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Matthew Scott: The Illusion of Money

Tom welcomes a new guest to the show, Matthew Scott. Matthew explains why he wrote a children’s book to explain the concept of money. The book is called “The Illusion of Money” but it should instead be called the “Illusion of Currency”. Eventually, faith is lost in every currency and its value disappears. He’s self-publishing the book through Kickstarter which can be pre-ordered now.

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Children consider banks to be like piggy banks that store money for clients. Most adults think banks make their money with loans via the difference between borrowers and savers. At university, you learn another story about fractional reserve banking and multiplying deposits via reserve ratios. However, the real way money is created is via loans generated out of thin air issued by central banks. It’s new “money” that never existed before that moment.

Those closest to the banking system can take advantage of the system and use it to slowly extract wealth from society. Today, much of the money is created from the housing markets which are in bubbles once again.

Matthew explains his balloon model anecdote for the economy and how banks and politicians manipulate the economic system. This process creates opportunity but brings along with it numerous issues.

He is planning a second children’s book on the smoke and mirror illusion of politics.

Time Stamp References:
0:00 – Introduction
0:33 – The Illusion of Money
5:15 – Principals of Money
7:45 – Kickstarter Release
8:50 – Money Creation
12:48 – Distortions & Inequality
15:49 – Lessons in the Book
18:25 – Balloon Economic Model
23:04 – Austrian Thought
25:15 – Wall Street Silver
27:30 – Illusion of Politics
31:12 – Wrap Up

Talking Points From This Episode

  • Educating children on how fiat functions and how banks create money.
  • Balloon model for the economy.
  • The Wall Street Silver movement.
  • Smoke and mirrors in politics.

Guest Links

After first hearing about inflation at a young age, Matthew Scott wanted to understand how money works. If there is inflation, there must be more money, but where does the new money come from? He was determined to find out. After studying Finance and Economics in college without getting a satisfactory answer, he continued researching the topic on his own. When he finally got to the bottom of things, he found the answer pretty appalling. Based on his understanding, he believes the current debt-based, fiat-currency system which drives the world of finance is the cause of many of today?s problems. He is currently working to help children and non-finance-minded adults understand the illusion of fiat currency in hopes that we can replace it with something better.

To this end, he is releasing a children?s book called The Illusion of Money. The book aims to raise awareness about the nature of the money we use every day while instilling a bit of skepticism in leaders who promise too much. To help fund the first limited edition print, he is launching a Kickstarter on September 7th. He plans on following the book release with a podcast focused on sound money and alternative mediums of exchange that may better serve humanity.

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