Money, money, money. The extremely complex and arguably fictional foundation of our economy. I always wondered growing up how did a piece of paper with some inscriptions and fancy images become the social fabric of our world? When you put a U.S dollar bill side by side to monopoly money you understand that one is worth something and the other isn’t. Although, monopoly money like “real” money is simply paper from our trees. Therefore, we must question, why is money valuable? Pre Colonial era we traded among each other valuables in which each person needed. We valued precious and rare metals or jewels such as diamond, gold and silver. We valued goods as currency and only cared about items which every colony needed. If a man had a pig but needed a cow he would search for that person that needed a pig and had a cow. This exchange of goods made perfect sense and never involved a paper bill and a complex system of valuing that bill. Money in its self has no real value to it, it isn’t rare and its not pretty. We the people make money valuable, we make the value “real”, but should we?
When i came across the article by Milton Friedman named The Island of Stone Money I was intrigued. The island of Yap is extremely underdeveloped with barely any valuable items. When they discovered what seemed to them a precious rock called Limestone on a neighboring island they began using it as their form of “currency.” Although, they went about system in a very odd way. According to Friedman these men and women could trade these large pieces of stone for other valuables they needed or important services such as the retrieval of a fallen soldier. Here was the catch; technically you never had to physically have the rock or even have it in your possession. You didn’t have to even see it, it was all based on the idea of the rock and a trust system that everyone knew who the real owner of it was. This was relevant when Friedman mentioned that the wealthiest man on the island never even had his Limestone he just saw it and was vouged for by his crew. (Friedman, pg 2) Reading this made a light bulb shine bright inside my head. I soon realized that this ridiculous form of “currency” is a lot like other more civilized countries. The point is not the physical aspect of money that gives it value, its simply the idea of money and what it represents that makes it valuable. And that raised the question, is this the right way to run an economy?
Friedman also discussed an instance where the french technically owned some portion of gold. However, they never physically retrieved the gold, instead a deal was made with the U.S and was stored in a drawer on our homeland.(Friedman) This is another perfect example of how nothing but an idea satisfied a whole nation and was understood by others. Although, when you put it in perspective was that valuable metal doing any good for people just sitting around? The answer is no. The best two examples I can present you with is that of the Bitcoin and URV. Online banking is a complete joke and makes no sense. When we use bitcoin we are essentially transferring images and codes over to our bank. In no way, shape or form is this real money. But, we except it as real money wit real value! How is something intangible in an exchange of goods essentially, valuable? We aren’t physically handing anything over to the bank but they still accept it. My favorite example however is that of URV, which I read bout in the article How Fake Money Saved Brazil. As proposed by the title URV is exactly what it says, it is fake money. Brazil was in a state of high inflation rate which in turn practically made the price of items go up either everyday or week.(Chana Joffe-Walt) The country was in turmoil so a couple of guys came up with the idea of replacing cruzeiro with a virtual “fake” currency and they called it URV. The worst part is this idea was accepted, used and succeeded. It had no real value therefore it was literally fake. These two examples prove my point that money just seems to be an idea. It seems crazy to me that much of peoples happiness and status in this world is based off of solely an idea with no true value.
Recessions or economic depressions effect everyone. The way the economy is set up values this idea of money over true goods and resources. After reading these articles my perception on money has changed tremendously. It raised the question, is this the right way to go about it? Was the old way of trading goods and food and resources more useful? This isn’t just for me to decide. Although, it is sad to see people lose their happiness and parts of their lives struggling over the obtainment of technically a pure intangible idea.
Works Cited
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. 30 Jan. 2015. <http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil>.
Renaut, Anne . “The bubble bursts on e-currency Bitcoin.” Yahoo.com. 13 Apr. 2013. 30 Jan. 2015. <https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html>.
“The Invention of Stone Money.” 423: The Invention of Stone Money. This Is American Life, WBEZ. Chicago . 7 Jan. 2011.
Rowan Counterintuitive 