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    Former Guinness World Record Holder for largest book signing ever, Orrin Woodward is a NY Times bestselling author of And Justice For All along with RESOLVED & coauthor of LeaderShift and Launching a Leadership Revolution. His books have sold over one million copies in the financial, leadership and liberty fields. RESOLVED: 13 Resolutions For LIFE made the Top 100 All-Time Best Leadership Books and the 13 Resolutions are the framework for the top selling Mental Fitness Challenge personal development program.

    Orrin made the Top 20 Inc. Magazine Leadership list & has co-founded two multi-million dollar leadership companies. Currently, he serves as the Chairman of the Board of the LIFE. He has a B.S. degree from GMI-EMI (now Kettering University) in manufacturing systems engineering. He holds four U.S. patents, and won an exclusive National Technical Benchmarking Award.

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What is Fiat Money?

Posted by Orrin Woodward on September 15, 2015

Society developed money to make trade easier between its members. Real money is simply the most marketable commodity within a society. For the most marketable commodity is in high demand and is generally accepted by all parties; consequently, over time, the most marketable commodity becomes the preferred medium of exchange. Of course, this is just another way of saying the most marketable commodity becomes society’s money. Without exaggeration, money is one of the greatest inventions in the history of mankind because it greatly increases the amount of win-win exchanges.

How does it do that one might ask? Because money allows all goods to be rated using the same monetary units which makes valuation of each item much more convenient. This leads to quicker agreement on win-win exchanges compared to the older and less convenient bartering process. It’s easier, in other words, to trade excess eggs for its money  market price and then buy bacon at its money market price rather than barter with every customer over how many eggs is bacon, milk, or even a chiropractic adjustment worth. Money simplifies the exchange process for all members in society; thus, it increases the amount of exchanges occurring. As a result, the division-of-labor and subsequent production and wealth for society’s members greatly increases.

Gold and Silver appear to be mankind’s preferred money because the commodity is in demand outside of its potential use for money, is easily divisible, and is extremely durable (coin collectors have many specimens over 2,500 years old). Of course, as the marketplace within society grew, the time and cost associated with moving precious metal coins from one location to another also grew. Predictably, the marketplace developed a solution to this challenge by creating modern banking. Instead of transferring the physical gold or silver, a bank would create a title or metaphysical representation of the physical precious metal. The paper claim (bank note) would allow the recipient to either receive the said amount of precious metals for the bank note or just exchange the bank notes to others in exchange for goods.

This allowed business to be carried on in others cities without  having to physically move the gold or silver. So long as the banks ensured the paper titles represented actual physical gold in the banks, the system worked wonderfully. Unfortunately, however, it didn’t take long for the banks, once they had established a reputation of integrity and trust,  to start printing more paper notes than the had precious metals backing them. This resulted in the birth of fractional-reserve bank notes – metaphysical banknote money backed by only a fraction of the physical precious metals the notes allegedly represented.

In essence, banks began printing more banknotes supposedly redeemable in precious metals even though the banks did not have enough gold/silver on hand to do so. Naturally, this increased banker profits exponentially but also caused rapid inflation from more not circulating within society. Furthermore, as bank members discover the bank’s fraud, they respond by returning the banknotes and demanding precious metals. Of course, this only works for the early returners of the fiat paper because the precious metals are quickly depleted and the bank collapses. The numerous remaining banknotes, allegedly redeemable in precious metals, are now worthless since the bank pledging to redeem them has bankrupted itself by falling for the something-for-nothing temptation of the fraudulent fractional-reserve-banking system. 

This process of collective banknote redemption by the banks members is called a bank run. Although the banks feared and hated this scenario, it is merely society’s natural response to the banks unnatural behavior. For how can a paper note, that is supposed to be simply a representation of the physical money (precious metal), now be passed off as the actual money? This is no different than a seller of land printing multiple paper titles to his land and selling the paper titles to different buyers to reap multiple profits from multiple sales.  Indeed, the main difference in the two frauds is that most land title holders will eventually want to see the physical land backing the title where few banknote holders (unless they lose trust in the bank) ever request to see the physical precious metals backing the note. The other difference, ironically, is the seller of multiple land titles (representing the same land) will be prosecuted for fraud while the seller of multiple banknotes (representing the same precious metal) will be protected by the government.

How did the banking system manage to convince governments to support fractional-reserve banking (FRB) fraud when similar practices in any other field are punished severely? Why would governments across the world support such an unethical behavior Perhaps the simplest answer is that all governments are insatiable in their desire for more money and power. The banks offer governments the philosopher’s stone of creating money out of thin air through the ‘joys’ of fractional-reserve banking. The government, in other words, supported the banks fraudulent activity because the banks happily agreed to loan copious amounts of fractional-reserve banknotes to the government. This is an ignominious alliance where the banks gain extra profits by creating money out of thin air and the governments gain extra power by borrowing the FRB funds. As a result, both the banks (profits) and governments (power) benefited while society paid the bill through the predictable inflation, boom/bust cycles, and lost liberties. 

The Birth of the Financial Matrix

Fiat Money

Fiat Money: Only Backed by State Coercion

Absurdly, the monetary madness gets even worse with the beginning of World War I. For before the first World War, the bank notes at least had to be redeemed in gold or silver when demanded by the owner of the notes. Governments, however, knew this would be impossible to do during a war where billions of extra banknotes were create to fund the war without without the backing of any precious metals. As a result, the European governments ended the gold standard and permitted banks to no longer redeem the metaphysical banknotes into the physical precious metal. This was the beginning of fiat money – paper notes not backed by any precious metal but only by the coercion of government.

Fiat paper notes backed by government coercion knocked out the last connection between the metaphysical paper and the physical money. From now on, the central banks would create fiat paper and call it money. Then it allowed the big banks to pyramid fractional-reserve-banking on top of the fiat notes to multiply the money supply ten, one hundred, and eventually thousands of times over the actual commodity money. The purchasing power (amount of production each monetary unit can purchase) decreased disastrously as inflation increased the cost-of-living to unheard of levels.

Fiat paper money allows the banks to create money at will and profit on the loans to governments, businesses, and families. Meanwhile the government supports the FRB fraud by declaring the paper legal tender good for all taxes and monetary exchanges even though it is not backed by any physical precious metal commodity. Fiat money, in effect, is the victory of the governments and banks to replace the physical commodity money society developed with a metaphysical counterfeit that has no physical commodity backing whatsoever. Indeed, the only reason the banks can get away with this scheme is they have purchased government’s support (by loaning FRB money to it) and then using government’s monopoly of force to coerce society into using its funny money. The government has mandated acceptance of the banking system’s fiat paper money and punishes anyone who refuses to do so. Welcome to the wonderful world of fiat money. 🙂


Orrin Woodward: Chairman of the Board of LIFE Leadership

17 Responses to “What is Fiat Money?”

  1. Wow. I’m so glad more and more people are learning about this scam. Thanks for your continued insights!

  2. Doug Clarke said

    As we break the last strands holding us in the Financial Matrix by NEVER having a credit card balance and making BIG mortgage payments an interesting coincidence happened. They want to increase our credit line and lowered our monthly mortgage payment. In other words they are on the ropes and panicking! I hope no one lets the banks and cc companies do them this “favor”…

  3. Elaine Mallios said

    Funny that my daughters who have finance degrees from two different colleges had never learned this! I wonder why? (tongue in cheek)

  4. Lou Minnis said

    Thank you Orrin, I had been looking at this system since the 80’s when Paul Volcker was the Chairman of the Board of Governors of the Federal Reserve. I knew then that it wasn’t a government agency. What I did not know was how to get out of it. I am so glad the Lord has blessed you with the insight to see clearly and make it available to others. Denny Smith has been mentoring me and I will be free to go back to the plantation (work) and free others.


    Lou Minnis

  5. Chad Palmer said

    This is one of the largest scale crimes against humanity. By specific devaluation of the currency, generations since WWI have been working their guts out for 40 plus years each to attain a retirement of fools gold. The revolution is coming via the finacial fitness program, just by paying off our debts, we can be free to live a life of purpose. Your the Best, Orrin!

  6. Andrew LaFleur said

    Control=fiat money=time=labor=my life=no value
    Instead of
    Intrinsic value (gold, silver, grain
    M, etc.)=money=time=labor=my life=(Intrinsic) value
    I believe we are on the path to show that the current fiat system will have no benefit to those that wish it to continue, and we will see a rise in our value of life through a true value of labor. I really appreciate Orrin taking the time to educate us and respect his vision for our future! I am very proud of everyone in this organization sharing financial fitness, and please know that our efforts will improve the world!

  7. Steve Leuquin said

    Thanks Orrin for taking the time to study this and inform us. The truth is out there and we are leading people to it!

  8. This is just a great, simple explanation of this fraudulent pyramid scheme that is “Fractional Reserve Banking”. Thank you for making this easy to understand Orrin!

  9. John Mossner said

    Amazing how we are taught that this type of money supply manipulation by our government is normal and acceptable in our school systems. Oh wait, the schools are run by…..I get it. No wonder!

  10. Steve Meixner said

    Thanks Orrin, As Terrible as all this is I am so Thankful that I now know the Truth and Have A Way OUT !!

  11. Danny Kellenberger said


    Thanks for continuing to share how the house of cards is built. The inequality of the banking system is frightening. I am glad there are people like you and Life Leadership to help teach us, the masses, what is going on behind the curtain.
    Carpe Diem

  12. Tim Marks said

    I remember asking my mom a question when I was about 7 years old…” Mom, why can this paper buy stuff”? She said ” well because the government says so and they make it” And that was that! my financial education had begun, and ended on the same day!!
    Thanks for this clear explanation

    Tim Marks

  13. Andy Kosowski said

    Great article Orrin, thanks for explaining this so well. This is so much different than what we are led to believe in our society today. Keep spreading the truth.


  14. “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…I believe that banking institutions are more dangerous to our liberties than standing armies… The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” Thomas Jefferson

  15. Rick Tillmann said

    Hey Orrin,
    I just saw a piece on John Maxwell. He stated that one of the most important things we can do is focus on “Intentional Living and living a life of Purpose.” Sounds to me like he’s following you, or a customer of LIFE Leadership!!!

    Yet another example of great minds thinking alike…

  16. Heidi said

    I drove my dad to an event his portfolio manager and company were putting on for their investors. There was Q&A and I was blown away by answers/comments such as, “No one is talking about inflation (these fancy economists were blowing off the question)…….. Local governments are worried about debt, but the federal government doesn’t because they can just print more…… Consumer income is up, and so is their savings and spending, and their debt is way down…..”. I couldn’t believe it. My dad called the next day to ask about precious metals and the guy had nothing much to say. On a similar note, our daughter is taking a college class and has to pick a topic to write on/debate. She picked the Free Market. She told me that she has to pick “credible sources” and that only includes things written in the last ten years, although there are a few exceptions. I told her that’s crazy and if she can’t use “Economics in One Lesson” as a source then our university system is worse than I thought. Ugh.

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