The Idea That is Money
Money acts as a gear in the clockwork of today’s society. Take the gear out, and the whole clock stops working. However, did you ever once consider the idea that the money you hold in your bank account holds no value? Upon reading the article The Island of Stone Money, I realized that money could very well be an idea, or just an acknowledgement of value. The article describes an island called Yap in Micronesia that has a unique form of currency. On the island, the people used these gigantic, carved stone disks as their currency. The people would use these disks otherwise known as fei to buy houses and make other large purchases, and because they were so heavy they would sometimes just leave the stones where they were and acknowledge the owners. In one case, one rich villager sent workers to an island to make the biggest fei any of the villagers have ever seen. They went to the island, and created the massive fei out of stone, said to be perfectly carved. It was said to be the biggest fei they have ever seen, and because of its massive size, it held much more wealth than the other fei. On the way back, the stone was lost at sea during a massive storm. So, did the man lose his precious fei at sea? The answer is both yes and no. The villagers knew that the fei stone was his, and instead of considering it lost, they remember that the fei at the bottom of the ocean, was his. I’m shocked by the idea that these people just kept track of who owned certain fei, as someone could have their entire savings out by someone else’s house. Friedman stated that later on, the Germans took control of the island, and found that the island badly needed new roads and requested that the district chiefs repair them. However, They wouldn’t listen, so the government painted black crosses on the fei, as an attempt to claim their fei. The people of yap saw this, and then decided to fix the roads. The roads were fixed, the crosses were removed, now restoring the people of yap’s wealth. To me this seems counterintuitive to accept that by marking one’s fei automatically they lose their wealth, however, they accepted it. The people of the island revealed to us that money is not a physical object, and that you can have wealth without any physical identity to show for it, and that theory holds true to this day.
Further research led me to look for current economies that can prove this. Upon reading the article How Fake Money Saved Brazil, I can never look at the dollar bill the same way anymore. In brazil, there currency has an issue with inflation. Their currency is increasing in value day by day. At one point it was at 80%, which is astounding! If we had the same inflation rate in the United States, our economy would be in chaos! How people and shops in Brazil are able to operate is unbelievable, and the fact that the prices changed rapidly made it hard to buy goods at a consistent price. Holding onto money is useless in an economy like this, as the value of items will skyrocket and your money will hold no value. Political candidates tried to fix this, but in most cases it just made it worse. Presidents in the past tried to freeze prices, print money, but all of their efforts have been proven unsuccessful. The people of Brazil have managed to adapt to this economic system, even if its somewhat unstable.
The most unpredictable form of currency by far is cryptocurrency. Bitcoin, otherwise known as BTC, is starting to become accepted as a new form of currency in the United States and in China. In the article The Bubble Bursts on e-Currency Bitcoin, the crypto market experienced a significant crash in value. Right around April in 2013, Bitcoin reached an all time high of 266 USD, and was rocketing in value. Just three days later, it fell off a cliff. It went down to 54 USD, and people were left broke. This is very similar to a stock market crash, because of that some investors were able to predict this event and didn’t buy. Some people sold their bitcoins and took their losses, others held theirs in hopes of a rise in value. Today, you can buy a bitcoin for 4187 USD, and it will probably change once your done reading this. Cryptocurrency, like stocks, can sporadically change value in a moments notice. Think of cryptocurrency like a race car. It can take fast turns, accelerate and brake fast, and when in the wrong hands, can crash. The thing that’s interesting about bitcoins is, it’s just an icon on a screen, or a line of encrypted code. It has no physical backing, and yet people have become very rich off this.
Even in the United States at one point their was an issue with our currency system. In Friedman’s article, he talks about the gold standard and how it failed. France wanted to transfer its dollars into gold, and at the time US currency was backed by a guaranteed amount of gold, that was yours any time you asked for it. However, the United States didn’t want to have to ship all the gold overseas, so France agreed to just have them leave a note on a desk with the gold, kind of reserving it for them. This lowered the US dollar’s value, and helped raise gold value in france. This acknowledgement of value, is what money in the world today is. The value in your account, the cash in your pocket, is no longer backed by anything. It’s crazy to think that our cash isn’t really worth anything physical, but is instead a symbol of wealth. When you look at all the currencies and how they are backed, you will find out that almost every one does not have a set value. They run off what the government says they are worth. There is no more gold, or any sort of backing, just word or a stone in your yard. This idea that we call money is what paid for our house, food, and all our necessities, and is only that, an idea.
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.
Renaut, Anne. “The Bubble Bursts on E-currency Bitcoin.” Yahoo! News. Yahoo!, 13 Apr. 2013. Web.
Joffe-Walt, Chana . “How Fake Money Saved Brazil.” NPR.org. 4 Oct. 2010. 9 Sept. 2017. <http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil>>