The concept that money does not exist is mind-boggling. In the American society, money is no longer a physical object. Money is handled through the computer more often than it is handled physically; yet, there are still some places that do not use computers to handle money. The island of Yap is a prime example of physical money. The islanders of Yap have a unique currency system that is beyond strange to me. They use lime stone to create these massive coins called fei. The bigger the fei, the more wealthy a person is; however, some of these stones are too heavy to move. Because it is so heavy to move the fei will usually remain in one place. When the owner of the stone changes, people will know that there is a new owner. The islanders of Yap traveled 250 miles off shore to find these lime stones to create the fei. One man had several workers go off to make a big fei; however, when the workers sailed back, there was a storm. The stone ended up in the bottom of the sea. The workers came back and told everyone about the stone. At the end, the stone’s value was still recognized. This type of currency may seem absurd, but it is no logically different from ours. Back then, our currency used to be gold (which was always held in a bank). If you wanted to pay for something, you would get a piece of paper stating the amount of gold that is getting paid. The idea of money is no abstract. We never see the money get deposited or moved. For example, in the NPR broadcast “The Invention of Money”, a member of the Planet Money brought up a good idea to further inspect. When you get a job, your boss does not hand you the money, instead it is directly deposited. You cannot see the money; all a person does is wait for the numbers to change on their bank account statement. Money is just an idea that we all believe in. Anyone can change the value of currency and we would still believe in it. In the end, money is something so abstract. We are the ones that put the initial value on money (in Yap, stones).
The NPR broadcast “The lie that Saved Brazil”, is about the inflation that happened in Brazil. The price of goods would rise every week in Brazil, this is the product of the new city Brasilia. This is a city that was built in 1950. Then the government of Brazil started to print print a massive amount of money. Now, Brazilian money started to lose it’s value. When people got paid, they would spend it right away before it loses it’s value. Some people would hide cattle so the meats could stay a good price and not go down. In March 27, 1993, the government sought out four friends who had an idea on how to stop inflation. They wanted to restore the faith people had in money. These four friends developed a currency called Unit of Real Value a.k.a URV. One URV would be equivalent to 7 cruzeros one week and the next week one URV might be equal to 10 cruzeros. The URV is a form of virtual currency that everyone started to use. The government saw the progress of Brazil and decided that the URVs will be the new form of currency. While listening to this broadcast, I realized that our form of currency can be altered.
We might think of electronic currency to be absurd; yet, in the American economy there is a currency called Bitcoin. Bitcoin was assimilated into society about a year ago. Bitcoin has no true value; but, people still believe in it like the URVs in Brazil. People get tricked into thinking currency is already at a valued price. Bitcoin will cause a network affect. Everything is done electronically so this creates a chance for bitcoin to succeed. If other people use the currency bitcoin, that means other people will use it as well. People will trick themselves into thinking that bitcoin is a real currency. This is the same situation in Brazil without inflation.
Going back into our economy, money is handled through the Federal Reserve. They can create money whenever they want and they can control the amount of money the economy gets. The real question is where does this money all come from? Did the money just come from some void? The federal reserve decided to print more money. They would give banks millions of dollars by buying treasury bonds. I found out that the Federal Reserve would press a single button and that will change how much the bank would get. It’s scary how the government can manipulate and make money. How do we know if someone is wealthy? We can never see the money, but we believe in the numbers that are presented to us on a single piece of paper.
Money has a set value because we perceived them that way. What makes money different from each other? They are all a piece of paper that have been printed from the computer. In Yap, the stones are an odd concept to uphold; however, we had gold which had a similar concept to the fei. In Brazil’s currency changed because the government decided to. That’s happening now in America because of Bitcoin. The creators of bitcoin are hoping people can influence each other to use this new currency. Money is not a physical object anymore, it’s just a statement on the computer. Money is just an idea that we believe in. People set forth how much a dollar bill is worth and how much a hundred dollar bill is worth. Can they be the same though? Money is just a piece of paper that can be manipulated and we would be okay with it.
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.
Joffe-Walt, Chana. “How Fake Money Saved Brazil.” Npr.org. NPR, 4 Oct. 2010. Web. 6 Sept. 2015
Phillips, John. “Bitcoin: What to Expect in 2015.” CNBC. N.p., 15 Dec. 2014. Web. 04 Sept. 2015.
Reeves, Jeff. “Bitcoin Has No Place in Your- or Any-portfolio.” Market Watch. N.p., 31 Jan. 2015. Web. 4 Sept. 2015.
“The Invention of Money | This American Life.” This American Life. N.p., 7 Jan. 2011. Web. 04 Sept. 2015.