Category: A01: Stone Money

To many people, money is the most solid, most definitive proof they have of well-being. To have a lot of money is never wrong – to be low on money is very wrong. But the very concept of money is a dynamic one.  It’s a dynamic concept that is built, very basically, on a sort of honor system. Yes, money has no value other than the value we all says it does.  Historically, money was invented as a way to make exchanging goods easier. Money started off as gold, but when gold became too heavy for larger quantities and too scarce for higher demand, we started using paper. Each paper stated its equivalent worth in gold. Eventually, paper became fully independent, and gold was removed entirely from the equation: the value of the paper was based off what the government said. And when paper became too heavy, we made money digitized. Now people have even less solid proof that there is money at all; the banks say we have the money, so we have the money. Is there any backing that the dollar our bank says we have is actually worth a dollar? None really, except for the reassurances of the government. What ever step comes next, no one knows for sure but any new step only increases how arbitrary the concept of our money is. However, as long as the government, and society continues to say that our money is worth something, it will continue to be worth something.

P1. Growing up as kids we have always been told how important money is and how important it is to earn money, to save money and to value money. I was taught that money is a method of exchange. We give money and we get something in return. But we can’t get anything and everything we want. We can only get those things that holds the value which is equivalent to the money we provide. However the concept of money isn’t as simple as it looks. The more you start thinking about money the more vague your concept becomes. When you shift your focus from being an individual conducting day to day exchanges just to survive to nations all over the world managing those exchanges, you start to question, What is the end result of those exchanges? Where does it go? Who decides what should happen and Where it should go? Who invented this form of method in the first place and Why do we need it?  In reality there is no definite answer and logical explanation for all these questions because its too complicated to calculate just like its complicated to find the sum of two infinite numbers. Of-course you know that the answer is infinite but you also know that its just impossible to measure or calculate. One can consider money as just an illusion humans created in-order to make exchanges for using services and products provided by other humans, without much hassle.

P2. Money or some form of exchange has been around since the existence of the human race. The exchange started with bartering system. For example people will give vegetables in exchange for clothes. However this system was not efficient enough, because in the scenario where you want to buy a house you can’t possibly have enough vegetables that holds the value equivalent to that house and even if you do have enough vegetables there is no way one can use it up before it goes bad. Hence people started coming up with new ideas, which led to the invention of gold and silver coins. It lasted for a while and  it was a good idea, but it had it’s drawbacks. Firstly, digging gold and then giving it the shape of the coin is expensive in itself and it’s also hard to find. One can’t find gold on streets. Also carrying gold coins all the world with you is a heavy task – literally! And then finally the currency we use today was created. Its paper, its easy to carry and easy to exchange and thanks to technology we don’t even need to carry it anymore. It’s just a number in our bank accounts that keeps changing. Hence one can say that money is just an illusion we manipulate according to our convenience and our needs.

P3. The 7 billion people on this planet don’t necessarily use the same currency or the same method of exchange. The reason behind is difference in culture, difference in geography, difference in the availability of resources. There is one island out in the pacific ocean that supports my argument. It’s an island called Yap and people there use limestones carved in huge stone discs that could weigh more than a car to pay for stuff since they don’t have gold or any form of metal available on the island. At first people will think its bizarre but what is more bizarre is the trading process. In general we buy something and we give liquid money in exchange or transfer it to bank account. However transferring the limestone without any equipment and machinery is impossible. So during a trade the people in Yap would just be informed that person A bought x thing from person B and now that limestone of person A belongs to person B. The stone won’t be moved from its place but everyone knows who it belongs to. The question is why the people on Yap would go through all the trouble of getting limestones and carving it? “At some point people on Yap realized what most societies realizes. They needed something that everyone agrees you can use to pay for stuff.”(The island of Stone Money) We need something to support our illusion and we can go beyond our limits to achieve that. The Yap’s concept of money may sound insane but it’s nothing new. We use that concept everyday. When we buy groceries via credit cards, “what’s really changing? The digits in the bank account.”(Stone Money NPR Broadcast) Convenience and availability plays an important role in how we carry out exchanges.

P4. Money is a lot more rather than a mere tool of exchange. If not handled properly, it can make people go bankrupt, it can create inflation and deflation, countries can be consumed by debt. One such example is brazil. “Twenty years ago, Brazil’s inflation rate hit 80 percent per month.”(CHANA JOFFE-WALT) The prices would change everyday and will go from $10 to $1000 in no time. It all happened because of poor decisions made by the presidents of the country at that time. However, how four people who knew how to handle money set an example by ending brazils inflation is incredible. People of brazil had lost faith in government and the value of money. The idea was to bring the faith back by creating virtual money and making people believe that it’s real. We can say money is nothing but just Faith. You need people to believe in money and believe its real.

P5. Money is created out of nothing. It has no value initially. We decide it’s value and how much it’s worth and change it according to our convenience. Reserve Bank decides how much money to print depending upon whether the economy is good or bad. Japan decided to devaluate its currency to bring country out of recession. “Bitcoins were created in-order to have a currency that is free from central bank or financial institution.”(Renaut, Anne) One can conclude that money is just an idea people play around with but it doesn’t exist in reality.

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&gt;.

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&gt;.

P1. Money is a broad concept and can define in so many ways. It is used in our everyday lives and we can list all the scenarios how money is used.  For example, if you wanted to travel around the world, you would need money in order to do so, or buy a car, along with many other situations. Like the saying goes, “Money does bring happiness”.  In society, people portray money as distinguishing someone’s social status. People look at how much one is worth due to their specific income. Furthermore, people generally think money has value, but the money made from reality TV shows doesn’t have any inherent value, it is simply pieces of paper or numbers in a ledger. In the Milton Friedman’s piece The Island of Stone Money, I noticed the idea of how the Yaps monetary system and concluded the American monetary system is identical, but is a different concept of how it’s being used. The Yaps used stones to make a higher purchase like if a warriors dead body was being kept held it at another village and the village requested it they would buy the body using the stone. And then people would know that this he or she has claimed the stone. Americans use paper bills for purchases and seems cliché, but the Yaps certainly had creative manner to use money.

P2. The NPR broadcast was very interesting and what surprised me is how the claims were accurately correct in my opinion.  I would have never thought of how money can change so drastically in time.  In the past, we were exposed to using gold as a currency, then to paper bills and now an electronic transaction. In today’s world, society does claim to use paper bills and coins for small matters, but at the same time we already progressed, using digital cash. A prime example, paying bills, in which society pays bills using a computer and that consist only information it’s seems surprising to know now how easily any amount of a transaction can be paid off or transferred. There is no physical money being involved. The closest idea that I can think of using paper would be is sending checks through the mail, but that’s highly rare nowadays.

P3. The next most intriguing topic was Bitcoin. Bitcoin basically changed how traditional currency is being used. Bitcoin shared database between of computers all keeping track of accounts and their associated balances secured by mathematically encrypted password.  And people are so consumed in buying bitcoin that they don’t realize it does not have a true value.  Yes, virtual banking sounds amazing because it is so easy and accessible, but there are some tweaks that could be issued.  Bitcoin is just like the stock market, the value changes every day. And the money you spend might not have the equal value as the price drops or arises. Money comes and goes there is not a financial base structure to accommodate users; it is simply the game of chance. NPR broadcast mentions how money is now just information and Bitcoin is prime example.

P4. Fake money to the rescue! I just wonder if America should do this or not. The Brazilians used fake money, such as URV, to save the economy from falling. The idea of fake money baffled me because of how easy it seemed to raise the economy using fake money that didn’t have sentimental value. You would think the opposite because it did not make any sense as to how the whole country would use this. As soon the URV arose the Brazilian inflation ended.

P5. I completely changed my mindset over how simple as money can change drastically. Every time I look at dollar bill my perspective will change and I will realize this dollar has no internal value. And I did not know how money grew overtime from our hands to the computer. I will certainly have a different view of how money works and the general idea of why we have this monetary system.

Works Cited

Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.

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&gt;.

Date, By. “The Invention of Money.” This American Life. N.p., n.d. Web. 13 Sept. 2016.

“How Fake Money Saved Brazil.” NPR. NPR, n.d. Web. 13 Sept. 2016.

I am not an expert on the concept of money, what so ever. Thinking and understanding these stories and issues are not easy. Places like Yap, with their stone money and Brazil with their fake (now real) currency isn’t easy to understand the concept of. Being an American teenager, now a young American woman, there is very little thought about money on my mind. I know that one receives money and one spends the money. Only that seems relevant to me.

While studying where the concept of money came from, I realized there are more connections with different currency than not. We have thousands of dollars in a bank that gives us only a number on a screen of how much money we have. We do not physically see this money, we only just assume its there. We put money into our bank accounts and the bank then gives that same money for a loan to someone else. Though, the amount of money is still there in your same bank account and the amount does not change. The Invention of Money discusses how money is only fiction and doesn’t really exists. How can that same money a person owns them self go to someone else, yet each person has more than what they started with. How can that be if money was real? It can’t.

The people of Yap are doing no different than what we, Americans, are doing today. The citizens of Yap do not see the gargantuan limestone boulders, yet they knew it belonged to them or another citizen. “Is the one practice really more rational than the other?” Milton Friedman states in his Island of Stone Money essay. This got me thinking that, no, I don’t think that there is much of a difference. A person works all their life to make their number at the bank the highest they can possibly get. A person in Yap trade for their stone money and work for that. Neither of which can carry to a store or put in ones pocket.

Brazil on the other hand had a different issue, though still not too different from America. Back in the day, when we used gold as the value of our money, it eventually started not to work in our favor. There was not enough to spread around to all Americans. We then came up with another plan. Something new but not unheard of, paper money. We printed them and shared with the banks to spread to the people and a new way of money was made. Brazil achieved with their new currency, using URVs. This stood for Unit of Real Value. Which, for me, seemed pretty iconic since the money wasn’t real at all until much later.

Fortunately, this worked out for them and helped their inflation problem. As discussed in the broadcast, How Fake Money Saved Brazil, this only succeed because people’s faith in the value of the money. People had to have faith in the concept, the progress, and the money itself. Money is only valuable because of the amount of people’s faith that is put in it. This obviously took many years to master the URV money into real money, but only because the people’s faith and mind believe the fake money to be valuable.

Bitcon money, on the other hand, was also very similar to URV. This digital currency was not seen, and was only to exist online. My view point with this system is that it could easily become hacked by anyone really. Also, this money would not be seen by any kind of banks and would most likely put banks out of business. There would be no more loans, money in the banks, and there would be less money to spend. Companies borrow money from banks everyday, if that was gone, jobs would go with it. Companies will be forced to lay off and not hire. This would end up in a global depression. Whoever thought of the Bitcoin didn’t think through much of this. Though my views on these concepts may not be the most accurate and the money concept still does not have my full understanding, I now believe that money is not real. It is hard to think about that concept, and it is for anyone.

Works Cited

Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Standford University, Feb. 1991. Web. 13 Sept. 2016.

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR.org. 4 Oct. 2010. Web. 13 Sept. 2016.

“The Invention of Money.” 423: The Invention of Stone Money. This Is American Life. WEBZ. Chicago. 7 Jan. 2011. Web. 13 Sept. 2016.

Renaut, Anne. “The bubble bursts on e-currency Bitcon.” Yahoo.com. 13 Apr. 3013. Web. 13 Sept. 2016.

As a child growing up I always thought as money being one definite amount value. And why wouldn’t I growing up in the United States in school its taught a dollar is worth just that a dollar.  But moving forward in life I have come to see that money is only worth what we as people give it. In the fifth grade I was able to travel to my families original country Haiti. It was at this time that I found out first hand that money isn’t always worth what we know it to be here in the United States. At this moment right now the American dollar is worth 65.09 Haitian Gourdes according to exchange-rates.org. At a young age I was able to see that American currency was seen as worth a higher value than Haiti’s own currency. I was able to see that faith and value had been put in American money. America having a history of being stable and a secure government gives its money a good backing. Being able to experience this taught me that the intrinsic value of money is really only based off of the value that we as people give it and how stable the government the money belongs to is. As long as there is faith in the currency whether it be dollars, stones, gold or even corn as long we give it value and are willing to trade for it then it will have value.

This would be the case of what occurred in Brazil and how the government was able to convince Brazilian citizens to trust the new currency. Brazil was going through a rough patch economically they were experiencing inflation at outrageous rates up to 80% a month. Just as Ted states in his video with inflation it causes disrruption due to their being more money in circulation and less of what ever product it then causes prices to rise at an alarming rate. Inflation being that high meant that the value of Brazil’s currency was low and prices of items were only getting higher. Causing the trust in the government to diminish, the ways in which the government tried to address this problem had barely an effect in fact in some cases it made it worse. Leaving the people of Brazil to lose faith in the value of money. In order to fix the problem they had to do just that create faith in the money system. The system that was used at the time was tarnished it would no longer be accepted or trusted by Brazilians. So in bring forth URV’s people could be tricked into thinking that money had value again. Because URV’s was a constant rate it was able to sway the minds of the citizens creating trust and in doing so putting faith back into the money. In doing that the citizens will continue you spend at a steady rate which will help the economy grow creating more jobs.

 

In Milton Friedman’s article “The Island of Stone Money” we are introduced to the people of Yap where there are no “valuable metals” and so as a collective the people of Yap decided to give value to stone coins. When I first read this it threw me for a loop to think that stones would be an adequate means of making purchases was beyond my comprehension. The fact that theses stone coins depending on their size could be left at another persons home but it would just be understood that this huge stone would now belong to someone else I couldn’t comprehend it. When put in comparison of the way we give value to our own money you find that it’s not so different after all. Here in the states we grew from a bartering system where goods would be traded for what we thought what was of equal value,such as trading a wagon wheel for a crate of corn. When then moved on trading gold from gold to paper money and now electronic. Now with the exchange of electronic money you never truly see the actual money its supposed to represent unless you withdrew it all. But I can go to any website enter my account number and make purchase. There is no visible transaction only the changing of numbers to my account balance to me that is not much different from the exchange of ownership the Yaps would do amongst themselves. Even though a person may have never even seen this so-called wealth by faith he owns it and is able to use it to make purchases just as we do.

WORKS CITED

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR. NPR, 4 Oct. 2010. Web. 13 Sept. 2016.

Goldstein, Jacob. “The Invention of Money.” This American Life. Chicago Public Media, 7 Jan. 2011. Web. 13 Sept. 2016.

Friedman, Milton. “The Island of Stone Money.” Working Papers in Economics (1991): 1-7. The Hoover Istitution Standford University. Web. 13 Sept. 2016.

“Exchange-Rates.org World Currency Exchange Rates and Currency Exchange Rate History.” Convert US Dollars (USD) to Haitian Gourdes (HTG). MBM Media, Inc, 2016. Web. 13 Sept. 2016.

TEDEducation. “What Gives a Dollar Bill Its Value? – Doug Levinson.” YouTube. YouTube, 23 June 2014. Web. 13 Sept. 2016.

 

“What is Money?” is a question that many people brush off, but when some thought is put into that question it becomes an enigma. Money is something we use as a reward for a good or a service, but why does money have worth? Money had worth because it was backed by gold from the government until 1971 when president Nixon took the USA off of the gold standard(Moffatt 1). That meant however many dollars somebody had they had that amount of dollars worth of gold. That also meant that the government got to decide how much gold one dollar is worth. The government decided the worth of gold, but what is golds actual worth? This is the conundrum most people arrive at when they analyze the question, “What is money?”.  It is hard to fathom that any random object can have any kind of worth unless they have some kind of value. Value of course is the use that something has, for example a car has value because it can be used as a mode of transport (Moffatt 1). Paper money itself holds no value because it is just paper and ink, and that doesn’t have very much use at all. The USA now uses fiat money, which isn’t backed by any commodity. This means that paper money truly isn’t anything other than paper. The only reason people want paper money and accept it is because other people want it (Moffatt). This concept is very primitive, in fact there is a great example of a similar system used by people on the island of Yap.

The people on the island of Yap used large circular stones as currency. These stones were nothing other than stones so it was odd that they were excepted as legal tinder. The stones varied in size to ones that could fit in a hand to ones that were twelve feet in diameter. The reason that these stones, called rai, held value was because they were big and shiny and other people wanted them. They were in reality huge chunks of lime stone from a neighboring island roughly 250 miles away called Palau (Stone Money).  The large stones would be carved into circles with holes in the center probably used to help transport the enormous stones. The value was decided by the size, style, and how many people died on the journey to retrieve the stone (Stone Money). Basically people wanted this “money” because it was something different and shiny and everyone else wanted it, which sounds inherently similar to the aforementioned paper money.

It’s very strange to think that random objects can hold so much worth in the eyes of people. It doesn’t take much for something to become valuable. Someone could just take a rock and say this rock is worth that house, and if enough people grew to accept that a rock could become a new kind of currency. So “What is money?”, money is something that we decide is worth something else at a rate of exchange. If something has value to you it is worth something to somebody else. Money is something that everyone decides has value, and in the case of the USA, that thing is paper with pictures of dead historical figures on it. Money is a strange thing, but it has worked in the world up to this point. It just becomes a question of when people will stop accepting paper as a currency? When that moment comes perhaps we can resort to using large circular stones like the ones used by the people on the island of Yap.

 

Works cited

Friedman, Milton. “The Island of Stone Money.” The Island of Stone Money(1991): 3-7. Web. 13 Sept. 2016.

Moffatt, Mike. “Why Does Money Have Value?” About Education. About Education, n.d. Web.

 “Stone Money.” BBC News. BBC, n.d. Web.

Since the early days of mankind, humans have traded precious items and commodities for other commodities and services. These items could have ranged from small shells to large stones carved by man. But what made these items valuable was the agreement of the people that these items held value and were worth something. We call these things today money. One of the earlier accounts of people using money were the people of the island of Yap. The people of this tiny island in the South Pacific Ocean created a monetary system with giant stone wheels called fei. The fei were created by man on an island 400 miles away from Yap, in which crews would have to take a small raft or kayak to this island and quarry the stone and shape it and then transport it back to their home . Once at home these stones where so large and heavy, some of them stayed in place. However everyone knew who owned what fei and who held all the wealth on the island. The stones never moved but the transfer of wealth still occurred. A much similar event happened in the 1930’s between America and France. Due to the looming economic collapse in America, France asked the Federal Reserve to convert dollar assets that it had in the U.S into gold (Friedman). The only thing the Federal Reserve did was take some of the gold, put it in some drawers, and labeled that this gold belongs to France. The U.S gold reserves went down and France’s went up. There was never a physical transfer of gold to France yet people knew and understood that the gold now belongs to France. Today we now have our own drawer of gold called the Bitcoin. The Bitcoin is a digital currency with no central bank and its value is determined by whomever is willing to pay for the bitcoin. As of today 9/13/2016, one Bitcoin is worth 609.10 USD. While once again there is no actual coin the bitcoin is an idea that people have agreed on that holds value, same as the US dollar. in actuality the paper the dollar isn’t even worth the amount printed on it’s face yet people accept and agree that the piece of paper that cost 5.7 cents to make is worth 100 dollars. Money is nothing more than an idea that people agree upon that regulates the flow of an economy and gives value to commodities and labor.

WORKS CITED 

Friedman, Milton. “The Island of Stone Money.” The Island of Stone Money(1991): 3-7. Web. 13 Sept. 2016.

“The Invention of Stone Money.” 423: The Invention of Stone Money. This Is American Life, WBEZ. Chicago . 7 Jan. 2011. 13 Sept. 2016

Renaut, Anne . “The bubble bursts on e-currency Bitcoin.” Yahoo.com. 13 Apr. 2013. 13 Sept. 2016.

Levinson, Doug. “What Gives a Dollar Bill Its Value? – Doug Levinson.” TED-Ed. TED-Ed, 23 Jan. 2014. Web. 13 Sept. 2016.

                A couple of days ago, if anyone were to ask me what was the concept of money, I would have told them that it is a way to buy or sell items. I would also add that here in the United States, our money comes in the form of individual dollar bills and little metallic coins. The more a person possesses of these forms of money, the richer they are. This country’s current society believes in this concept, accepting it as pretty straightforward. However, the reality is that money is a concept so abstract, that it can either be represented by green paper bills or unmovable stone circles, and still work in the same way.

             So what is the true concept of money? Well, as A. Freeman says, “Money is primarily a medium of exchange or means of exchange. It is a way for a person to trade what he has for what he wants.” This is similar to what I previously thought, and is in a sense true. However, it does not explain the whole truth. As Ira Glass reveals in the podcast The Invention of Money, “Money is fiction… money never existed… No money changed hands, no money vanished… Money is not solid. Its value could disappear.” There is the answer- money is not real. It is an abstract concept used as a medium of exchange or means of exchange and whose value may change. And the money is worth a certain amount because everyone accepts said amount or value. To illustrate this point, let’s travel to a little island called Yap, on which massive unmovable stone currency was used.

            In his article titled The Island Of Stone Money, author Milton Friedman features a quote  by American anthropologist William Henry Furness III about the inhabitants of Yap and their currency, which states, “Their medium of exchange is called the fei, and it consists of large, solid, thick, stone wheels…After concluding a bargain which involves the price of a fei too large to be conveniently moved, its new owner is quite content to accept the bare acknowledgment of ownership and without so much as a mark to indicate the exchange, the coin remains undisturbed on the former owner’s premises.” Money on Yap is represented by these stone wheels, and the transfer of money for purchase is accepted through word of mouth, without these wheels actually moving. Everyone on this island trusts you when you say that you earned your neighbor’s stone after giving them what they wanted to buy. The word of mouth process is accepted, and the idea of lying about the ownership of a stone is generally out of the picture. A popular example of this is a story about a group of individuals who were transporting a huge stone wheel on their ship from one point of the island to another. En route, a storm broke out, causing the stone to sink to the bottom of the ocean. Once the group were able to safely return back to land, they told the people they encountered that they were carrying a massive stone wheel and that it is at the bottom of the ocean. The listeners accepted this account as fact, without seeing any proof, and offered items to the individuals based off how much they believed the stone was worth.  The actual money is never really there, but through representation of stones and accepted word of mouth, the inhabitants of Yap had a working currency system. In fact, the way we use money today is not too different from those of the islanders.

             Instead of giant stone wheels, we use green pieces of paper, metallic circles, plastic rectangles, and numbers on electronic boxes in order to represent and transfer our money. Instead of accepting word of mouth (most of the time), we use quantity and numbers to show the amount of wealth in our possession. Even with that minor difference, the idea stays the same- and the “actual” money never appears. In our society, as an anonymous author points out in their article titled Money and the Illusion of Wealth,  “Over 90% of money is literally created out of thin air via loans and the expectation of debt repayment.” We say that something is so amount, and expect someone else to be able to pay us back with something else of similar value. We are literally picking a monetary price that others generally accept as fact. This is what Ira Glass meant when he said that “Money is fiction.” Money doesn’t exist, but we believe that it does based off what we use to represent it and how much an individual has of those representations.

            In the initial paragraph, I made it clear that if someone were to question me on the concept of money and how it works, I would have given a straightforward answer about how it is the way we as a society purchase and sell items, mainly through the form of dollar bills and coins. Now I realize how narrow minded I was at the time. As I have now shown you,and which I have personally learned about in the past couple of days, money is a concept much more abstract. Yes, it is used as a means of buying and selling. But money also doesn’t exist. We made it up out of nowhere,  decided to use different things in order to represent it, chose how much any given item was worth, and  finally accepted everything as fact. Based off this truth, instead of pieces of paper, plastic, metal, and electricity, we would be able to theoretically accept anything as money. Why not use live animals? I think hair would also be a cool way to represent money. An out of the box idea would be to use live human babies (which would eventually give a new meaning to the phrase “a multicultural world”). Or maybe we could follow the footsteps of another successful civilization and use Stone Money.

Works Cited

             Anonymous, Author. “Money and the Illusion of Wealth.” Money and the Illusion of Wealth. N.p., n.d. Web. 13 Sept. 2016.

            Freeman, A. “What Is Money?” Economics and Liberty. N.p., 11 Dec. 2015. Web. 13 Sept. 2016.

                Friedman, Milton. “The Island Of Stone Money.” (n.d.): n. pag. Web. 13 Sept. 2016.

            Glass, Ira, and Planet Money. “The Invention of Money.” This American Life. N.p., n.d. Web. 13 Sept. 2016

Money powers our world. From economics to international affairs, money can make or break a person’s quality of life. The power of money has led many, including NPR broadcaster Jacob Goldstein, to question where exactly money originated, how it evolved, and how it gained the inherent value that it seems to have today. In his studies, Goldstein cites a peculiar story of the people of Yap. In their village, there was a huge stone made of limestone, a metal considered precious to the Yaps due to its rarity. The citizen that held ownership of the stone, even if it was not in his direct possession, could make purchases with the stone. If he or she chose to make an exchange with the stone, the ownership of the stone would then change to that seller. The stone never had to move, the only thing that changed was the village’s knowledge of the owner of the stone. Even when that stone accidentally fell to the bottom of the ocean, the villagers of Yap continued to use it as a means of currency. The stone did not have to be present to have value. As long as villagers continued to exchange using the stone, it had value.

The story of the Yaps, although it seemed bizarre at first, sounds very familiar. America started its currency evolution in an almost identical way. Gold, a metal that is considered rare and beautiful, was used as a means of currency. When gold became a hassle to transport, paper money was created. Each paper dollar represented an amount of gold. So as the Yaps exchanged their stone through word of mouth, Americans exchanged their gold through paper money. The gold never moved, only the ownership changed. As time moved forward, American money was no longer backed by gold. A dollar bill was just a dollar bill. Its value was not an amount of gold, but now just valued at whatever it can be exchanged for. In present day America, even cash is starting to go out of style. Now, the average American’s finances are based on electronics. Salaries are awarded, bills are paid, and purchases are made just by numbers changing on a bank account statement. This present-day economic system can only survive on human faith. If everyone lost their faith in the banking system and attempted to withdraw all their cash, the system would collapse. This is because there is not enough money to back every number on every bank account. As long as people continue to trust the banking system and the value of their dollar, the system can continue to grow.

This idea of faith ruling a country’s economic success is shown in Brazil. When the Brazilian economy began to stumble and inflation was increasing, Brazilians began to lose faith in their currency. The citizens no longer felt as though their money was valuable, so there was a rush to spend it all quickly instead of saving it. This made inflation even worse and so the cycle continued, until Edmar Bacha created a system of “real value” currency. Units of real value meant that prices always appeared to stay steady, the only thing that fluctuated was the amount of cruzeiros that was equivalent to the real value currency. Since steady prices made the Brazilians regain their faith in their economic system, soon the economy began to level out. This fake currency even allowed Brazil to thrive economically more than it ever did.

All in all, money runs on faith. If people have faith in the value of their currency, they will feel safe saving, spending, and accepting it. If one day all American companies decided that the dollar was worthless and they would not accept it as payment, then it would be worthless because it cannot be exchanged for any goods or services. However, as long as companies continue to feel as though the dollar is something to be sought after, the dollar does have value. When it’s broken down it means that one day someone can be rich and the next day they could have nothing. Despite the system’s apparent fragility, it’s not time to lose faith now. Currency systems like ours are essential to society and as illogical as they seem, they work. By how things are going now, people are not likely to lose their idea of value in the dollar any time soon. Companies continue to seek the dollar crazily. People work tirelessly just to see the numbers in their bank account rise each week. Therefore, I believe the American currency system will not collapse any time soon because citizens continue to believe that currency is valuable and the key to a good life.

References

Goldstein, Jacob. “The Invention Of ‘The Economy'” Planet Money. NPR, 28 Feb. 2014. Web. 13 Sept. 2016.

Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.

“How Fake Money Saved Brazil.” Planet Money. NPR, 4 Oct. 2010. Web. 13 Sept. 2016.

“The Invention of Money.” This American Life. This American Life, 7 Jan. 2011. Web. 13  Sept. 2016.

If we think about it, Stone money played a great role in the development of our currency today. Today our currency is all computerized, merely a number on a computer screen. There is no physical displacement of the currency rather the ownership is changed. This characteristic of our modern currency is similar to how yaps stone money was not moved from one place to another rather just the ownership was changed. However, we do differ from them in other aspects such as being able to make transactions over long distances in seconds , deposit money at one location and take it out at another to suit our need. We have came a long way from stone money but the fundamentals have not changed . we really can not keep the money forever . we have to spend that some however . to earn a college education you have to give money to earn more money . its kind of look like investment . you give some and get more in the end . i think now every other country want some kind of other gold , diamonds etc. instead of money . we are the country that make their own money . which is make other country think its good to take some other stuff instead of their money