Value of Money
When I was listening to the story of about the island of Yap in class I thought to myself my teacher was making this story up. My teacher told us about how people would make huge limestones and ship the 400 miles away by boat to some island so far away. Even when people would use them for a purchase they wouldn’t have to be moved anywhere to change ownership. Why would people take the time to make such large limestone coins to be their representation of money? It seemed absurd because you couldn’t even move them easily or use them for little things like food for the house, it had to be spent on something big like building a new house or as said in the Planet Money Prologue if one of your warriors died in war we could use that stone to buy back the warriors body. It was also interesting to know that only if we had one of these stones it would mean we are considered as wealthy, which was different because we could have tons of gold and other forms of money but we weren’t ever considered to be as wealthy as someone who owned one of these stones as stated in the story of stone money. Also, something else I read was that there was no form of documentation on this island of Yap, they have such a strong faith in each other’s word. Someone could say they wanted a house built, a contractor would come out build a house with no upfront pay but know that the fei was his once the house was completed. Even while reading Friedman’s essay the thing that stood out the most to me was when he talked about the magnificent fei that was being delivered over sea. A big storm aroused and the fei sank to the bottom of the ocean, and the people on the island of Yap were perfectly fine with that. They said that even though it is at the bottom of the ocean it still has its value, just as if it were leaning against the owner’s house. To me this is ridiculous because if that were my fei that sank I wouldn’t be as calm about it as they are and it wouldn’t seem valuable to me anymore.
Then that has me go into thinking why is money so important to people, and what is the point of money in the first place? The NPR broadcast I was listening to talks about all the stages of money and how it has changed over the years. It first started as the stone fei, then to gold, and bills, off to checks, and now it is as simple as just a number appearing in our bank account. It was enjoyable how they were talking about the differences in how payments work now a days, they said that when they pay their phone bill it’s not like someone goes and delivers a hundred dollars to their phone company. It is almost as if they are just sending numbers back and forth to one another and it is a game that doesn’t even feel real. They even said in the NPR brodcast that most of the money that exists is just the idea of money.
Which then brings me to the Lie That Saved Brazil, and what they had to go through. Listening to the story was just so awful for the people of Brazil. It’s not understandable why people had to be living the way they did when there was so much money in the world to be shared. This is because there was apparently no money for the people in Brazil and they were really struggling to get by. Chana Joffe-Walt talked about what the stores were like and how the prices of things would go up or change every single day. How there would be a sticker guy that would go up and down the aisles changing the prices each day, people would even try to get in front of the sticker guy so they could pay the old price. It was devastating when she told us that even when people would get paid, they’d have to spend their money before it wasn’t worth anything anymore. She said you could put your money in a drawer and each day that went by the clock would be ticking on the value of your money. There was even a point when the government threatened to take everyone’s money, people went into panic and some she said even committed suicide. But then one day four men came along to help Brazil’s situation so they wouldn’t have to live like this anymore. Hero’s was what she described them as, they proposed a way to make people think their money had value again. Not long after things started to change because this new idea seemed to make such a difference in the way people just “lied to themselves” so to speak. Even though there was no physical money, all they needed was for people to believe there was and that made all the difference.
This story just easily helps me flow right into Weekend at Bernanke’s, listening to this story just gets me thinking about all the different ways the Federal Reserve could have helped Brazil for example, because in the brodcast they said the Fed can create money at and given time. Why they wouldn’t think to give some to Brazil during that crisis, I don’t exactly know. They were saying that the fed can just make money out of nothing and just lend it out and if they should do this. The process is so easy as they explained, all you do is add a few numbers, click a mouse and alas money is created. Also on top of that they even exclaimed that banks don’t just like to sit on load of money they like to lend it out, so why not use all of this money to help countries in dire need of it? It is interesting to think if the Fed screws up then the people stop believing in the dollar and the dollar loses value as they explained.
Thinking about all these different ways money is transferred and the money people have and how much they have can put them in the category of being wealthy, but why? Some things these days don’t really have a good representaion of money. What is the point or meaning of money? Money is just something that holds value, but there are so many different things that hold value to different people and if you really think about the dollar and how it is just a piece of paper with a guys face on it, it doesn’t make sense why people go so crazy over it. Money is just another materialistic thing that people think they need to be successful in life when there are far greater things, like knowledge for example. Now a days with how high tech money as gotten it’s just a game of sending numbers and not physical money, so it’s as if the money isn’t even real to begin with.
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.
Joffe-Walt, Chana . “How Fake Money Saved Brazil.” NPR.org. 4 Oct. 2010. 30 Jan. 2015. <http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil>.
“The Invention of Stone Money.” 423: The Invention of Stone Money. This Is American Life, WBEZ. Chicago . 7 Jan. 2011.