Why the Rich Are Getting Richer  

At its core, Why the Rich Are Getting Richer challenges readers to shift from earning income to acquiring assets. Instead of focusing only on wages and savings, it encourages strategic use of debt, tax planning, and ownership structures to build lasting wealth. The result is financial control driven by assets and leverage rather than dependency on earned income.

The 90 10 Rule and Tax Education

• • Businesses with over 500 employees and professional investors represent the 10 percent in the 90 10 rule. Ten percent own ninety percent of the money. The real unfair advantage is education on taxes. The system rewards those who understand it.

Inflation and Currency Devaluation

• • When considering inflation, interest rates can read zero. If you are earning 2 percent but losing 5 percent to inflation, you are still losing purchasing power.

  • The US dollar lost roughly 90 percent of its value from 1913 to 1971. This period spans from the creation of the Federal Reserve to Nixon taking the United States off the gold standard.

War, Taxes, and the Gold Standard

• • Wars were historically funded through taxes rather than debt.

  • The Korean War ended in part because Americans resisted higher taxes.

  • After Korea, wars were increasingly funded through debt. Vietnam was fueled by debt, and it had to be paid somehow.

  • This shift toward debt financing contributed to the United States leaving the gold standard.

The Petrodollar System

• • In 1974 President Nixon signed an agreement with Saudi Arabia linking the US dollar to oil. Oil would be sold globally in US dollars.

  • The US dollar became the petrodollar.

Oil and Geopolitics

• • Oil is the lifeblood of the global economy.

  • During World War Two, Japan attacked the United States after being cut off from oil.

  • During the Vietnam era, the United States did not want Vietnam selling oil to China.

  • In 2000 Saddam Hussein announced he wanted to sell oil in euros.

  • In 2001 the September 11 attacks occurred.

  • In 2011 Muammar Gaddafi proposed a gold backed dinar for Africa. He was removed, which would have disrupted central banking influence.

Tax Advantages in Oil and Investing

• • Active oil investors can write off 100 percent of exploration expenses and only report 85 percent of income.

The 1971 to 2008 Market Era

• • From 1971 to 2008 it was possible to become wealthy without deep financial education.

  • Dollar cost averaging into the market often worked.

  • In 2008 the financial system nearly collapsed.

  • The same investment advice continues to be promoted today.

  • Mutual funds were created in 1978 and significantly benefited Wall Street.

Taxes as Incentives

• • Taxes function as incentives.

  • Write offs for employees reduce the need for government hiring.

  • Write offs for apartment owners reduce the need for government provided housing.

Financial Timeline

• • 1929 stock market crash led to fear and the creation of social security programs, which increased dependency and debt.

  • 1935 Social Security was created.

  • 1943 Tax Payment Act normalized income tax withholding and reinforced the patriotic framing of taxation.

  • 1944 Bretton Woods Agreement established the US dollar as the reserve currency.

  • 1971 Nixon ended gold convertibility.

  • 1974 The US dollar became the petrodollar and oil was sold globally in dollars.

  • 2000 Saddam Hussein announced oil sales in euros.

  • 2001 September 11 attacks.

Debt Versus Equity

• • Debt is other people’s money.

  • Equity is your own money.

  • Debt may cost 5 to 6 percent interest.

  • Ordinary income may be taxed at 40 percent.

  • Strategically used debt can be cheaper than equity.

Income Statement Versus Balance Sheet Thinking

• • The income statement tracks income and expenses. This is where the poor focus.

  • The balance sheet tracks assets and liabilities. This is where the rich focus.

  • Ensure you maintain both accurate income statements and balance sheets.

Three Types of Taxes

• • Ordinary income

  • Portfolio income such as capital gains which is taxed lower than ordinary income

  • Passive income where deductions can reduce taxable income even further

Tax Differences by Role

• • Employees earn ordinary income. Raises increase ordinary income.

  • Executives earn more through portfolio income such as stock options, which are taxed at capital gains rates.

Corporate Incentives and Wage Dynamics

• • Employees push companies for higher wages.

  • Companies may weaken and use debt to buy back stock instead of investing in research and development.

  • Employees pay more in ordinary income taxes.

  • Executives receive stock options and later take portfolio gains.

  • Employees often return to school and continue earning ordinary income with limited write off capability.

Phantom Income and Leverage

• • Phantom income comes from using debt strategically.

  • Borrowed money is not taxed.

  • Saving for down payments uses already taxed ordinary income.

HELOC and Whole Life Strategy

• • If using a HELOC, ensure cash flow covers the HELOC interest rate.

  • Whole life insurance can be used to pay down a HELOC while building cash value.

  • A HELOC can bridge short term deals and later be paid off with a policy loan once cash value increases.

  • This maintains property acquisition momentum when capital is tight.

Real Estate and Depreciation

• • McDonald’s uses property depreciation to offset business income.

  • Appreciation can function as phantom income.

The I Quadrant and Giving Back

• • Masters of the investor quadrant give back.

  • Just as a master in martial arts teaches others, wealth includes responsibility.

Education and Entrepreneurship

• • Robert attended the Merchant Marine Academy. MBA programs often teach a different code than service academies.

  • In Grahamstown South Africa, privileged students taught underserved communities with strong results.

  • Never doubt that a small group of thoughtful committed citizens can change the world. It is the only thing that ever has.

  • MBA programs often train employees for corporations rather than entrepreneurs.

  • The United States could create a business academy for entrepreneurs similar to West Point.