Different Money, Different Value
Money is made in all different types of values, shapes, sizes and has all types of different perspectives on it from the people who use it every day. In the United States, a majority of the population, like the middle class and lower class, could earn their weekly salary one moment and then barely have any money the next moment. This is because the lower a person’s income is, the lower their consumption and savings is going to be, and the higher the income is, the higher consumption and savings will be. Moreover, the government does not control how much we get paid, our businesses, our jobs, and us people do. For example, the average income is determined by how much the job pays per hour and depending on how many hours one chooses to work. However, the government does control the value of the U.S. dollar which influences the minds of every single person who uses money. Whether it is a number in a bank account or a number printed on a dollar, the government is the one and only powerful source who has a say on which rectangular piece of paper is equal to one dollar and which one is equal to twenty or a hundred. After reading and listening to the articles and podcasts of Stone Money and the fake money in Brazil, several thoughts were shifted in my mind about purchasing power and medium of exchange as a whole. One may believe the government is the only source that could determine the power and value of money, but truly, it is the people’s faith.
Learning from the article, The Island of Stone Money, author Milton Friedman (1991) illustrates that the value of money is not just determined by the government but also has been questioned by people’s faith in it. Friedman explains in his article when the Federal Reserve Bank was converting it’s U.S. dollars into gold and requested it to stay in Bank of France’s account, people did not realize that it was still their money. Society recognized that money as weaker than it was actually worth, and this proves that money value is not just determined by the government. The Federal Reserve Bank’s perspective is similar to essentially giving a friend some money to hold, but it is still theirs as the friend is just holding it to keep it safe for you. have On the other hand, people look at the situation as if they gave their money to their parents, and now have no control over it, so the money is useless. It is the same thing when the stone money was marked with black crosses and taken over until the streets were repaired, and people strongly believed that the stone money was not as valued as before, when really, it is just a simple mark on a stone.
In addition, the stone money that sank to the bottom of the ocean that Friedman (1991) told his audience was somehow worth the same value even though it was not in the same place as its owner. It is understood that in a similar situation of a wedding ring being lost or at the bottom of the ocean and the owner still claimed it, it still has its worth, but if it is money from today and not stone money, it would be different. I say this because simple dollar bills and coins are not as rare as the stone money from the Island of Yaps. It would be illogical if it were gold at the bottom of the ocean, it may have the same value towards the government and the people. Once again, people want to believe what they believe and faith in, and a simple mark or word could change that.
Furthermore, after listening to the podcast about fake money in Brazil to lower inflation, one may recognize the reaction of many people. If inflation were to keep rising as high as it was back then in Brazil, prices themselves would have exploded and sky rocketed so high that nobody could afford anything. The worst thing to do would have been saving because each day, prices would go up. When four economists finally came to a solution for Brazil’s economic problems, it was very hard to believe. Since the fake Brazilian dollars were new and society would do anything to decrease inflation, it was essentially easy to trust. When the economists created the fake bills, it changed the way people were thinking of spending their money, and overtime, inflation started to decrease. People had a choice to trust the new currency, of course, but in a way, they had to trust it and have faith in it so they did not overspend or spend it all at once. Their faith in the new currency led to inflation diminishing in the country, and the fake currency ultimately became the real currency.
Nowadays, it is very easy to exchange money, essentially with just a push of a button on a person’s phone. For example, in the article Bitcoin has no place in your – or any – portfolio, by Jeff Reeves (2015) conveys to his audience that bitcoin has no underlying value. Also, apps like Cashapp or Venmo are used to transfer money which does not need that much work. Unlike these apps, Yaps had to go through a lot of labor to get stone money and that is why it was so rare. People had so much faith in their medium of exchange, but that has lessened over the years due to cash, debit or credit cards, or even apps being so convenient and so common. However, people do still trust and have faith in their money because they worked for the money and it is a source used to exchange for satisfaction. Even if it is in a different country, money may have a different value or people may have a poorer perspective of it. At the end of the day, the money cycle will continue to flow as long as people never lose the unquestionable beliefs and faith.
Friedman, M. (1991). The Island of Stone Money . Retrieved February 2, 2020, from https://miltonfriedman.hoover.org/friedman_images/Collections/2016c21/Stanford_02_01_1991.pdf
Reeves, J. (2015, January 31). Bitcoin has no place in your – or any – portfolio. Retrieved February 2, 2020, from https://www.marketwatch.com/story/bitcoin-has-no-place-in-any-portfolio-2015-01-28
Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR. NPR, 4 Oct. 2010. Web. 13 Sept. 2016.
OMGMafia, I’ve had only a few minutes to scan your work, but I see you’ve managed to cover a lot of material in just a few words. I also see you’ve discovered how difficult it is, in just a few words, to convey a new idea to people who haven’t read the source material. For example, nobody who hadn’t already listened to the NPR podcast would know what you mean by “money marked with black crosses.” We’ll work on that skill together in the next class.
Thank you, that was hopeful, hopefully we can review that in class.