Rowan Counterintuitive

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

 

Money is the mental reassurance of wealth. The real value of money depends on the value we mentally place on money. One might question what does mental reassurance of wealth have to do with money when it is actually the only reason we are able to keep track of the value. We will continue to change what we mentally think about the worth of money. The intrinsic value of money will forever change. America converted money of France into gold upon their request. This gave the assumption that they did not think U.S dollars was worth its weight in gold. This changed the mental picture of the value of the U.S dollar. People began to think less of the U.S dollar which decreased the U.S dollar value.

The Yap might think our concept of exchanging money hand and hand to be bizarre. The Yap never exchanged their coins, probably because their coins were to big to simply move. The Yaps changed the ownership of their coins without moving them. If you wanted to buy something from someone you would take ownership of the huge stone. This made it possible for people to never see the stone but know the value. This is similar to in the U.S where someone has money in their bank but never actually see physical money.

Brazil had a similar problem as the U.S with the value of their money. Similar to the U.S Brazil’s citizens lost faith in their currency. Their faith in the currency was decreasing but soon was restored when a new idea of money was created. The idea of a different kind of currency was called Unit of Real Value, which wasn’t actually a real thing. URVs was a currency that stayed consistent because the real currency was used to determine how much URVs one had. While the currency worth would change the URVs would remain the same which gave the citizens hope in the URVs and boosted the economy.

The public’s faith in the value of money is so important because we determine what anything is actually worth. It doesn’t matter if its money, technology, or even our time. We put a price on on things and we determine the worth. This out the public out opinion on a items worth our money system would mean anything.

Works Cited

Chana, Joffe-Walt”How Fake Money Saved Brazil”NPR.org http://www.npr.org/sections/money/2010/10/04/130329523/how-fake-money-saved-brazil

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

 

What is the purpose of money?  We, as a nation, have grown up thinking that money was a tool for the trading of goods and other services.  For some, it is a matter of survival.  How we feed each other or how we purchase clothes to keep us warm.  However, if you really think about it what does a piece of paper have to do with our worth?

Out in the Pacific Ocean, there is a tiny island named Yap.  Hundreds of years ago, their society agreed that they would use the limestone deposits as money.  This limestone was usually only used big things and not everyday purchases.  The only problem for them was that it was very hard to transport these big stones.  During the first transportations, one ended up at the bottom of the ocean.  Although you could not physically touch it, everyone decided that it was still good.

The limestone that was used is very similar to Bitcoin, which became popular two years ago.  Bitcoin is a digital payment system which allows transactions to occur directly between users without the use of a middle man.  As you can see, neither of them can be physically touched but are still extremely valuable.  Bitcoin on the other hand, has some people that doubt its value.  These people talk about how it has no sense of authority or a central bank.   They also bring up that a bitcoin is worth whatever a random person is willing to pay, meaning that the seller will look for the person that is willing to pay the most.

In my 20 years of living, I don’t think I was ever given a straight forward answer on what money was or what the value of money truly is.  One thing we know for sure is that money makes the world go round.

Work 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;.

Planet Money, By. “The Invention of Money.” This American Life. N.p., 7 Jan. 11.

Reeves, Jeff. “Bitcoin Has No Place in Your – or Any – Portfolio.” MarketWatch. MarketWatch, 31 Jan. 2015. Web. 10 Sept. 2016.

 

Every country in the world has some type of currency. The United States and Canada use dollars, the United Kingdom uses the pound sterling, and most of Europe uses the euro.  Each of these currencies have different values and ever changing exchange rates. For example, when I went to Canada this summer one US dollar was worth more than one Canadian dollar and this got me thinking what is the difference? I was not complaining because the exchange rate was in my favor but I was very curious.  One question that kept going through my mind was “Can one US dollar purchase more goods that one Canadian dollar?”

While the United States currency is officially the US dollar, some countries have more unique currencies. One example of a country that uses a unique currency is the island of Yap. The Islanders of Yap used stones as their currency (Friedman 3). The interesting about is that some of the stones were too large to carry around in a pocket, so they were left somewhere and people would just know who owns the stone today. In a way it is not too different than the money in our bank accounts. I know the money is in my savings account but I cannot see it unless I went to the bank and withdrew it. So with this in mind money is physically real but only worth what society values it for (Glass). One example would be if someone says “I will give you one dollar for the soda,” then one dollar is worth a soda but if a different person said “I will give you a soda for $3,” then one dollar is not worth a soda. Money is what society says it is worth, but the value of the United States dollar is almost universal because most stores will not charge someone more than two dollars for a soda .

While I am not an economist or economics major, I know how bad inflation can be. From the 1950’s to the 1980’s, Brazil had a chronic inflation problem (Joffe-Walt). The problem in Brazil was that prices kept rising and people had no faith in money, also most people were probably not  saving their money because over time it would lose its value. If I lived in Brazil at this time I would have no faith in my country’s money system. Rampant inflation makes people feel that their money is losing value every day because in a way it is. Currently, I do have faith in the United States dollar because it is considered a stable currency worldwide and while the value of the dollar has inflated, the inflation rate is very low.

When I was in high school I remember hearing about bitcoin for the first time. At first I had no idea what a bitcoin was and my first question I asked my friend was “Which country created bitcoin?” The correct answer was no country did, but it was created by someone and a bitcoin is not an actual coin. The most interesting thing about a bitcoin is that it is not owned or backed by any bank (Reeves). So a bitcoin’s value is based off what it is traded for in the market exchange. The value of a bitcoin can vary from day to day just like a stock. With a bitcoin, it literally is worth what people say it is worth which makes me wonder if a bitcoin really worth anything in real value.

Over the last two days my concept of money has not changed, although I do feel that I have learned a lot more about currency and some aspects of economics. I still do have faith in the United States dollar. I know it is a stable currency and at least in my lifetime has not experienced rampant inflation. Although I understand how the Yap island currency can be similar to the United States currency today. An example would be that when I got paid this summer I was paid via direct deposit, so I knew I had the money, but I did not physically have it in my possession. Another reason I had faith in the money in my bank account was that I used it to pay off a credit card bill so I know the numbers in my bank account have value. In brief, I believe money is very valuable and a necessary thing for society to thrive.

 

Works Cited

Friedman,Milton. “The Island of Stone Money”. Hoover Institution. February 1991. Web.

Glass, Ira. “This American Life.” 423: The Invention of Money. N.p., n.d. Web. 13 Sept. 2016.

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR. NPR, 10 Oct. 2010. Web. 13 Sept. 2016.

Reeves, Jeff. “Bitcoin Has No Place in Your – or Any – Portfolio.” MarketWatch. N.p., 31 Jan. 2015. Web. 13 Sept. 2016.