We are living in a financial reality where money and capital are no longer the same thing.

In this deep-dive episode, Dan speaks with Paul Musson, author of Capital Offence, about the "Great Category Error" most investors make: confusing the currency they save with the wealth they create. Paul breaks down how the Fiat system punishes savers, why your home’s appreciation might be a hidden mechanism of wealth redistribution, and how to build a portfolio of "Real Assets" that allows you to opt out of the distorted reality and escape the clock.

Key Talking Points:

• The fundamental difference between Money (currency) and Capital (productive capacity)
• Why the "Wealth Effect" in housing is actually a transfer of wealth from the young to the old
• The "Paradox of Thrift" and why central banks are incentivized to punish prudence
• How to use the "Central Bank Lunacy Hedge" to protect your portfolio from policy errors
• The danger of "Zombie Companies" in passive index funds
• Why you must balance financial defense with living for today

Escape The Clock Resources:

• Book: www.escapetheclock.com/book
• Planner: www.escapetheclock.com/toolkit
• 1:1 Help: www.escapetheclock.com/schedule
• Free Weekly Newsletter: www.escapetheclock.com/subscribe

Episode References:

• The M2 Money Supply exploded by 40% between 2020 and 2022, while real productivity barely budged - Federal Reserve Economic Data (2024) - https://fred.stlouisfed.org/series/M2SL
• Since 2009, US Household Wealth has nearly tripled to $150 Trillion, largely driven by asset price inflation rather than GDP growth - Federal Reserve Financial Accounts of the US (2023) - https://www.federalreserve.gov/releases/z1/
• The percentage of "Zombie Companies" (firms that can't cover interest payments with profits) rose to nearly 20% in the US by 2020 - Bank for International Settlements 2020) - https://www.bis.org/publ/qtrpdf/r_qt2009a.htm
• Over the last 100 years, gold supplies have increased at an annual rate of only 1% to 3%, making it hard to manipulate - Mark Skousen, The Structure of Production (2015) - https://www.amazon.com/Structure-Production-Mark-Skousen/dp/1479848522

People & Concepts Mentioned:

• Michael Green: Portfolio Manager known for his research on how passive investing strategies (index funds) distort market prices.
• Paul Volcker: Former Fed Chair (1979–1987) who famously raised interest rates to 20% to crush the inflation of the 1970s.
• Paul Krugman & Paul McCulley: Economists referenced regarding their 2002 arguments for creating a "housing bubble" to replace the dot-com bubble.
• Bob Kierlin (Fastenal): The founder referenced by Paul as a prime example of ethical stewardship for distributing wealth to his employees.

Connect with Paul:

• Website: https://paddingtoncapitalmgmt.com
• Book: https://paddingtoncapitalmgmt.com/capital-offence-book-paul-musson-economic-policy-inequality-money-management-financial-intelligenc/
• LinkedIn: https://www.linkedin.com/in/paulbmusson/

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Thank you for listening. This podcast is for education only and is not financial advice.