter, with very little actionable advice. Here is a podcast the breaks down books like this.
https://pod.link/1651876897/episode/1a9316ba1134a0c2484e8fc6e416b978
To be fair, a lot- probably most- of the self-help book authors are at least toeing the line of grifter. and a fairly large number straight up are.
Remember we’re probably not talking about a single person, but an company. His company is likely over valued because of how famous his books/seminars are. And yes, while he probably has real estate, it’s probably not the same business. When they come after him, they probably hit one side of the business and not the other.
It’s very possible someone gave him a ton of loans that are undeserved because they overvalued the names. We see it all the time in the stock market.
Given what I understand of his ‘advice’… he may not in fact be smart enough to split his assets up like that. Also, if you do split up your assets into LLCs or whatever; then they’re loaning to the LLC, and they will be looking at its financial ability to pay back… banks are generally rather careful with these kinds of things.
if he’s using [assets of company a] to inflate the [assets of company b] (IE IP on his books etc,) then that’s fraud.
You have a lot of confidence in the financial system and I wonder given what is known if it is justified
more like, confidence in human greed.
Banks don’t cut people breaks just because they’re famous. keep in mind, this guy’s net assets are not 1.2 billion- that’s his debt. He’s over extended and they’re taking them up. long-time business partners might get less scrutiny on the inflated values, but this guy? naw. he took out massive loans on proprieties or whatever, they’ll be taking whatever collateral he used, and whatever other assets are associated.
if you’ll ask a question?
But if you’re referring to the 2007-08 financial crisis caused by MBS going tits up, you’ll have to do better than that, since MBS’s were packaged loans to lots of individuals. Each individual loan was risky because of the sub-prime market being largely unregulated at the time, however, it was assumed the risks were acceptable because the loans that didn’t go up were profitable to offset them.
The problem with that, of course, was that the entire industry kept ramping up sub-prime loans building up a slow, but increasingly high risk of total collapse on the value. but this is an entirely different situation than giving one guy a billion dollar in loans. And you’ll note, that the MBS’s were backed with collateral in the form of houses that they subsequently foreclosed on. (and later sold for much more in profit, while also getting bailed out by the government.)
You got two explainations. 1 the banks didn’t know what was going to happen, despite all the obvious signs, in which case they have no idea what they are doing 2 they knew exactly what they were doing and engineered a crisis for a bailout and market dominance.
So do you want your friends to be fucking morons or fucked up?
or do you want to stop confusing issues here?
'07-08 crisis is a fundamentally different scenario that built over time. The toxic assets totaled something like 1 trillion; they were built over time, and the problem rose when home values stopped going up. let me compare the orders of magnitude on the debt that caused that crisis vs this:
1,200,000,000 (Kiyoski's debt) 1,000,000,000,000 (Toxic assets in the great recession)Do you see the difference now? It’s a nice whataboutism, but it’s fundamentally irrelevant. the only thing that’s going to get fucked is Kiyoski, and the people who work for him. The difference between a billion and a trillion is… about a trillion. more preciesly, .1%.