By Robert Kiyosaki
Many fear that a second-term win by President Barack Obama will signal the end of capitalism. Newsflash: Capitalism has been dead for years.
Capitalism did not survive World War I, when that war destroyed the classic gold standard upon which capitalism was built. Once the gold standard became history, governments took over the economies of the world…and capitalism died.
By definition, capitalism is an economic system in which the private sector drives production via capital accumulation. In true capitalist societies, the government plays a very limited role. Today, the U.S. government represents over 25% of the economy, and has not only bailed out General Motors, but financed a variety of dubious ventures.
During World War I, capitalism was replaced by credit-ism, which means the war was paid for by the creation of unprecedented levels of government debt. All that credit caused the bubble known as the Roaring Twenties. The Great Depression was the result of debt that could not be repaid
Likewise, World War II resulted in the complete government control of the economy.
In 1944, the world signed the Bretton Woods Agreement, and the U.S. dollar, now backed by gold, became the new paper gold. As the war ended, the economy stabilized. This caused many to believe that the war ended the Great Depression. In reality, having a stable currency stabilized the economy, and capitalism came back to life — temporarily.
Soon government spending on social welfare programs and the military accelerated. The United States also began importing more than it exported, buying Toyotas and Mercedes from former enemies — and gold left the United States coffers, as governments began redeeming dollars for gold.
In 1968, with rising concerns that the United States would soon run out of gold, the United States removed the legal requirement that the U.S. dollar be backed by gold. This violated the terms of the Bretton Woods Agreement. Capitalism died, once again, and credit-ism was back in control.
Taking the U.S. dollar off the gold standard completely transformed the world. Credit, yet again, had replaced capital as the engine of the world economy.
In 1964, total credit in the United States topped $1 trillion. By 2007, U.S. credit expanded to $50 trillion. As long as credit expanded, prosperity increased. And $50 trillion in credit created unprecedented wealth, profits, jobs, and taxes. The United States credit also created globalization, and the world economy boomed.
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