Not Valuable, Not Worthless
P1. If something has value it has a certain level of importance to someone, so how is it that we can place value in something that serves virtually no purpose (Difference Between, 2011). Money is something of great value to people in today’s society, however if you break down money all it’s only paper and rocks. Paper of course meaning paper bills and rocks meaning the metal used to forge coins. Paper and rock can be very valuable to some people, perhaps people who need to create fire, but the way people use it nowadays is nothing short of idiocy. Money doesn’t have value, but it does have worth. Worth is how much of one thing is equal to another thing (Difference Between, 2011). For example one bag of peanuts is worth one dollar, or one bag of skittles is worth one snickers bar. The big question derived from this definition is how to we decide what is worth what?
P2. The most primitive answer to the previously stated question can be found many years ago with the people who inhabit the island of Yap. The Yapese used gargantuan limestone coins commonly referred to as Rai coins (Friedman 2, 1991). The coins were found on an island miles away and they had holes borrowed through the center that were probably used for easier transportation. These coins had great worth in the eyes of the Yap people and they were in high demand, but why? These coins are nothing more than big shiny rocks. The way that they calculated the worth of these coins were through factors such as, how much time it took to get the coin, how hard it was to get, the size of course, and how many people dies in route to bringing the coin back (Friedman 4). All these things were part of a complex algorithm to decide how much one of these coins is worth. Some of the Rai were so big that they couldn’t even be moved in order to show that a transaction was preformed between two people. So the people had to go off of the honor system for knowing whose Rai was whose. There could be a coin just sitting at the bottom of the Ocean and that’s Jerry’s coin. Then Jerry buys a cow from Thomas using the Ocean coin, and so the Ocean coin becomes Tom’s. It is now Tom’s coin because he says it is, and all of the Yap trust Tom.
P3. The only reason this method of transactions works is because it is widely excepted in the community. Everyone agreed that the Rai were worth something and that they were valuable, so they were. If it was the greatest thing in the world to Jerry, but it meant nothing to Tom there would be no transaction and Jerry would be shunned for loving a big rock. As long as the people in a society agree that something is worth something else anything can be currency. A prime example of this would be the emergence of the Brazilian URV. URV stood for Unit of Real Value. The URV’s saved Brazil’s economy in 1992, but it was generated out of thin air. An economist and his buddies we tasked with finding a solution the Brazil’s 80% inflation rate (Joffe-Walt). The inflation was at a rate so dramatic that if on the first day of the year eggs were 1$ at the end of the year they would be worth $1000. So what they did was invented a unit of currency that remained consistent to fight the effect of inflation. So if eggs were 1 URV a year later they would be 1 URV. The only thing that changed was how many cruzeiros a URV was worth. A cruzeiro was the actual unit of currency in brazil, so a URV could be worth 20 cruzeiros one day and then 40 the next. This fake money saved Brazil’s economy, but it doesn’t even have a physical form (Joffe-Walt). The government got the word out to all people that URV’s were the new currency and they just accepted it . People were paid in URV’s taxes were done in URV’s and all transactions were done in URV’s (Joffe-Walt). The only reason this work was because it what widely accepted.
P4. Another not-so-dramatic example of this would be the US dollar. The US dollar used to be backed by gold and silver and now there’s nothing even backing it anymore except more money. The US economy has created a cycle where every dollar is back by debt. This means all money printed by the FED is just added to the US debt (Wood 2012). This has turned The US into a ticking time bomb. Once the ignorance of the vast majority fades and people realize the US dollar is worthless, the economy will tank in an unthinkable way. Until that moment where everything goes south, the dollar is widely accepted and there for it has worth. One could even make the argument that it never had worth even when backed by gold and silver. Gold and silver are just shiny rocks with no value. They can’t b used to make tools and they don’t serve much of a purpose. So how can something with no value be worth anything? This is just due to the ignorance of people and their willingness to accept that something has worth because somebody else says it does.
P5. To conclude, money is something that has worth in the eyes of the beholder. As long as something is valuable to someone else it has worth. The Yap found worth in large limestone coins, and the Brazilians made up worth in the form of URV’s. Even the US is guilty of the illogical perception of money really having worth. As long as people continue to accept these forms of currency the economy will stay a float, but will people ever catch on to the ugly truth. The truth that money is only paper and rocks. So how do things become worth anything? The simple answer is because somebody says so. With this mindset anything can become money, even big stones.
Friedman, Milton. “The Island of Stone Money.” (n.d.): N.p. http://www.karlwhelan.com/IMB/Friedman-Yap.pdf. The Hoover Institution, 1991. Web. 23 Jan. 2017.
http://www.differencebetween.com/author/aron/. “Difference Between Value and Worth.” Difference Between. N.p., 29 July 2011. Web. 23 Jan. 2017.
Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR. NPR, n.d. Web. 23 Jan. 2017.
Wood, Jennifer Shafer. “What Is the U.S. Dollar Really Backed By?” Middletown, CT Patch. Patch, 27 July 2012. Web. 23 Jan. 2017.