Let's start by going over the back side of the power curve. To explain this further and show how it applies to the economy, I'll go ahead and throw up a recent text from my good buddy, Robert Kiyosaki himself.

Robert Kiyosaki describing the backside of the power curve
Robert Kiyosaki describes the backside of the power curve

Pilots call it the backside of the power curve; raising the nose of the aircraft and adding power causes the aircraft to sink faster. That is what rookie pilots do, especially when the engine stalls or the aircraft stalls during a landing.

Fed and Treasury Metaphor
Fed and Treasury Metaphor

And here's where he starts to turn it into a metaphor for the economy and attempt for a quote-unquote, soft landing turns into a crash. That is exactly what the Fed and Treasury are doing today.

We all know Robert is one of the greatest storytellers of our generation. And he has an incredible talent for taking complex topics and putting g them in very simple terms. And I think he has outdone himself, in this case, with the backside of the power curve.

backside of the powercurve plane

So the plane is flying along, and suddenly something goes wrong with an engine.

What the rookie pilot does, which is kind of intuitive, is they want to give it more power, they want to pull up because they want to gain altitude. They're worrying about losing altitude and crashing.

But unfortunately, this causes the plane to stall and actually lose speed, making that crash inevitable. And it's the exact same thing with the US economy.

We start off right here. And just like the plane, everything is stable. You can see the average Joe has a smile on his face, and business XYZ doing pretty well. But then something happens. The economy starts to slow down. The average Joe starts freaking out saving money decreasing aggregate demand, and the businesses start laying off employees to tighten their belts because they see gray skies on the horizon. And then, just like the rookie pilot, you're drunk insolvent Uncle Sam (the government and the Federal Reserve) come in and try to do more quantitative easing. They try to do more fiscal spending.

 

Unfortunately, what this does is it slow down the economy even more. It makes it worse, like the plane losing airspeed, as the rookie pilot gives it more power and pulls up.fed and treasury making economy worse And then, when the economy really starts to stall, you can see the average Joe is almost passed out here. And the companies are yelling for help. Your drunk insolvent Uncle Sam and the Federal Reserve, the central planners come in with more and more and more of what caused the problem in the first place.

 

And just like the plane, it leads to the inevitable collapse of the US economy.

So what should be done if the economy slows down?

Well, as you'd imagine, the exact same thing as the plane.

Robert told me that the correct thing to do when your engine goes out is to point the stick down, point the nose down, and gain speed.Β Although extremely counterintuitive, it allows you to pull up and then land softly.

And it's the exact same thing with the economy. Instead of doing all of these government and central planning interventions, they should step back, do less and allow the free market to take over the private sector: the average Joe and Jane, the small and mid-sized businesses.

That is the equivalent of giving that plane more and more airspeed. And it's the only way that we can ensure the economy not only survives but actually thrives in the future.

And one thing Robert wanted to make sure I included in this video was a direct quote where he said, “regardless of what you think of the Marines, they're nowhere near as stupid as the PhDs at the Federal Reserve. Semper Fi my friend, semper fi.”

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