• Elias Zeekeh

Functions of Money | Money as a System of Control

Medium of exchange, unit of account, and store of value are the conventional functions of money, but there is another use of money as a system of control that is spoke about much less.


Hello ladies and gentleman welcome to the Elias Talks money v-log where I talk all things money. Today I'm going to talk about money as a control system, and what that means.

Backing up a bit money was originally used when we evolved from the barter system in which people traded possessions with one another for what we needed.

The history of money goes back to Mesopotamian/Babylonian civilizations 3000 BC with the use of the Shekel. It was nominally equivalent to a specific weight of barley.

It became popular because not only did it facilitate transactions as a medium of exchange, but also because it is also a store of value. Because when you can exchange a product or a service for money you don't have to directly exchange it for the good or service that you want right there and then.

If the currency is operating well you can store value with the money, and use it when and where you want to purchase goods and services at various prices. In this way it is also a provides market value to facilitate commercial transactions. So to summarize we have medium of exchange, unit of account, and store of value as the conventional functions of money.

But there is another use of money as a system of control that is spoke about much less. This is both against individuals as well as countries. This is something that you won't find in any traditional text book.

For an individual a bank can directly freeze your bank account, and in a practical sense there is not much you can do about it. Usually this is done if somebody is engaged or participating in activities that are illegal. Some examples are selling drugs, sex trafficking, or distribution of stolen goods. But, it has also historically been also used to target political opponents.

For example, in Russia last year the government froze all accounts linked with opposition leader Alexei Navalny as well as over 100 linked individuals and entities. This conveniently happened before planned nationwide demonstrations organized by his allies to protest against the exclusion of opposition candidates for the Moscow election. He was in jail at this time as a result of calling for the protests. The official reason for freezing his accounts was money laundering.

In America Enrique Tarrio who is a conservative entrepreneur and has a website which sells some clothing with messages and language that can be considered offensive had his bank account cancelled last year. This items on his website can be considered politically volatile in nature. He was kicked off Chase's payment processor and he was subsequently de-platformed from Facebook, Twitter, Instagram, AirBnb, First Data, Square, Stripe, and Paypal. No clear reason was provided to him, and he essentially got the run around from the bank. His accounts were in good standing at the time. He was advised in writing that the decision was not reversible.

This is not say whether these individuals should have been de-platformed or not, but to make you aware that these things do happen, and the financial system can be used to keep people in check.

Beyond being used against individuals the financial system can also be used against countries. In fact the bank of international settlements which is the central bank of central banks was originally founded in 1930 to facilitate reparations against Germany for World War I.

In more current times the SWIFT system based in Belgium which enables financial institutions worldwide to send and receive information about financial transaction in a secure, standardized, and reliable way cut off Iranian banks based on pressure for United states even though the EU did not support this.

Hence a country with less political power can potentially be bullied using the international banking system. I've provided some web links below regarding these incidences both on an individual and country level.

In conclusion while the traditional use of money has been as a medium of exchange, unit of account, and store of value it can also be used as a way to control individuals and even entire countries.

This mechanism of control is what crypto-currency looks to solve, and in large part this is the reason for its creation. By their nature cryptocurrencies like bitcoin are de-centralized as far as their control, and can be considered neutral.

No central authority can cut one off one individual nor can one powerful country cut off or restrict another country. In my future video I will provide an introduction to crypto-currency as investment, and discuss pros and cons as well as future outlook.

That's all for today. If you enjoyed my video please like and subscribe to the Elias Talks Money YouTube channel or follow me on the Elias Talks Money Facebook Page. Keep your feet on the ground and your head in the sky over and out.


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