Money is Not Real
In the little Island of Yap, the wealthy people would get onto a boat, and travel 400 miles to get these large, uneven limestone discs. These discs were so big and heavy, it was an uncomfortable trip for the people of Yap. The limestone discs were called fei, they were used as currency. The shaping of the stone requires intense labor; that is why they’re so valuable. There are big holes in the middle of the discs, in order for them to be transported around the small island of Yap. Ironically, the holes are used for them to be moved to their first location; after that, they do not move!
They will usually trade the fei for big purchases according to NPR’s Broadcast of “The Story of the Stone Money.” The thought of a huge, hole-drilled stone from an island quarry could make the people of Yap rich is very peculiar. It sounds less reasonable that the stones aren’t actually in the possession of their owner. As I started listening to NPR’s Broadcast of “The Story of the Stone Money” and reading Milton Friedman’s “Island of Stone Money” I began to realize our economy and our visual of money is not too far off from those that live in Yap. Both, the Yap and us Americans, believe we can be wealthy and gain wealth by not actually physically moving anything. Someone in Yap claims a stone that fell to the bottom of the ocean. But just the same, we do not need cash, all we need is a magnetic stripe to move wealth around. If that does not seem strange to us, then neither should the Yap claiming a stone they have never seen.
In Milton Friedman’s story, “Island of Stone Money” Friedman explains how the French didn’t think the USA would stick to their gold standard of $20.67 an ounce. Therefore, according to Friedman, they asked the NY Federal Reserve to convert their dollar assets into gold, and set it aside for them instead of shipping it overseas. The Federal Reserve then put aside gold for the french. They separated the gold, and put it in drawers so it wasn’t touched. This way everyone knew that belonged to them. After reading that I realized money is just knowing what you have, it is nothing physical. For example, you do not need the physical cash in your hand to determine your wealth. In Yap they determined their wealth by others knowing how many fei they owned, and not much different us in the USA determine how wealthy we are by digital numbers raising in our accounts.
After reading, “Island of Stone Money” I began to questions why do so many people have the faith in others to determine their own wealth. For example, how is it that I deposit money into my bank account, and a digital number, a machine gives me, determines my wealth. How does money from my account get taken out, and put into the car companies account. But nothing physically is exchanged? That flimsy green piece of linen is rarely used anymore, it is all about the plastic card with a chip in it. How is it that France has the faith in us to put aside gold for them that they bought, but they never physically saw? How is it that there is a fei at the bottom of the ocean near Yap that no one has seen for years, but yet it is still being used as if it was physically there.
I continued my research on how people put their faith into other with their money, and I came across an article by NPR’s Broadcast called “How Fake Money Saved Brazil”. Just twenty years ago inflation in Brazil reached 80% a month according to NPR. Brazil’s inflation began when Brazil’s government printed money in order to build Brasilia, Brazil’s capital. They created a new currency and it improved their economy rapidly! People would still have cruceros, but everything was listed in a URV, Unite of Real Value. One URV would equal 7 cruceros, and the next week one URV would equal 14 cruceros. According to NPR broadcast this idea was created so people would stop thinking prices would go up. After a few months the prices began to equal out, and that’s when they decided the URV was the new real currency. After this change 20,000 people got out of poverty!
Money is different everywhere you go, but the way it is used is very similar. The people of Yap would just mark their fei with a painted ‘X’ to claim it, and correspondingly the Federal Reserve put gold aside for the French and labeled it, so everyone knew it was for the French. The same thing happens here in the United States; almost everyone keeps their money in banks, and the only way they know who owns it is through an account number. If you think about it money is almost never actually exchanged physically in person. Transferring money from one person to another can be done from the comfort of your own home, using online banking. Almost everyone has moved to online banking, because it is so much more convenient. Most of the world has moved on from physically money, and developed a way to claim it without having it with them.
After reading these articles I came to think, what actually is money? To the people in Yap money is a big rigid limestone that doesn’t have to be in their possession. To us money is fake, it isn’t that green rectangle linen with pictures on it. It is numbers we see in our accounts, and we use plastic cards to make purchases. To Brazilians money was virtual, it didn’t exist it was just a unit of measurement to control their inflation. Throughout the years money has developed many different values. Now a days it is hard to survive without money, even though we might not even physically see it. I believe money is what makes the world go around. Even if no one actually has a definition of what money is. Money all around the world is physically different, but the actual use of it is all the same. What connects everyone’s money value to all others are their concept of money. The concept of money is just the trust you have in each other. Whether you live in the US and put your trust in a bank. Or whether you live in Yap, and put your trust into other people knowing what is yours, or even trusting 4 men you have never met before to create a new currency and help inflation. Money is different everywhere, it is the trust that makes it the same.
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. 9 Sept. 2017. <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.