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Blood money?

Updated: Jul 13, 2023

This blog is a part of The Matrix Series. See the overview here:

Blood money?

How would you answer the question “what is money?” and "where does money come from?". Why is it called “salary”? Why are cigarettes valuable in prison? If you find yourself clueless to these questions you are not alone!


The concept of money is a fascinating and complex topic, especially in modern times, and something most people take for granted even though it is a key part of the foundation on which a civilization is build. I was a lazy student for much of my school time but I am pretty sure I was taught absolutely zero about the concept of money. Might this be by design? My interest exploded after reading “The Bitcoin Standard” by prof. Saifedean Ammous and jumping down the rabbit-hole of how the current money system of our world is setup and controlled.

Did you know that in earlier times sea-shells and later salt was used as money? The latin word for salt is “sal” from where the word “salary” originates. Why did sea-shells become worthless once foreign sailors with endless supply started flooding the islands with currency? Because of something called scarcity. Because there are not many real Picassos and because the amount of cigarettes in prison are in short supply the value of each increases. If the prison is suddenly flooded with cigarettes, they, like the sea-shells, will quickly lose value and purchasing power.

“Seashells were used as money when they were hard to find, loose cigarettes are used as money in prisons because they are hard to procure or produce, and with national currencies, the lower the rate of increase of the supply, the more likely the currency is to be held by individuals and maintain its value over time.

When modern technology made the importation and catching of seashells easy, societies that used them switched to metal or paper money, and when a government increases its currency’s supply, its citizens shift to holding foreign currencies, gold, or other more reliable monetary assets.”

  • "The bitcoin standard" by Saifedean Ammous.


To better understand the concept of money let’s cover some definitions. For something to be categorized as money it must fulfill these four criteria according to Investopedia:

1. A medium of exchange.

2. A unit of account.

3. A store of value.

4. A standard of deferred payment.

So does having a lot of money make you wealthy? Actually not.

Money and Goods Are Different

“Thus, clearly, money and goods are not the same thing but are, on the contrary, exactly opposite things. Most confusion in economic thinking arises from failure to recognize this fact. Goods are wealth which you have, while money is a claim on wealth which you do not have. Thus goods are an asset; money is a debt. If goods are wealth; money is not wealth, or negative wealth, or even anti-wealth. They always behave in opposite ways, just as they usually move in opposite directions. If the value of one goes up, the value of the other goes down, and in the same proportion. The value of goods, expressed in money, is called "prices," while the value of money, expressed in goods, is called "value."

  • Carrol Quigley, ”Tragedy and Hope: A history of the world in our time” chapter 5.

I had to read this a couple of times to fully grasp the professor’s point so maybe you feel the same way. Let’s decipher it:

“Money is a claim on wealth which you do not have” says a lot. Having a ton of paper money at home does not make me wealthy, yet, for I can use the actual paper money for nothing except wipe my ass or light a fire and I can do the same with toilet paper.

“The value of goods, expressed in money, is called ‘prices’, while the value of money, expressed in goods, is called ‘value’”. My stack of paper has value because of the goods, like food or a car, that I can exchange them for. I cannot get anyone to accept my toilet paper for a car. The higher the purchasing power, meaning the more goods I can get, the higher value of my money. If the purchasing power drops enough my paper money becomes effectively toilet paper – or worse because of the lack of layered softness.

In a short braindump I ponder the concept of wealth deeper. Read here.

I can also recommend this podcast:

Soft vs. hard money

Money can be categorized as soft or hard. Imagine that your paper money turned into bananas. You would have less than a week, depending on the amount of poison used on/in them, to exchange them for goods before they start to rot and no one will accept them. They would also lose value each day as they turned more and more brown (unless my father was the recipient) and for this reason be a terrible store of value. Now let’s say your bananas are special and never turn bad. In this case they will be a much harder form of money, but if suddenly a ton of new special bananas goes into circulation the value of your special bananas and therefore purchasing power will decline. An important point about soft money is that it incentivizes spending and consumerism according to professor S. Ammous.

Hard money is the opposite and therefore a type of money that does not lose it's value or purchasing power and cannot have it's supply hyperinflated. Gold is the classical example of hard money but ultimately failed as a medium of exchange for everyday use for various reasons such as difficulty transfering big amounts (transportability through space). By this definition bitcoin is the hardest money ever created because of, among other things, its limited supply of 21 million making it's scarcity absolute (the first time in recorded human history).

Eventually hyperinflation turns paper currency into uncomfortable toilet paper

Money as debt

Today’s monetary situation is not so easily understood but the most important thing to understand is that it is probably the biggest, longest and most sophisticated (dark) magic trick in human history. The following short video is a great introduction. After it is necessary to understand the history of money better in order to end up at current times.

History of money

(stolen from "Tragedy and Hope 101" by Joe Plummer)

What Is Money?

To accurately define what money is, we can’t simply hold up a US dollar or a Russian ruble or a

Mexican peso and say “This is money.” We’re better off to start by defining the overall purpose

of money. What does money do? In the simplest terms, money enables us to purchase products and services from other people. Using this basic description, we might go on to say money can be anything that is widely accepted as payment for products and services. Having defined money in this way, it will be easier to explain the different forms of money and why some are far more honest than others. But first, let’s quickly touch on what existed before money—barter.


Prior to the creation of money, individuals used barter to trade with one another. This simply

means that they would “purchase” what they wanted with products or services rather than paying for it with money. As an example, assume your neighbor grows corn, has one hundred extra pounds of it, and you would like some. If you grow tomatoes, it’s possible that your neighbor will allow you to “buy” some of his corn using your tomatoes instead of money. Or, maybe he’ll allow you to provide a service of some sort in exchange for his corn. (Perhaps you’re good at building storage sheds, and he needs help building one.)

If the two of you are able to come to a barter agreement, then each of you will gain value from

the exchange. (Your neighbor turns his surplus corn into something he’d rather have; you turn

your surplus tomatoes or a couple days’ work into something you’d rather have.) However, if

your neighbor isn’t interested in your tomatoes, and if he doesn’t need a new storage shed, then both of you lose out. Both of you will have to find another trading partner.

Though limited, barter at least provided an opportunity for individuals (and society as a whole),

to enjoy the benefits of trade. Rather than just having really good tomatoes and some nice

storage sheds, you could also have some really good corn, really good wheat, clothes, furniture, or anything else that others had to offer. But again, you could only obtain these things if others wanted what you had to offer in exchange. This was the big limitation of barter, and it was overcome with the creation of commodity money.

Commodity Money

While trading with each other, people eventually realized that certain commodities were always

in high demand. For instance, they discovered corn was so high in demand that it could

consistently be traded for nearly anything. From that point forward, corn took on a value that

exceeded its consumption value . In other words, even though your neighbor already had all the

corn he needed, he would continue to grow (or acquire) more because he knew the corn would be accepted as payment for the products and services of others. The more corn he had, the more purchasing power he had. In this way, many different commodities (corn, wheat, cows, sheep, etc.) eventually evolved into reliable forms of commodity money. But just as barter had its limitations, so too did early forms of commodity money. These problems were eventually

overcome when metal was discovered.

Unlike livestock, metal didn’t need to be fed, watered, and cleaned up after. Unlike wheat and

corn, you didn’t have to worry about metal going bad, becoming contaminated with bugs,

growing mold in storage, and so on. Also, metal was easily divisible. Assuming a milk cow was

equal in value to one hundred pounds of iron, and the sale price of an item was twentyfive

pounds of iron (or onefourth of a milk cow), the individual buying with iron had a distinct

advantage: he could easily produce the exact amount of money needed. For these reasons, metal eventually became the commodity money of choice, and though many different types of metal were used (iron, copper, and tin to name a few), gold and silver coins became the standard around the world.

Summary of Barter and Commodity Money

Both commodity money and barter share a couple of desirable attributes. The first attribute is

transparency. If I want to trade my goat for some of your corn, I’ll have to bring my goat and

you’ll have to bring some corn. The odds of either of us walking away with something else in

our pocket, like a cricket, are pretty slim. Likewise, if I offer to buy something from you with a

Gold Eagle (US gold coin), I must hand over a Gold Eagle. There is little chance that you will be

duped into accepting a far less valuable Silver Eagle as payment for your item.

The second desirable attribute is the intrinsic value of the items traded. There are significant

natural barriers that limit the production of commodities and, as such, their intrinsic value is

transferred to anyone who acquires them. The person who acquires corn does not have to grow and harvest the corn himself; the person who earns a gold coin does not have to dig the gold out of the ground, fashion it into a coin, and convince others of its authenticity. Nobody can simply create gold, corn, or a goat with the flick of a pen. For this reason, these items will always possess the intrinsic value of the labor and the other costs that produced them.

These two attributes (transparency and intrinsic value) made it reasonably difficult to defraud

people in trade because it isn’t easy to convince somebody that you’ve paid them with a goat

when, in fact, you’ve handed them a cricket. But just as barter led to the invention of commodity money, and commodity money eventually evolved into metal coins made from gold and silver, the inconveniences of gold and silver coins eventually led to the creation of a new form of money. And with it, the ability to easily defraud people (the ability to create money with “the flick of a pen”) was born.

Receipt Money

Gold and silver coins were a much improved form of commodity money, but they still had some

drawbacks. For instance, if you were even moderately wealthy, finding a place to safely store

your coins was difficult. Also, if you wanted to make a large purchase or simply wanted to move

a significant amount of money from one place to another, the weight of gold and silver coins

made it challenging and nearly impossible to conceal. (Just sixteen hundred dollars in a

silvercoin economy would have weighed approximately one hundred pounds!) [2] As before,

these two problems were eventually solved. This time, the solution came from goldsmiths.

Goldsmiths already handled large stockpiles of gold and silver in their trade and had built very

strong and wellguarded vaults to protect those stockpiles. This made solving the first problem

(safe storage of gold and silver coins) a nobrainer.

Goldsmiths began renting unused space in their vaults to citizens who wanted to keep their coins safe until they were needed. The goldsmith was happy to collect a fee from each depositor, and the depositors were happy to know that their money was in good hands. Interestingly enough, the safestorage solution ended up solving the weight problem of using coins in trade as well. When a citizen came in to deposit their coins for storage, the goldsmith would hand the depositor a paper receipt as proof of their deposit. So, if a customer deposited $1,000 in gold coins, they were given a receipt (or receipts) valued at $1,000 worth of gold. These receipts were marked “payable on demand,” meaning anyone, at any time, could come in and exchange the receipts for gold. Because the receipts were literally as “good as gold,” citizens began accepting them as payment for products and services. From that point forward, the receipts became a new form of money: receipt money. Though the receipts were only made of paper, each one was 100 percent backed by gold (or sometimes silver) and, therefore, each receipt was a legitimate form of paper money.

However, as time passed it became increasingly rare for individuals to cash in their receipts and

withdraw coins from the goldsmith’s vault. Assuming their coins were safe and always available,

depositors had no reason to remove them. (They’d just have to find another safe place to store

them if they did.) Besides, it was much easier to use the receipt money in commerce. Nearly all

citizens preferred to carry a pocket full of the goldsmith’s receipts to a pocket full of heavy

coins. Now, put yourself in the goldsmith’s shoes. The receipts that you create are trusted by all. They’re literally considered as “good as gold” and are accepted as payment for products and services, just the same as if a person paid with a gold or silver coin. Although you do not possess the power to create gold and silver coins “with the flick of a pen,” you do possess the power to create receipts that are every bit as valuable in trade. What do you do?

Fractional Money

It wasn’t long before goldsmiths realized that they could simply print up additional receipts for

their own benefit. This, of course, was an act of pure fraud. Each ounce of depositors’ gold held in the goldsmith’s vault had a corresponding receipt that was issued to the gold’s rightful owner. Issuing additional receipts constituted a theft of purchasing power, and worse, it set into motion the inevitable loss of the depositor’s coins.

To illustrate, say a man walks into the goldsmith’s shop, deposits $1,000 worth of gold, and

receives $1,000 worth of receipts in exchange. No problem there. An hour later, another man

comes into the goldsmith’s shop, but he doesn’t want to make a deposit; he wants to borrow

$1,000. The goldsmith agrees to the loan and issues the borrower $1,000 worth of new receipts, which are created on the spot. There is now $2,000 worth of receipts, but only $1,000 worth of gold in the vault. Now imagine that the borrower takes his newly created $1,000 worth of receipts to a local store and spends them. And say the store owner decides he’d rather have the actual gold coins instead of the paper. So, he takes the receipts to the goldsmith, cashes them in for coins, and goes on his way. Everyone is happy to this point. But what happens if an hour later the man who made the original $1,000 goldcoin deposit shows up to withdraw his coins? Too bad for him. His gold walked out the door an hour earlier when the loaned receipts (created without a corresponding deposit) were cashed in.

This is a highly simplified example, but it illustrates the problem that emerged with the creation

of paperreceipt money: it opened the door to fraud. What began as a legitimate form of paper

money, backed 100 percent by coins held in reserve, eventually turned into fractional money .

And as the goldsmith printed more and more receipts, the fraction of coins backing those receipts became less and less. Before long, citizens were unknowingly accepting receipts backed by only half of the receipt’s printed value, a quarter of its printed value, a tenth of its printed value. When people finally figured out what was going on, they rushed to exchange their receipts for the coins that rightfully belonged to them. Of course, only the first few in line were able to withdraw their gold and silver. All the rest were left holding worthless paper.

Fiat Money

In the previous example, people accepted paper receipts in exchange for their products and

services for one reason: they thought that they could cash in their receipts for gold or silver coins whenever they wanted. None of them knew that they were essentially selling their goods for inadequately backed pieces of paper. If they had known the receipts were fraudulent, they

wouldn’t have accepted them; they would have demanded actual coins instead. Clearly, they

were ripped off.

Again, in an economy that uses only commodity money (as opposed to paper money), it is very

difficult to rip people off because the actual commodity must be surrendered at the time of

purchase. The trade is transparent. But in the aforementioned receiptmoney economy, only the assumption of transparency exists. Yes, the receipt might actually be legitimate; it might represent an underlying commodity that physically exists and does not belong to anyone else. However, it might also be illegitimate. You might sell an ounce of gold for a moreconvenient receipt that’s marked “one ounce of gold,” only to find out later that your receipt can’t be redeemed for anything. If this happens, it’s very clear who won and who lost in the exchange. (What thief wouldn’t want to trade worthless receipts for as many ounces of gold as he could get? Printing paper receipts is very easy…Printing gold is impossible.)

This reminds us of what money is supposed to be: something that enables us to purchase the

products and services of others. The only reason we are willing to work for money is because we believe the money we earn will serve this purpose. Nobody interested in earning money would exchange their time and effort for pieces of paper that they knew to be worthless. Therefore if somebody wants to use paper money to steal from others, the most obvious way is to mislead them into believing that the money has value. However, fiat money provides another way to steal: good oldfashioned government force.

Encarta defines fiat money as:

“paper money that a government declares to be legal tender although it is not based on or convertible into coins.”

Another way to put that would be: fiat money is paper money, backed by nothing, and the

government forces people to accept it via legal tender laws. It’s basically the goldsmith’s

counterfeit receipts on steroids. Whereas the goldsmith had to conceal the fact that he was

fraudulently printing money to enrich and empower himself, fiat money enables a group like the

Network to openly print money and force it down people’s throats. They simply use their

lawmaking ability to legalize the scam. Whether by fraud or by fiat, the power to print money is the power to steal whatever money can buy. Fiat money is more egregious because, unlike fraud, it is backed by force and can be used to openly confiscate purchasing power on an enormous scale. (There is no doubt that the Network advanced its position significantly when it moved the United States from a gold and silverbacked money supply to a purely fiat model.) But believe it or not, there is actually something worse than fiat paper money. And this brings us to the final form of money we’ll be discussing in this “crash course,” the form of money we use today—debt money.

Debt Money

Take the inherently fraudulent characteristics of the goldsmith’s fractional money system, add in

the greater fraud and force of pure fiat, top it off with a mechanism designed to generate

inescapable debt, and presto: you’ve got the most sophisticated monetaryenslavement

system ever devised by man. And, wouldn’t you know, you also have all the components that make up our current monetary system. Unlike a normal fiat money system (where the ruling class simply creates its own worthless paper money, spends it into the economy, and demands that everyone accept it), our ruling class has devised something much more powerful. Rather than spend money into our economy, they loan money into our economy. This enables the Network to steal purchasing power from us twice: once when they create new money, and again as they collect interest on the entire money supply.

Worst of all, by creating money and putting it into circulation only when a loan is made, and

then destroying that same money (removing it from circulation) when the loan is repaid, the

Network has designed the perfect debt trap. Any meaningful attempt to escape this debt trap, by paying down debt, will trigger an automatic “correction mechanism” that guarantees failure. The chain of events is perfectly predictable: as the nation repays its banking debts (and refuses to take out new loans), the economy’s debtbased money supply will shrink. This will cause disruptions in the economy; initially the disruptions will be minor, but they will inevitably become

intolerable if new money isn’t injected via new loans. (Imagine the consequences of a 10 percent reduction in the nation’s money supply…now imagine a 40 percent reduction, a 60 percent reduction, or an 80 percent reduction.)

Theoretically, if new loans are not issued to reverse the automatic “correction mechanism” that

the Network has built into the system, and if all available funds continue to be applied toward

extinguishing Network created debt, then the debtbased money supply must eventually fall to

zero. Robert Hemphill was the credit manager of the Federal Reserve Bank in Atlanta. In the foreword to a book by Irving Fisher, entitled 100% Money , Hemphill said this:

If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have…If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless situation is almost incredible—but there it is. [3]

Needless to say, the economic and political power that flows from this system is nothing short of obscene. Therefore, it’s easy to understand why the Network built this system like a prison.

Playing by their rules, we cannot escape; we can never repay the debt that is owed. And just like the debt slaves of nineteenthcentury India, this inescapable debt is binding on our children, and our children’s children, and so on…forever. Of all the Network’s monetary powers, this particular power is the most destructive. In nation after nation, politicians who are happy to bury their citizens in debt are supported by the Network and placed into positions of power. Some of the politicians are well intentioned; others are not. In the end it really doesn’t matter. As politically motivated spending programs (from warfare to welfare) spiral out of control, it isn’t long before massive monthly loans are needed just to cover the daytoday operating costs of government. The noose is then tightened further with a neverending slate of new spending programs that are added year after year, decade after decade. Out of the crushing debt that ensues, and the subsequent need for an endless supply of new loans to keep the bankrupt system afloat, the Network secures its dominant position over everything and everyone that depends on its money.

In the meantime, the illiterate debtors of the world slave away with no idea that the money they

“owe” was created out of thin air; it was never earned by the lender. They have no idea that the

system itself was designed to create an everexpanding black hole of debt, a system of financial

servitude that is literally inescapable.

Back to me

If you made it this far congratulations and well done! You have now arrived at the million yuan question:

Blood money?

And now for the last part. What happens when the currency is allowed to be printed by government order beyond the limits of backing in precious metal or the production of goods and services?

Apparent Capital as "Paper" Inductor

In this structure, credit, presented as a pure element called "currency," has the appearance

of capital, but is in effect negative capital. Hence, it has the appearance of service, but is

in fact, indebtedness or debt. It is therefore an economic inductance instead of an

economic capacitance, and if balanced in no other way, will be balanced by the negation

of population (war, genocide). The total goods and services represent real capital called

the gross national product, and currency may be printed up to this level and still represent

economic capacitance; but currency printed beyond this level is subtractive, represents

the introduction of economic inductance, and constitutes notes of indebtedness.

War is therefore the balancing of the system by killing the true creditors (the public

which we have taught to exchange true value for inflated currency) and falling back on

whatever is left of the resources of nature and regeneration of those resources.

  • Silent weapons for quit wars

This is taking out of context so will be difficult to understand, and is tough enough in context, but the last part really says it all. I read this multiple times to really wrap my head around it. My summary goes something like this:

If I lend you gold in exchange for your roller blades, I am the creditor and you the debtor and the roller blades are the collateral – an asset. If you die, I lost money but got the asset = fair and balanced. Now if I lend you debt money in exchange for your roller blades the situation is actually opposite. You are the creditor, lending me your roller blades for free, and I am the debtor – I owe you rollerblades. The credit/debt money I gave you “has the appearance of capital, but it is in fact, indebtedness or debt”. If you die I lose nothing, but I get a pair of roller blades = you got hustled. Now let us switch roller blades with houses and land, repeat the thought process and see where that takes you.

Read more about the general above and his thoughts on war from a long time ago:


So what is the solution? I do not find myself qualified to answer that question, but that change needs to happen is evident and I believe the time has come. For inspiration to solutions, I can recommend to study:

- “Money as debt” part 3 by Paul Grignon.

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