The idea of money has always confused me as money is not a constant entity. The exchange of money for things such as food or goods with only a piece of paper does not confuse people as it was established that that piece of paper has worth that is backed by gold which equivalent to the goods that the person was purchasing. However, the worth that people give money is somewhat confusing as the wealth is determined by something as arbitrary and finite as gold. That piece of paper worth one U.S dollar can be worth even more or even less just for being in another country; where the wealth of the dollar and currency of another country, such as the European Pound is determined by something as “economic state of the country”. The concept of having the fabric of how society functions, from purchasing common goods for the everyday man to differences in power in intercontinental affairs, determined by something that isn’t constant sounds absurd. Yet the use of the abstract idea that is money miraculously makes the world turn round.
The faith in money is something that is only backed up with the faith humans put in it, which is absurd. Most societies happened to decide that money would be based on the rare and valuable material that is gold, but the material itself is arbitrary. Money just had to be something that a certain group, whether it be a city or an empire, backed up with any material they wished to. In the intriguing case of the island of Yap, the people of the island decided that gigantic limestone boulders that they held in such high regards would be what represented value. However, instead of making the money that was based off limestone something easily accessible such as the paper money that most people are familiar with, they habitants of Yap decided that they would use huge circular slabs of the material, ranging from a diameter of a foot to twelve feet, with a “convenient” hole in the middle as their currency. This Fei, which is what the island of Yap called the currency, tended to be so large and heavy that moving the Fei was too difficult; so the inhabitants nominally claim the large slabs and everyone collectively understands that the claimed stone is their worth and can be shifted to another person in just name alone. The concept of Fei initially sounds absurd, but the concept is still the same as the US dollar albeit less convenient. Both forms of currency utilize a representation of material where everyone agrees is valuable where they can exchange for other goods based off of the value of the currency. This money which the person doesn’t even have to physically have with them can then be exchanged to another person. What the inhabitants of the island of Yap consider a common exchange can just simply be compared to exchanging things digitally, as both money is essentially just claimed.In fact, a currency that is more current could be considered to be just as bad if not worse than the Fei, the digital Bitcoin. The idea of the digital currency free from the bank seems to be a legitimate idea, but the downfall is that the online currency’s worth is only worth what other people want it to be. This means that the Bitcoin which could sell for the equivalent of $266 on one day could become as little as $54 for essentially no reason.
Yet while Fei still backs up the money with material and Bitcoin’s worth remains changing forever, the handling of the economic crisis of Brazil shows that money doesn’t even have to be backed up by material but by the faith that the money was worth something. During the 1990’s, the constant inflation for forty years made the inflation rate rise to 80% per month, which would eventually make the costs of everyday items insurmountable for the people of Brazil. This caused sporadic changes in the costs of goods that made the Brazilian currency, the cruzeiro, have a sense of inevitable doom for the people. In order to solve this economic downfall, Edmar Bacha and his three friends devised a new currency that eventually replaced the cruzeiro and stabilized the entire countries economy, the URV. This virtual currency was technically based off of the erratic cruziero but everything of society from the wages of the workers to the goods that they would purchase was based on the stable URV that stayed static throughout the increasing costs of the cruzeiro. As the URV became more integrated into Brazil, Brazil simply swapped the failing currency with the URV and the inflation was gone. This completely overturns the very idea of money as something that was backed by another varying currency which was based on the common idea of money
The very idea of money was and will always be an integral part of society. Yet the true complexity and absurdity of what money is truly worth, which can apparently change given different circumstances, leads to show the true faith that people assume about something they deem to be an absolute truth when it is not. Yet people still believe in the worth that a collective whole believes have worth, so money will always have a place to keep the world going.
Works Cited
Friedman, Milton. “The Island of Stone Money.” Working Papers in Economics (1991): 1-7. The Hoover Institution Standford University. Web. 13 Sept. 2016.
Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR. NPR, 4 Oct. 2010. Web. 13 Sept. 2016.
Reeves, Jeff. “Bitcoin Has No Place in Your – or Any – Portfolio.” MarketWatch. MarketWatch, 31 Jan. 2015. Web. 13 Sept. 2016.
Anne Renaut, Anne. “The Bubble Bursts on E-currency Bitcoin.” Yahoo! News. Yahoo!, n.d. Web. 13 Sept. 2016.
Rowan Counterintuitive 