The Concept of Money
Money have always been a huge part of modern life that defines how successful and wealthy you are. However, money itself is just a fiction. All these green papers and numbers in our bank accounts exist because long time ago some people agreed that it’s gonna worth something. While it seems normal and obvious for us that paper money is a normal thing, it sounds unbelievable that some people used massive stones as their currency.
From the very beginning, Milton Friedman’s article “The Island Of Stone Money” looks like a joke: a group of people, living on the island, and rolling huge circle-shaped limestone coins from one shore to another. In fact, 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 some “money”. It would be shaped in wheels with a hole in the center and varied in sizes from the foot to twelve feet. Just imagine rolling your limestone salary to the nearest bank and asking to make a deposit. In American banks the reaction would be priceless. 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.It might sound ridiculous for us, but it is just as ridiculous for people of the island Yap to buy a nice and shiny car with a bunch of green papers with some weird symbols and faces on them. Stone money have some minor inconveniences, but 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.
We’re used to think that how much money worth does not depend on us, or our thoughts. It has been proven by Brazilian students who tricked the entire country and saved it from inflation that most of our problems are in our head, including problems with money. Joffe-Walt talks in the article “How Fake Money Saved Brazil“ aboutFour students from the Catholic University in Rio that 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. When the price of URV would be changing all the time, still all the prices in the stores would show same numbers of URVs wanted for products. 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.
The value of money, and money itself will be always changing, adopting to new people and realities of the world. It is quite possible that in nearest future we won’t be seeing our green paper bills and shiny coins, they’ll become grandpa stories and museum exhibits.
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