A Penny For Your Thoughts
“Money is fiction” is one of the weirdest quotes I have heard from the NPR Broadcast and just one of the oddest quotes I have heard in general. I could have never thought of the money that I have not actually meaning something. The money that I have in my wallet or bank account is the money that I have to spend and I need that money to buy something. The little piece of paper that I receive from the ATM that tells me how much money I actually have in my account is as close to holding all my wealth in my hands. When I heard the story of Stone Money I did not think this could actually be real.
When I was reading Friedman’s essay I was just thinking about how the Yap money system is so similar to ours. The money that the Yap use are big round stones, called fei. The fei have a hole in the middle so when they are created they can easily bring them onto the island and leave them in one spot for eternity. The Yap have their money just sitting in the streets but they know who owns which stone. They don’t need to see their money to make a purchase to someone, just like I don’t need to see my money to use a debit card. That money just goes from my account into someone else’s account. The German government put red X marks on the Yap’s stones saying that they were the governments money now. The Germans did not move the money back to Germany but just simply left it in the same spots, but now with a red X on it. What the Germans did with the fei is almost similar to the the French did with the US gold. They just put a label on it saying that it was now theirs and couldn’t be used. Its odd that just labeling some gold in a basement could cause the Great Depression. The US could have just given France the gold and taken the money from them and maybe the Great Depression wouldn’t have happened. It is crazy to think that a label could do something like that.
While listening to the NPR Broadcast it really made me think what that would be like to just have a new currency. Its weird to think that Brazil can just create a new currency but they did and it made their economy better. I feel like it would be hard for Brazilians to trust the new currency at first because it is something brand new to them. If I was a Brazilian during the whole crisis I would have defiantly loved the new currency. From what it seems I would be paying so much less for things that I need and want. I feel that it would have been easy for the Brazilians to trust the new currency, it helps them out. They would be able to save their money and not spend it right when they received it. They would not be over paying for some necessities.
While listening to the guys at the NPR Broadcast I find out that even thought the Federal Reserve includes the word “federal,” it is not actually part of the government. They are tasked with something simple but very large: Creating money from nothing. It is really cool how they make new money and suddenly it is in people pockets. Well not instant but almost. The Federal Reserve buys bonds from banks and the banks then give the money received from those bond purchases out as loans to people. See pretty easy, for the person trying to get the loan it sometimes turns out in their favor because interest will go down so the bank can get this money into circulation. It is crazy to think that my money is just transferred to someone else’s account when I buy something. Even if I use cash it will soon be in someones bank account and eventually in someone else’s after that. From listening to this podcast and and reading the articles its really made me think what my money is actually worth to me. These flimsy slips of linen covered with silly green symbols seem so worthless; do I really work hard at my job to earn a handful of these? Then just to spend them on worthless items.
I decided to read two articles about Bitcoin. It has always been something that interested me but I have never really looked into anything about it. In the article “Bitcoin has no place in any portfolio,” it says that the value of bitcoin has ranged from $13 in January of 2013 to roughly $1150 at the end of November 2013. The value of bitcoin changes almost every day just like the stock market. Most investors do not like to use bitcoin simply because they do not understand it. You can also simply go from millions of dollars worth of bitcoins to zero the next day if someone hacks into your computer and takes them. The cool thing with bitcoin is that you can exchange ownership of products very quickly. I read a story that some people buy expensive gaming graphic cards and sell them on bitcoin for more and that is one reason that makes those certain products hard to find in stores like Best Buy. There is no guarantee that bitcoin will be around for a while but for now it is a good way to make money and buy or trade products, that is if you know what you are doing.
So after reading and listening all of those articles about different types of money, it is still hard to tell what money actually is. Could it be a big round stone sitting next to my house that may or may not even be mine or is it a virtual coin that I may have received from trading a product I bought online. Maybe money is fictional and its just the trust in our government and each other that its is actually in our bank accounts or wallets and that we can use it to purchase our needs or wants. I have never really thought that my money that I use to purchase things with could really just be a number going from my account to someone else’s account. Just thinking back the Yap must think we are crazy when we want to buy something and hand the cashier a plastic card or paper. But then again we think they are crazy for trust that someone has a stone in the bottom of the ocean that gives their family wealth. It is also crazy to think that just a couple of guys can create a whole new currency for the people of Brazil and have it actually work out in the countries favor. Those guys basically saved that country when they were in a crisis. We live in one crazy world. But I am still going to go to the store tomorrow morning before work and buy a cup of coffee with my money that may or may not be fictional.
“Bitcoin has no place in your – or any – portfolio.” Marketwatch.com. 31 Jan. 2015
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.
Renaut, Anne. “The bubble bursts on e-currency Bitcoin.” Yahoo.com. 13 Apr. 2013
“The Invention of Money.” 423: The Invention of Money. This Is American Life, WBEZ. Chicago . 7 Jan. 2011.