How Paper is Heavier than Metal:
The Strange Concept that is Money
p1. Everyday we as people use or see money in some way shape or form. whether it be in actual paper notes or the more obtuse forms such as bitcoin or other types, money is apart of our lives. But does anyone really take the time to truly think about what the hell money even is? We use these paper notes to exchange goods like food or clothes, which can pose as an equal trade, but what about things like precious metals, that you would think would have more worth than a paper note, even when in bulk. Also consider abstract things, like how humans try and put a numerical value on things like nature. What got me thinking into this is the article we read on the “Island of Stone Money”, or the island home to the Uap. These people use huge limestone discs that sometimes can not even be moved, they believe in the value of these discs no matter where they are. So to us, those that use dollars,yen, etc… this seems so odd and unconventional, but how different are we really? The actual concept of money, when you break it down, seems so odd it demands an explanation.
p2.For a good place to start this exploration ,we must go back to the island of Stone Money. As discussed the Uap use these giant stone discs as currency, but that isn’t the stangest part, the strangest part is about how much the island trusts this system.”My faithful old friend Fatumak, assured me there was in the village a near by family whose wealth was unquestioned…and yet no one, not even the family itself has laid eyes on this wealth”(Friedman 2) The island mutually respects that this family is the wealthiest family on the island, and the family’s wealth is said to be sitting at the bottom of the ocean. Even better yet, when the Germans came to the island, the way they got the Uap to listen to their demands was by simply painting on big black X’s on the stone wheels, thus, in the Uap’s eyes, devalued the money to nothing. Why is it that this primitive economic system can become nothing by simply changing one aspect about its currency, is money really that malleable?
P3. To answer this question , I’m going to pose another question. What happens when inflation in your county is so bad that something like a pair of sunglasses could cost $10,000 in two weeks? The answer is you make up an entirely new currency, and that’s exactly what Brazil did with the URV, or known as the Real Value unit. You see in the 90s Brazil’s rapid inflation caused hard working people to be on a “spending timer” They would have to spend their entire paycheck that week, because they wouldn’t be able to afford the products they wanted or needed. The inflation percentage was something like 10% a day, well for the four american economy students visiting, this was a challenge to over come.”The four’s plan was allow the new currency to have an exchange rate to match the inflation with out putting people in debt, so you’d be paid 1000 URVs a month and milk would cost one URV, the next month it would be the same except, you’d get the original currency as change for the URV”(This American Life podcast 423). The real is a fine example on what pushing currency to the limit does. The fact that inflation cause a group of four college students to make up a fake note and an exchange rate for that note and have it work really hammers home that modern currency and primitive currency, I.e. The Uap’s are not really that different in nature. The fact is that currency is just a tool for an economic system, which yea of course it is, but tools can be new and tools can do only certain jobs, the real point is that every economy needs the right tool for the job and while people like the Uap keep the same tool forever, countries like Brazil someties need new ways to handle economic issues. Money is the tool, while the faith we put into it is the economy.
P4.A curious product of this concept of creating new tools is actually the Bitcoin. Bitcoin is a completely digital form of currency used on the internet for goods and services. The only difference between this made up currency and the rial is that the bitcoin wasn’t born out of necessity, it was just created as digital currency,exchange rate and everything.Bitcoin was a growing economy within the internet and more and more users did decide to dip their hands in it everyday,so how is it that some people just decide to switch over to something without having a sure idea where it’s going? Well the risk was not worth it because recently the bitcoin economy just had its first big crash. “The price of the virtual “geek” currency had soared through the stratosphere in recent weeks, trading for a high of $266 on Wednesday — only to come hurtling back to Earth in just three days.By Friday, a single Bitcoin was worth just $54, according to the Mt. Gox platform, which manages 80 percent of the Bitcoin transactions and had to briefly shut down trading Thursday.” Even from the beginning, some people had thoughts that something like this would happen at least a few times due to the nature of it being a privatized economy it was bond to burst.
P5. Why does it relate to the strange concept of money and its tool like qualities? It’s because, it’s too much like the incident with France when the US put gold aside and the market crashed, just on a much smaller scale. The actual concept of Money is a note or a tool that a group of government officials, college buddies, or some guy places a value on and the people trust its value with out considering what happens when it gets too big, or if we put away more gold than our actually currency can cover. Something similar to this is happening in Japan currently. Japan is fearing a currency war because the Yen has deflated immensely due to spending. “The yen skidded to a two-and-a-half-year low of 90.695 against the dollar Friday, which reinforced expectations for more monetary easing. The currency has slumped 11 percent against the dollar since early November as Mr. Abe stormed to an election victory in December with bold promises to end decades of intermittent growth”(NYTimes). The Yen has decreased so much that they need to reverse without changing the actual property of the Yen, or else they might insight a currency war.
P6. Money is so strange because with problems like in japan, and previous examples, like in Brazil, you can essentially just agree to stop using a currency for a new one until it balances out. Yet at the same time this could also incite an irreversible financial crisis all because the worth of some paper because too large or too small. That is the whole point of the oddity of money is that we as a country, or as people, put so much faith into a note without really thinking about it. I mean we pay for homes, and cars, and plenty of other things that, when thought about critically, seem way more valuable than the stack of papers sitting in our bank accounts. It’s almost miraculous that we, as people, pick some random thing, whether it be a paper note, a stone disc, chunks of data, or even shells, and decide that’s how our society will trade, especially when people value things differently than others.
Friedman, Milton. The island of stone money. Stanford, CA: Hoover Institution, Stanford U, 1991. Print.
“Japan Tries to Ease Fears That Its Policies Will Lead to Currency Wars.” The New York Times. The New York Times, 25 Jan. 2013. Web. 23 Jan. 2017.
Renaut, Anne. “The bubble bursts on e-currency Bitcoin.” Yahoo! News. Yahoo!, 13 Apr. 2013. Web. 23 Jan. 2017.
“The Lie That Saved Brazil.” This American Life. NPR, 7 Jan. 2011. Web.