Page 67 - Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money

debt, a debt that will be passed on to future generations in the form of
higher taxes. This is a sign of low financial IQ.

It was Democratic presidents Roosevelt and Johnson who are credited
with creating Social Security and Medicare, two of the most expensive and
potentially disastrous programs in world history.
America was the world’s biggest creditor nation under Republican

president Dwight D. Eisenhower. We were a rich nation. When Republican
Richard Nixon became president, however, the rules of money changed, and
the wealth of the U.S. began to change. As president, Nixon took us off the
gold standard in 1971. This converted the dollar from money to a currency.

Nixon allowed the U.S. government to print as much money as
necessary to solve our money problems. This is the same as a person
writing checks without having any money in the bank. If we did what the
government does today, we would be in jail. One of the reasons for the

growing gap between the rich and everyone else is that most people are still
working by the old rules of money—the old capitalism. After 1971, the new
rules of money took over. The rich became richer and the poor and middle
class worked harder trying to keep from falling between the cracks.

In 1980, Republican president Reagan gave us supply-side economics,
a.k.a. “voodoo economics.” The new economic theories promoted by the
Great Communicator Reagan, an actor not an economist, were the illusion
that we could cut taxes and continue to pay the government’s bills by

borrowing money. This is the same as taking a cut in pay and using credit
cards to pay bills.
When Thomas Gale Moore, then a member of President Reagan’s
Council of Economic Advisors, noticed that the United States was crossing

the creditor/debtor threshold in the mid-1980s, he said not to worry: “We
can pay off anybody by running a press.” Call me crazy, but usually that’s
called counterfeiting.
Because of the 1971 change in our money, and Reagan’s supply-side

economics, the national debt of the U.S. exploded. By the end of Reagan’s
reign, the federal debt was $2.6 trillion.
President Reagan’s vice president, the first George Bush, realizing the
national debt was exploding due to the loss of revenue from Reagan’s tax

cuts, ran for president promising, “Read my lips, no new taxes.” After he
was elected, he raised taxes and was not reelected.