Stone Money Rewrite – nyctime7

Worthless Money

The idea that money has any value, is a myth.  Money is simply the physical representation of a person’s wealth. No matter the object used as currency, it will always be a placeholder for something imaginary. It’s important to remember that there’s a difference between value and worth. As Americans, we use dollar bills as our form of money. The literal dollar bill is nothing but a piece of paper, yet we measure our worth using it. The idea that we are either rich or poor based on how many pieces of paper we have, is quite odd on the surface, but it works. Our idea of money is similar to that of the people of Yap, as well as Brazil. Money is given power by people, and can only exist when a person believes it has value.

The exchange of goods from person to person has existed from the beginning of time. The only thing that has changed, is the object various people use as currency. On the island of Yap, large stones were used as money. A person in possession of a stone, would hand over their stone, in exchange for other goods. In many cases, these stones were too large to actually be exchanged, and transactions were essentially made on “good faith”. An example of this is shown in “The Island of Stone Money” by Milton Friedman. Friedman tells the story about a family that lost a very large stone due to a shipwreck overseas. The people of Yap acted as if the stone was never lost, and treated the family accordingly. This practice was accepted as a logical means of trade for the people of Yap, regardless of physical possession of stone. To the modern person, the people of Yap, probably seem like fools. I myself even questioned their logic, until I compared stones to dollar bills. American methods of trade are surprisingly very similar to those of the Yap. We trade pieces of paper for other goods, given that another person believes our paper is worth the exchange. With the use of banks and credit cards, money is not necessarily physically seen or given, yet it is accepted as gospel. Current monetary systems may be more modernized, but at its core, is just as “crazy” as trading stones for actual goods.

In the 1990’s, Brazil faced one of their worst economic problems, inflation. The president at the time printed an excess of money, which resulted in the downfall of the cruzeiro. In the blink of an eye, the price of an item would change. In “How Fake Money Saved Brazil”, Chana Joffe-Walt says people would have to run ahead of grocery store employees just to get the previous days prices. Many stores changed prices daily, leading people to believe nothing could be done to control inflation. This trend continued, until four men introduced a fake currency, Units of Real Value, or URVs. Unlike the cruzeiro, this fake currency, URVs, gave the illusion of stable prices. For example, a car would be priced at 10 bags of chips. Instead of that same car costing 20 bags of chips the next day as previously expected, the price of 10 bags of chips remained. The only thing that changed was how many cruzeiros a single URV was actually worth. When people noticed the stability of URVs, their fear of rampant price changing began to dissipate. This lead to Brazil’s economy stabilizing, and the cruzeiro being replaced with the real. Like the people of Yap, Brazilians had to believe in their currency for it to flourish. The use of URVs gave people the idea that prices had stopped rising, when really they rose and fell like any other currency.

Prior to my research, I thought my $1 was actually worth $1. In reality, that $1 could be worth more or less than the value printed on the bill. Someone may be willing to sell me a car for $1, just as another person may want more for a bag of chips. I never realized how we operate on a system of good faith, especially in our modern lives. If my failed tomorrow, I’d have little to no physical items to prove that I’m worth what I say I’m worth. We’re simply trading pieces of paper, given value by the government, as representations of worth. As long as someone wants another person’s dollar bills, they’ll have some sort of worth, but the second they change their minds, that same person becomes worthless. Don’t get me wrong, this system is needed in order to make transactions, but if we as a society stopped believing in the dollar, are we really worth anything?

Works Cited

Friedman, Milton. “The Island of Stone Money.” The Island of Stone Money(1991): 3-7. Web. 10 Sept. 2016.

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR. NPR, 4 Oct. 2010. Web.