The Value of Money
All across the globe money is constantly being exchanged for goods, services, resources, and much more. The world is made up of all different types of currency, like the United States with the dollar and Japan with the Yen. Currency is made out of different materials everywhere, most of the time in the forms of dollars and coins. This is very different than the currency on the island of Yap, where they use rare rocks as their form of money. It is very strange to see such a subjective form of currency, where a size of a rock determines how much money a person has.
On the island of Yap, individuals exchange stones with one another in order to purchase something. These unique stones were marked when Germany seized control of the island back in the early 1900’s. Islanders labeled certain stones across the perimeter of the island that were being taken away due to renovations occurring in the very near future. These stones became to have value because people now considered them to be worth something due to their rarity. This sudden idea to use rocks as currency saved the country from economic failure.
The people of Yap really demonstrated the fact that currency is what is made of it. It is up to the individuals of the country or place inhabited to determine what they want to deem valuable. Something’s value also has to do with the type of culture of the region. The Yap were a small group of five thousand or so who were able to easily use these rocks as a means of exchange. If stones were used as currency in somewhere like Germany, it might not be so successful due to the amount of people, as well as the mind set of the people. In other countries people like to be able to carry their money with them and be able to write down a specific dollar amount of how much money they possess. The Yap did not feel that it was necessary to be so strict with their money. In their culture the word of a man was trusted just as much as a stone physically in hand. This trust was necessary for the survival of the Yap’s monetary system because some of the rocks were so large they were unable to be moved.
Currency is what people determine its worth to be, which is clearly demonstrated by the Yap. Their currency was just like others, and there can be a surplus or a deficit when it comes to any type of money. A lot of countries, like Japan, have been dealing with inflation issues with their currency for a long time. They use what is called “Yen” as their form of money. Yen is a lot like American dollars in image, but they are worth less than the American dollar because there is a surplus of them. When there is a surplus of money its monetary worth goes down. This causes prices to go up, which makes people use more money to purchase less goods and services because everything costs more. In Japan, a yen is worth about ninety cents on the dollar. So that means that a thousand Yen is only worth ninety percent of what it actually should be, causing people to spend more and receive less.
The opposite of this occurred in the United States during the early 1900’s. This is when the Great Depression occurred. During the Great Depression, dollar bills were hard to come by because of the government not knowing how to handle the country’s finances. No one realized financial aspects such as GDP and government spending needed to be factored into determining the country’s net worth. This made money become worth more, but also a lot harder to come by than what was best for the United States. Money was deemed to be valued more because of it’s high demand. This was an instance of currency’s worth being determined by what people decide it is worth.
In order to end the Great Depression the government determined that it needed to invent what they named the “economy”. The government realized that money could not just be spent frivolously and there needed to be things like a budget, or a structure to the financial aspect of the country. Eventually the United States was able to pull itself out of the depression after the economy structure was developed. By inventing the economy a dollar’s real worth was able to be determined based on it’s demand.
As it is seen, every monetary unit is worth something different everywhere. Even though this is true, individuals are still able to purchase goods and services in other countries by just transferring their currency into the other country’s currency. This would not apply to the Yap, where their money would only be accepted on Yap. Recently, there has been a new type of money that has come into the light called “bitcoins”. A bitcoin is an online currency that is stored in a computer’s memory. This money is universal and does not need to be transferred into another monetary unit because it can be used all across the world. All that one has to do to use it is go online, which is completely different than the Yap’s currency.
Although bitcoins sound wonderful, there are a few drawbacks. Even though they are universal, bitcoins can only be cashed out if someone is willing to purchase the bitcoins in cash, which means they can really only be used online. It is not popular to buy bitcoins in cash because they are not worth the same as other currencies. For instance, a single bitcoin was worth 244 American dollars, and their value would vary for every different currency. Also, bitcoins are commonly used to complete illegal activities such as drug deals, so people are wary to use them. If bitcoins popularity increases, their value will skyrocket. They are exactly like the Yap’s stones, America’s dollars, and Japan’s yen. Money’s value increases or decreases depending on it’s demand and determined worth by the people.
Money is the system that makes the world go round. This is not because it is the most valued thing in the world, it is because money is used to obtain the most valued commodities in the world. People want money to purchase goods and services. It does not matter what the physical form of currency is, it matters what the people of a certain region want it to be worth. This is why the Yap’s stone system saved them from financial turmoil. Everyone just agreed on what these rare rocks were going to be worth, like how the dollar’s value is determined by the number on them. Monetary units are what the people make of them. Once currency is no longer deemed valuable by the people, it is basically worthless.
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