Currency can seem the most valuable thing in the lives of many Americans. For many of us, our entire lives revolve around the acquisition, use, or display of currency. At first, this love of money seems very reasonable; after all, we’re told that in order to have a “good life” we need to possess things. We buy expensive cars, houses larger than we really need, fancy clothes, and other objects which seem to exist only to be a vehicle to show off our wealth. Not only are we obsessed with having money, we’re obsessed with our particular cultural idea of currency. When we look at Japanese yen, for example, we cry out about inflation. When we look at the brightly colored bills of Canada and the UK, we are quick to call it “Monopoly money.” This is, at its simplest, financial ethnocentrism. Friedman says in his essay that “[t]he money of other countries often seems to us like paper or worthless metal, even when the purchasing power of individual units is high” (Friedman 5). However, in the abstract it is clear that our currency is no more or less valid than that of any other tradition.
An NPR broadcast featuring Stanford University economist Milton Friedman examines this in more detail; Friedman talks about a tiny Oceanic island called Yap, whose inhabitants have a “non-standard” idea of currency (NPR). The Yap exchange “Fei” — sandstone discs of diameters ranging from a few centimeters to more than a meter. As a sandstone disc of that size is somewhat difficult to move, the Yap don’t bother; they simply make a mental note of which Fei belongs to whom. North Carolina State University anthropologist Scott Fitzpatrick is quoted by Goldstein and Kestenbaum as saying “[t]hey often talk about the stones themselves not changing hands at all. In fact, most of the time they wouldn’t” (Goldstein). Contrasted to our culture, that seems insane; we carry our money with us, of course! Why else do we buy wallets and purses if not as vehicles to transport or display our monetary wealth?
Upon closer inspection, though, it becomes apparent that the Yap are not as crazy as we thought. The Yap separate ownership from physical location, just as we do when we deposit our money into a bank account. The actual dollar bills are used to lend to other bank customers, and we may never physically see a specific dollar bill twice in our lifetime. Instead, a number is entered and a button is clicked, triggering the bank’s software runtime environment to convert a number into a string of binary bytecode, which is then sent to a router, and through a complex series of DNS lookups, IP addresses, and physical trans-continental cables is sent via the internet to a remote facility, sometimes thousands of miles away, which updates an integer value on a hard drive that nobody ever physically interacts with, and that…is what we call money. And we somehow believe that our currency is superior to that of the Yap.
This begs the question, though — what is the meaning of currency? And even more absurdly, how can we maintain value and meaning between currencies? Ayton MacEachern says that “[h]ow much demand there is in relation to supply of a currency will determine that currency’s value in relation to another currency” (MacEachern). But ultimately that’s also just another arbitrary game of numbers, with hundreds of international exchange employees keeping track. And even that gets further abstracted by the concept of futures. “The futures markets,” says the Economist writer Marc Levinson, “allow participants to lock in an exchange rate at certain future dates by purchasing or selling a futures contract” (Levinson 15). We abstract the arbitrary value of stylized pieces of paper to the point of absurdity.
In the end, as much as we think our culture and our currency is more advanced, that simply is not true; we need only to look at how truly absurd our own currency is to learn that. Currency only exists as a vehicle to transfer value, and whether we use US dollars, Japanese yen, Turkish lira, or Yap fei, the physical object that we transfer (or don’t) merely serves as a proxy for that value transferral. Money only has worth as far as we all agree that it has worth, and separated from that agreement it is meaningless.
Friedman, Milton. “The Island of Stone Money.” Working Papers In Economics (1991). Web.
Goldstein, Jacob, and Davd Kestenbaum. “The Island Of Stone Money.” NPR. NPR, 10 Dec. 2010. Web. 09 Sept. 2015.
MacEachern, Ayton. “How Are International Exchange Rates Set?” Investopedia. Investopedia, 14 May 2008. Web. 09 Sept. 2015.
Levinson, Marc. “The Economist – Guide to the Financial Markets.pdf.” The Economist. The Economist. Web. 09 Sept. 2015.