When I first started the reading and listening processes of this writing piece, I had always known that money was a man-made thing that didn’t really mean much. What I didn’t realize was that so much of how much money is worth is based on how much the people who use it believe in its worth.
When the faith that people have in their currency comes into question, that’s where problems arise. Whether it’s because there’s no longer anything backing up the currency, or because it’s so inflated that it’s worth nothing, a lack of belief in a currency can lead to an economic crash similar to the one that happened in Brazil between 1950 and 2000. The economic crash in Brazil was the main focus of the NPR broadcast that we listened to as source material. The main reason for the crash in Brazil was inflation. The government wanted to shift it’s capital to the middle of the jungle, but that costs a lot of money. Money that the country didn’t have. Their solution was to just print the money they needed to pay for it, which ended up being a short-sighted idea that created a snowballing issue for the next 50 years. Multiple elected officials tried their best to fix the issue (one was so bad that they were impeached), but no one could seem to find the answer. That is until one group men figured out a way to abuse the idea of money.
They had the idea to make everyone pay for things and get paid in URVs. Milk would cost one URV everyday, but the each URV would equal a different amount of reis, or the currency that Brazil had the time. If a person was payed say, 500 URV each week, the amount they received would stay stagnant, but the amount they were paid in the original currency would fluctuate. It gave people a currency to believe in, and so they were more likely to spend their money and keep the economy moving. The policy began on March 27, 1993, and was over by July the next year. Just over a year of having a fake currency did the trick, and the original currency of “reis” was replaced, funnily enough, by the currency called “real.” Looking back on the situation, an interviewed person from Brazil laughed and said “It was a fantasy, haha, not real!”
Milton Friedman wrote an interesting essay in February of 1991 on the stone money of people Yap. Said stone money was called “fei” and it was made from huge chunks of limestone from an island very far away from where the Yap lived. They took their stone money just as seriously as people do nowadays. When the Germans wanted the Yaps to repair their roads that become poor in condition, they put big black crosses on the stones to symbolize that they controlled them until the roads were repaired. Needless to say the roads were quickly repaired, although Friedman summed it up well when he wrote “Presto! The fine was paid, the happy Failus (citizens of the island) resumed possession of their capital stock, and rolled in wealth.”
Wealth is kind of a made up of made up ideas. Money is a made up concept, so being wealthy, or having a substantial amount of that made up concept means nothing. Chances are, the money is located in a bank account where it remains a number in a system until you wish to take it out. Similar to the giant stones of Yap, the size of the fei (rock) and the size of the number in the bank are just symbols of how much you have. What you have means nothing until you try to spend it. Then, some of your number, or your fei, gets transmitted to someone else. No questions asked, and everyone knows that it belongs to that new person.
The last source topic I read was on financial situation in Japan. Japan had been the poster child for way a good economy should look like for several decades following the recovery post World War II, but by the late 1990s and early 2000s, that was starting to change. “Perhaps the pendulum was destined to swing back.” are the very first words of the article, and they’re fitting of how economics work; a series of ups and downs. Shinzo Abe, Japans latest prime minister (at the time), has promised to start to fix the situation by having the Bank of Japan create 12 trillion yen, or $134 billion. So far, Shinzo’s efforts have been effective, and Japan has already begun reaping the benefits. The main opposition that people have to creating so much new yen is that the money could go to dead companies or just wind up being more money into the pockets of industries that don’t need any more money. Another issue is that people could become dependent on the government constantly creating increasing amounts of new money. That will create a debatably worse issue in having uncontrollable inflation. Everything is going well right now, but if the prices of goods increase faster than the increases in wages, there could be issues. Not just for the Japanese people, but for Shinzo Abe, who had to resign from a previous term due to a stress-induced intestinal illness.
The listening that I did and the reading taught me a lot about money that I didn’t know before. Mostly that it’s all fake and just a representation of something that really doesn’t exist. The worth of a currency is all based on where you go and when you go. Milk from one person can be worth $2 while from another it’s worth $4, it’s all up to the seller. I also learned that the money we have now may be annoying, but it’s nowhere near as annoying as having to sail out and chisel huge pieces of limestone the next time I want to buy something. The last thing I learned was that Japan had a failing economy in the 1990’s and 2000’s despite the increasing worldwide popularity of anime during that time.
“The Invention of Stone Money.” 423: The Invention of Stone Money. This Is American Life, WBEZ. Chicago . 7 Jan. 2011.
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.
Tabuchi, Hiroko. “Back in Power, Abe Aims to Spend Japan Back to Economic Vitality.” The New York Times, The New York Times, 22 Jan. 2013, dealbook.nytimes.com/2013/01/22/back-in-power-abe-aims-to-spend-japan-back-to-economic-vitality/.