Latest news with #Gresham'sLaw
Time of India
3 days ago
- Business
- Time of India
Robert Kiyosaki claims the poor stay poor for ignoring 2 crucial money laws — here's what he says you must follow
Robert Kiyosaki, author of the best-selling personal finance book ' Rich Dad Poor Dad ', has spent decades exploring what separates the rich from the poor, and now in a recent post on social media platfom X (formerly Twitter), Kiyosaki revealed that people remain poor because they ignore two fundamental 'laws of money,' as per a GoBankingRates report. As he explained, here are the two laws of money that one shouldn't break if they want to be rich, according to the report. Bad Money Drives Out Good Money Gresham's Law is the first important law, an economic theory which says, 'bad money drives out good money,' as per GoBankingRates. Kiyosaki has explained it as 'When bad money enters a system….good money goes into hiding,' as quoted in the report. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like The Top 25 Most Beautiful Women In The World Articles Vally ALSO READ: Juneteenth 2025 is near: What this historic holiday means and how U.S is honoring the end of slavery With reference to the currency markets, the law means that legally overvalued currency will drive legally undervalued currency out of circulation and according to Kiyosaki's interpretation, people should focus more on obtaining assets like precious metals and cryptocurrency instead of stockpiling cash, reported GoBankingRates. Live Events Kiyosaki wrote in his X post that, 'In 'Rich Dad Poor Dad' I stated, 'Savers are losers', in 2025, poor people are working for and saving fake money and not saving real money … gold, silver, bitcoin,' as quoted in the report. The Power of Networks The second law Kiyosaki cites is Metcalfe's Law, which says, 'the value of a network grows as the square of the number of its users,' quoted GoBankingRates. Kiyosaki explained by giving this example on X, 'McDonald's is a franchise network. Mom Pop burgers is not. That's why they're poor. FedEx is a network. Joe's one truck package delivery is not,' as quoted in the report. He applies the same logic while investing in cryptocurrencies, as, according to him, the cryptocurrencies that have a larger network behind them are also the most valuable, reported GoBankingRates. The author said, 'I invest in bitcoin because [it] is a network,' adding, 'Most cryptos are not,' as quoted in the report. Why These Laws Are Important To Get Rich Kiyosaki says these two laws guide how he manages his own money. He wrote on X, 'If you want to be rich, obey the laws,' adding, 'Michael Saylor's rich man's words of wisdom are: 'Only invest in things … a rich person will buy from you.' Think about that," as quoted by GoBankingRates. He also revealed that 'I do not save U.S. dollars because the U.S. dollar violates Gresham's Law,' as quoted in the report. Kiyosaki pointed out that, 'I do not invest in … coins without networks, because they violate [Metcalfe's] Law. That's why I save gold, silver and acquire bitcoin. They obey the laws,' quoted GoBankingRates. FAQs Why does Kiyosaki invest in bitcoin over other cryptos? Because Bitcoin has a large, established network behind it, and most other cryptocurrencies don't follow Metcalfe's Law. What's the biggest money mistake people make, according to Kiyosaki? Ignoring the two laws of money, which is not understanding Gresham's Law and Metcalfe's Law.
Forbes
25-04-2025
- Business
- Forbes
Are Investors Losing Faith In The US Financial System?
I had intended to write about universities this week but, strolling through the City of London, I was surprised, shocked even, to find myself on Trump Street, and then amused to see that it is joined by Russia Row. My first thought was that this was part of a grand plan by the British establishment ahead of President Trump's visit to London in September, the idea being to stage an event at the nearby Guildhall and to then tell the president that a nearby street had been named after him. Trump Street was apparently named so because several trumpet makers lived there in the 18th century, but let's ignore that for the time being. Yet, the far more meaningful coincidence of Trump Street is its proximity to Gresham Street. Sir Thomas Gresham was a trader and financier in 16th century London, at a time when coffee houses in the lanes around the Royal Exchange formed the basis of what is known as the City. Gresham was an important player in Queen Elizabeth I's economy, and his emblem – a grasshopper – is still present in various parts of the City (there is a giant-sized golden grasshopper on the roof of the Royal Exchange….if you can dare to make it up there). While Gresham's imprint can be seen across the City, he is remembered by Gresham's Law which was named after him and states 'bad money will drive out the good'. Gresham's Law which echoes similar observations from Copernicus and other scientists through the ages is founded on the idea that in an economy where coins with the same face value but that are made from different base metals (say nickel and copper) there is a tendency for traders to hoard the coins made of the more valuable metal and to circulate lower quality coins. Bad coins stay in circulation, good ones are re-commoditized. From an economics point of view the law is conditioned on all the coins (of variable quality) having the same face value. Unlike the 16th century, today, coins have the same physical consistency and in general there is little incentive for people to shave bits off coins (historically coins have serrated edges to prevent this) but broadly the Gresham's Law is applicable in different domains. Think of how cheap goods (made under questionable labour conditions) have forced quality players out of markets, or how in the run-up to the global financial crisis, low quality financial institutions offering generous loan conditions caused better quality banks to step back from lending. In both cases, regulation or policing of markets is necessary to ensure that 'bad' actors do not gain an advantage over good ones. Social media is another example, where it seems a lot of nonsense thrives at the expense of information. Additionally, the idea of Gresham's Law is applicable to politics, where in many countries it appears that political actors with extreme views and extreme modus operandi are forcing out 'good' ones in the sense that most normal people would be terrified of a career in politics. Readers will guess that my argument is leading back to Washington. Bad behaviour, bad ideas and bad policies are infesting themselves in public life, the economy and markets – to the surprise of many ardent supporters of President Trump. What is not clear is whether this will result in an evacuation of capital and talent from the US, or whether there will be a counter-reaction. Gresham's point in describing how bad money drives out good was to avoid the debasement of the currency (schilling), which when Elizabeth I came to power, was already in a bad state. She appointed Gresham as a finance minister of sorts in 1560, and within a year he had 'bad' coins taken out of circulation and replaced them with money made from precious metal, the result of which was a dramatic improvement in Britain's status as a trading and economic power. The lesson of this should be very clear today. As a final point, it is interesting to note, from the point of view of coins and money, that the ratio of gold (precious metal) to a cyclical commodity (copper) is the most stretched it has been since at least the 1980's, suggesting that markets at least are thinking of Gresham's Law.
