Money is one of the most important things in this world. It makes the world go round. There is many different forms of money used around the world, its value is recognized by its significance. In Europe, the currency for one and two euro are coins while in the United States of America, the one dollar is paper. Many nations use different forms of currency, and the internet is no exception. The bit coin is used for trading and purchasing goods.
In economics, money is refer to as capital. This capital is spent by consumers and business and creates an economy. The economy fluctuates by how much capital is put into it, and by how much imported products are brought into the economy. The Yap simplified this economic system.
The Yap people’s currency is made up of lime stone rocks carved into cylinders. These rocks would be decorated and customized for whoever had them made. These stones, being huge in size, would not move from its final placement. The Yap people relied on word of mouth for financial records. This is almost like today’s modern credit system. Our credit system is based on invisible money that appears electronically.
Currency can be anything, as long as it has value to whomever wants it. In the past money was made of rare metals. Gold was the most saute after currency since it does not really loose its value. Most countries used gold to back their paper currency. The United States of America used gold to back the currency all the way up to the 1930’s. During the Great Depression, America suffered. Its economic growth dived to the pits. The once great economic power lost its way. Foreign countries became scared. They did not want to risk the money they had tied up. Many countries wanted to insure their assets would be secured. France being the first of them, wanted to secure its credit in gold. The United States dived the French shares. Eventually this would change. The gold would not be used to back the currency’s value, instead the government regulated the value based on the economy. Essentially this would start the modern day system of credit.
Inflation is good and bad for an economy. To much inflation is bad because it discredits the moneys worth. Prices for everyday goods would jump. An example of this is Brazil. It had to much inflation and no one had money to buy the things they need. People would live paycheck to paycheck. Basic items would cost a tremendous amount of money because of the lack of value in the currency. A new currency was introduced. Eventually the currency was changed and the economy leveled out. Products and services would then have normal prices. This made it better for the Brazilian people because they could live in a society that was “on their side” and made the way of life better.
Another example of how to much inflation destroys an economy is Germany after World War 1. The German nation after one of the most horrific wars of the twentieth century suffered economically and their reputation disappeared. Germany was blamed for the start of the war and many countries sought after reprisals because of it. At the time Germany was forced to pay large amounts of money to all the countries involved in the conflict. This shocked their economy and inflation began. The German people thought that printing more money would solve the problem. This is what caused their economy to collapse and sent the nation into a depression. Eventually Germany would fix their economy but in the end create another world war.
It is sad to say, but war either leads to a booming economy or a crumbling one. It is not good either way because of the events that lead up to it. The United States benefited from Word War 2, because of the booming economic growth but after the war most jobs were not needed and the economy shrank significantly. Germany again was crippled from the war just like the previous one, BUT, since the nation was split the western allies helped.
In the end money is truly one of the most important things to have. It can be anything as long as it retains its value. People ever since the existence of man, traded and used items as money. Money does not have to be a specific paper or coin, but anything with value. In the end it is truly whatever is found to be needed.
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>.