Talking Money
P1. Money is what makes the world go ’round. We all recognize the importance of money in our capitalist society. After all, we spend over 20 years of our lives receiving an education for what? To earn money. Money is traded blindly for everything from a bag of chips to a house.
P2. In 1991, anthropologist Milton Friedman visited an island called Yap, over 8,000 miles away in a subregion of Micronesia. The official currency of the island is Fei. The currency is created out of sandstone which is designed in the shape of a donut, ranging from one foot in diameter to twelve feet. These “coins” are typically taller than a man, and weigh more than a car. For the reason that these stones are so large and heavy, one is not required to possess the coins in order for them to be property. After a transaction, the new owner of the stone is broadly recognized, which disposed of the need to equip them. As a result of this, there are situations in which rich families of Yap have never even seen their wealth.
P3. Years ago, relatives of a rich family were hunting for Fei. After the discovery of a massive Fei stone, the family captured it and tied it to their boat in an attempt to bring the money home. Disastrously, there was a violent storm on the night of their voyage home. As a result, the family had no choice but to save their lives and drop the Fei overboard. Once back at the village, they had to testify for their money that was dropped. The family explained the massive size and wealth of the stone, and declared that it was lost through no fault of their own. The family was then permitted to retain the stone as their own with absolutely no loss of value. Now, it is accepted in their village that there is a stone in the ocean that has never been seen yet holds massive wealth.
P4. Does the idea of not actually having your money on-hand sounds trivial? Well the Fei is very close to the American currency system.
P5. Before 1933, American currency was backed by gold. This meant that the trade of dollar bills was a promise of gold which was held in banks. After 1933, the decision was made that we may no longer trade money for gold at our banks. The American dollar was officially unbacked.
P6. As of today, our money is still unbacked and the only true value of the dollar is what someone can buy with that dollar. Further, money is now optionally paperless. The money that is held in bank is utilized to give loans. The money that resides in the bank is essentially a fictional number with no actual cost, money may not even be in the account at the moment. At this point in our society, citizens are trading virtually useless pieces of paper for goods and services. The only reason these pieces of paper have value is because we want it to. We believe it has wealth.
P7. Growing up, I never understood money. However, after my new education on the topic, I’ve recognize that the fictional value we place on money is a necessity. Without money, contrary to popular belief, the world would be chaos. What is the incentive provide services or create and trade goods? We would not have teachers, doctors, lawyers, or even public officials. The blind faith that we hold in our currency, although dangerous, is currently essential.
Works Cited
The Planet Money Team. “The Invention of Money.” Audio blog post. This American Life, 7 Jan. 2011. Web. 23 Oct. 2016.
Friedman, Milton. “The Island of Stone Money.” The Economic Journal 25.98 (1991): 281. Web.
The Planet Money Team. “The Lie that Saved Brazil.” Audio blog post. This American Life, 7 Jan. 2011. Web. 23 Oct. 2016.
“How Fake Money Saved Brazil : Planet Money : NPR.” Planet Money. NPR, 4 Oct. 2010. Web. 23 Oct. 2016.
Renaut, Anne. “The Bubble Bursts on E-currency Bitcoin – Yahoo.” Yahoo. AFP, 13 Apr. 2013. Web. 23 Oct. 2016.