Many people who I have a close relationship with has told me that it is near impossible to live a comfortable life or various fun activities without having money. In my experience I can agree with that general statement. The way people view money in the world is really interesting. Especially the people who are in control of regulating it in certain areas of the world as well as people who own large amounts of currency. In general, across all economic backgrounds and social classes, place very high value on money. Currency is used to control just about everything. There’s a famous quote that i am sure that everyone has heard once or twice in their life. It’s, “Money makes the world go around”. As is to be understood, if all of the citizens in any country were to completely abandon the use of a certain currency, that form of money would have no value. A Great example of this is as the NPR podcast discusses how in the country of Brazil, a certain currency was being devalued everyday and making people’s lives harder to survive. When Brazil wanted to build expensive buildings in the middle of the jungle, it cost a lot of money to make. So what they decided to do was to just print more money. This caused severe inflation to their country for decades and make it harder for people to purchase daily necessities like food. Many different stores completely changed their prices regularly everyday to try and put the correct value on their product so that money could be made and continue to flow. This meant that people had to constantly spend money as soon as they got it because the money was losing value daily. People pretty much completely lost faith in their country’s currency. NPR podcast used the example of the lady running in front of the price changer and picking up the product in the grocery store before it became too expensive. People really fought to make sure they got things at the lowest possible price before it was too late. Pretty soon this became very impossible to keep up with since people were losing a quality of life and the trust was lost. If I were in that position, I would have most likely done the same thing. This forced the country to come up with a brand new value system. People put their trust in the new form of currency, which was named the Brazilian Real.
When I read the story on the island and currency of Yap, I found it’s story rather interesting. Discovering how their currency was different to that of most of the world was very interesting. Hearing about the concept of the trust that the people of yap have in each other and their capital was shocking to me seeing that the country could easily go back and check to see if the money is there. In the beginning, I thought it was foolish to not get confirmation for the money to build the home, then I thought about how the banks are being run in our country and our digital currency. The majority of the people in the country gets paid a direct deposit, where you are not able to see the physical paper money in hand and doesn’t question where it is exactly, yet it is understood to be owned by you. In the United States, our earnings are supposed to be secured by the Federal Deposit Insurance Corporation, or the FDIC. This corporation began under the new deal crafted by the president at the time, Franklin D. Roosevelt, as a way to restore the country to its former financial and economic norm. Even before that, during the age of the international gold standard, since many Americans did not have gold, it regulated how the American dollar’s value in comparison to other countries. For example, as it has been stated in Friedman’s essay, “The Island of Stone Money”, France’s currency: the Franc, had more value than the American Dollar through gold per ounce. This happened because citizens in the United States as well as the country’s gold reserve did not have as much gold as France. The example that Friedman used in is article was The original conversion of dollars to gold at the time was $20.67 per ounce of gold. As the US did not own as much gold as other countries, the value dropped and was called in the country’s newspapers as the draining or “The Loss of Gold”. This is what helped caused the United States’ Great Depression. Once the country loses currency/valued goods, the economy begins to shift towards a recession, and in this severe case, a depression. NPR talks about Ben Bernanke’s role at the Federal Reserve. Bernanke works at the national bank called the Federal Reserve. In times of “economic limbo”, the government will try to work with the reserve as well as various other banks around the country to regulate the economy, spending and so on. The banks will usually lend money to the reserve from a special bond that has been held for years, as revealed by NPR’s podcast on the subject. This could sometimes be dangerous since if it is too little, nothing will change in the economy. If it is too much, there will be a certain amount of inflation the country might receive, which the value of the dollar will decrease.
In my opinion, there aren’t that many differences in the basic structures of the banking system comparing Yap to that of the United States. Both countries basic structures rely on some form of trust in another person or people that money is in fact owned by someone else and can be used at anytime, with or without being physically moved anywhere else. The only difference is that the Yap currency has to be made and counted for. In the US, there are not enough physical paper money to match the amount of electronic money that is being made daily. Most people just check their online bank account to see if the money is there.
In conclusion, After viewing all of the sources provided, it has not weakened my thoughts towards money, but the exact opposite has happened. In order for money to help others everyday, it needs to be valued highly so everyone can work towards having a certain standard of living.