Money does not exist. The most shocking things for me to believe in, after dealing with all these paper bills and bank account statements, was that it is all fiction. You don’t really own anything valuable. Money exist when everyone believes in it, in the power and wealth they give to the owner.
When I just started reading Milton Friedman’s article “The Island Of Stone Money”, I couldn’t believe that people were using stone as their money. Stones aren’t that valuable! They’re everywhere! Just go outside and grab some. However, for the people of the island Yap the stones named fei, were equal to our gold; people had to send ships hundreds miles away from the island to get more “money”. It would be shaped in wheels with a hole in the center. The sizes of the stones varied from the foot size to twelve feet. I had mixed feelings about this statement. First, for me it sounds incredibly inconvenient to carry those coins. I believe that we got used to having our money everywhere with us and being able to buy whatever we want in any moment. In case with fei, you can’t just take your money with you and walk around, but people from the island Yap didn’t have Starbucks, so there was no every day trading. On the other hand, the weight of money would make it harder for the thief to steal it. Besides those minor inconveniences, fei was very stable and valuable currency on the small part of the world, but it worked for the people who lived on the island. The big coins were placed in certain parts of the island, they had their owners, everyone was acknowledged of the owners and it was unquestioned. Money that we’re using every day could be just as unreal as fei. We have some papers, or some number on our bank account and we believe that it’s worth something, just like people who have limestone coins and they know they are valuable.
Belief in money keeps money stable and improves the economy. It was proved by Brazilian students who tricked the entire country and saved it from inflation. Joffe-Walt tells about it in the article “How Fake Money Saved Brazil“. Four students from the Catholic University in Rio were invited by new finance minister to embody their idea of stabilizing the economy of the country. The idea was to create one stable currency that would be placed along with the existing currency, cruzeiro. All the prices were changed to Unit of Real Value — URV, and they wouldn’t change. The different would be just the price of URV. After few months people got used to new currency and stopped expecting prices to always go up. It stabilized the economy and prevented the inflation. As for me, this is an amazing example of how people can control the value of money just with the mass thoughts. When people stopped expecting bad and started thinking stable, it also stabilized the economy of entire country.
Those few stories made me change some of my thoughts about monetary system, and reconsider my belief in money. Money is a valuable thing that can stop existing any time, but it can help us to get some actually valuable things in a life.
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. 7 Sep. 2015. <http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil>.
Reeves, Jeff. “Bitcoin Has No Place in Your – or Any – Portfolio.” MarketWatch. Livefyre, 31 Jan. 2015. Web. 07 Sept. 2015.
Glass, Ira . “The Invention of Money.” NPR.org. 4 Oct. 2010. 7 Sep. 2015. <http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money?act=0#play