P1. The first time I was exposed to this topic of money, my first thought was that money ruled the world. It has the power to give authority, power to provide a desirable lifestyle, and is the one thing, that I believe, separates society. So when I heard about the Island of Money and the concept they have on it, I was very intrigued to look deeper into it. I wanted to find the answer to the question, ‘is money just a concept?’ and compare it to the way that Americans see this “concept” or actuality of the paper dollar bill we all pass around. The first thing I looked into was the currency for a small island on the Pacific Ocean called Yap. Then I listened to a podcast of Brazil’s economic downfall and what they did to save it. After that I looked into the economy for America and compared it to what I have learned in order to answer the question while also relating it to what I know as an American. Through all this research I was able to open my mind and see what money is really all about.
P2. The island of Yap is a small, barely visible island located in the middle of the Pacific Ocean. It gets a lot of attention, despite it’s size, because of their currency and how they operate their exchanges of money. People of this island don’t hold wallets with paper money on them, but instead use big carvings of rocks in the shape of circles as money. These rocks are carved from limestone and have been the islands currency for decades. No one when it started, but the people of this island have been using the possession of the stones to rank the wealthy. One story in particular comes to mind when discussing whether or not this may be something physical, like giant stones being traded throughout the island, or if it is in fact a concept that we can learn from Yap. There was stone, so beautiful and big that is was considered the nicest stone the island had. Apparently, on the way back to the land, from carving it, the men on the boat dropped it overboard and the stone suck to the bottom, unretrievable by anyone. The family that had this stone made did not fret over not having the stone in their possession, for everyone in the village knew it was theirs. This stone has been traded and owned many times, without actually being present to stand it’s own in these trades and payments. That’s where the concept part comes from. The fact that these people on this island are able to still use this currency without actually having the proof, because it’s at the bottom of the ocean, makes the question come alive. For this particular situation I would have to give it to the idea of money/currency rather than physical possession. “Yes I have the money, not with me, but you know I have it because I said so and all the people in the village know I do”. It honestly makes you think in depth about what money, whether it be a stone or paper, has to do with our society and everyday living. For the people of the island of Yap, money is no more than knowing what you have and what you don’t and to me that is a powerful point/concept to have.
P3. Very different from the people of Yap and their stone currency, Brazil was facing an economic downfall with 80 percent of inflation making it unbearable to support oneself/a family with the currency. It wasn’t until four men from graduate school came together and came up with a way to change the game of money exchange in Brazil. They came up with a way to literally trick the system and in the end saved the economy and stopped the inflation, allowing 20 million people to rise from poverty. The inflation was making all the prices rise on almost everything from essentials to groceries. The URV’s were created on a virtual base, valuing to the cruezeiros whenever the value went up. One URV could equal 10 cruezeiros or 20 depending on the inflation, but people didn’t know that. This system was created in order to install faith back in the currency in the people living through the inflation, and it worked. The URVs values eventually became stable and they became the new currency for Brazil. This was interesting because these people still had money in their hands, but they didn’t know the value of what they had. Like the people at Yap, they just knew that they had money to spend and pass around, focusing more on the trade concept and having faith in what was being exchanges. I took this as a concept as well because the value wasn’t always there, but they were worth the same every time. People grew to accept it, going off of something that wasn’t real. Brazil used a fake currency, that rock was on the ocean floor, same thing.
P4. To make this more relatable I looked up the economy that America has been facing for the past decade and tried to compare it to both Yap and Brazil. In America we pass around paper bills that supposably are worth, or were worth gold (gold being the most valuable thing on the Earth at one point). Paper versus gold. Then it occurred to me that not everyone gets paper dollars, physical, but paper checks that claim that money is known as yours, non-physical. That is the same as having a URV that is claiming to be something when you never actually see the physical worth of it, it’s just numbers on a piece of paper, or more recently, digits that change when you check your bank accounts. Having money “known as yours” sounds very similar to having that rock in the water but still knowing that the worth of it is yours. Comparing what I know from the island of Yap and Brazil, this isn’t an uncommon thing. I do believe that money is a concept.
P5. The way I thought of money has changed. I still think that money has power and does provide a certain social status, but after learning what I now know I believe money is a concept. The concept of money was created to replace physical trade making it more convenient and “reliable”. The people of Yap show us that no matter where the money is, in the ocean or in the bank, as long as we know it’s ours it’s worth something. The Brazilian people showed us that the value isn’t important unless you make it about that; that money is set but goes up and down so often that it might as well all be fake. I have changed my mind on money and do believe that the concept was something we as humans have created in order to set social status and property ownership.
Friedman, Milton. “The Island of Stone Money.” n.d. Diss. Hoover Institution, Stanford University, 1991.
“The Invention of Money.” This American Life. N.p., n.d. Web
Thomas, M. (2014, October 13). What a stronger dollar means for the economy. Retrieved September 10, 2017, from https://www.cbsnews.com/news/how-will-a-strengthening-dollar-affect-the-us-economy/