Stone Money Draft-a1175

The Changing Of Money

Money can visually be seen in so many different ways, but at the end of the day, everyone sees the concept of money the same way. Whether it’s US dollars, cruzeiros, URVs or feis, they still have the same job of paying for items. People put their faith into the idea that there is money out there that belongs to them, even if they’ve never seen any of it before. Some people have so much faith of invisible money belonging to them that they continuously buy items in thinking that they have a ton of money that will last a lifetime. 

The Island of Yap had an interesting visual of money. In Milton Freidman’s “The Island of Stone Money” he tells us that “their medium of exchange they call fei, and it consists of a large, solid, thick, stone wheels… these stone ‘coins’ [were made from limestone found on an island some 400 some distant],” (Freidman 1991). The fei is considered to be very valuable due to the fact that a person has to travel a long ways away on a boat to pick a fei up. Feis were used to make big purchases such as a daughter’s dowry because of their value and rareness rather than everyday purchases. When a person decides to buy something, they give new ownership of the fei to the person they are buying from. The fei will stay in the same place no matter who owns it. A person could never see their fei, but they believe that it is in fact wherever it was said to be. Having faith that money is there can also be seen in the Brazil financial system. 

In 1990, Brazil’s inflation was at an all time high at 80% a month. In the American Life “The Lie That Saved Brazil”  podcast, Chana Joffe-Walt explains how inflation worked. “So think about those sunglasses. Say they’re selling for $10. One month later, with 80% inflation, the price is $18. Six months later the sunglasses are $340. And by the end of the year, that price tag reads more than $10,000,” (Walt 2011). People living in Brazil’s community had to figure out ways to get goods without spending a fortune and making them broke. The Brazilian inflation was so bad, that when people made money from their job, the value of it decreased as soon as the money was in their possession. Four economists eventually came around with an idea on how to end this inflation. They came up with the concept of URVs which was virtual currency. The URVs was like a credit card system; buy now and finish paying later. These economists were somehow able to convince the Brazil community into using this system which was pretty impressive considering no one actually had any idea if the money was there or not. The Brazilians probably had faith in this system because this was their last hope in getting rid of inflation so they figured they should give it a try. This is the same idea in how Americans pay for items. We buy it, put it on our credit cards and when we eventually have the money, we pay off the rest. Most people probably would not own half of the stuff they own today if they did not have trust in the invisible money. 

Americans also have their faith in the Federal Reserve for all of their money needs. The Federal Reserve decides if the country needs more or less money. If the Fed makes the wrong decisions, than the value and faith in the currency will lesson. The Federal Reserve is its own institute, so the only thing the government has to do with the value of money is that they print a number on the dollar bills. The Fed uses the computer to transfer money to the banks so that they can put money in the economy for everyone to access, leading to the idea of loans. In 2007, the financial crisis started, having the banks and firms on Wall Street not looking so hot. They needed money so they all didn’t hit rock bottom with their assets losing value. The Fed window opened up so the banks and firms could get money. The Fed was creating money out of nothing for all these big businesses. The Fed started to accept all kinds of things from these businesses when they began dishing out money. The Fed’s biggest purchase was home mortgages. If the Fed was not getting anything in return, they would see giving out money to help others as useless. 

A big system of trading money in today’s society is Bitcoin. Bitcoin can be very fluctuating. In Anne Renaut’s article “The bubble bursts on e-currency Bitcoin,” she shows us that Bitcoin is fluctuating when saying “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,” (Renaut 2013). The difference between Bitcoin and all the URVs and other invisible money is that Bitcoin eventually stops making money. Bitcoins can be sent directly to other people without having to go through the trouble of banks. The problem with Bitcoin is that there are many people waiting to hack into the system and wipe everyone’s pockets clean. So although it is easier to not go through banks, it is also easier for money to be taken from someone. 

The credit card system is big in Brazil and American communities, but now for Americans it’s changing even more. The physical credit card is starting to make a disappearance and is coming alive through phones. In Yoav Vilner’s article “The age of credit cards may be coming to an end-and that’s a good thing” he makes the point in telling us the benefits of everything being electronically now. “Users face issues ranging from hackers and fraud to lost and stolen cards,” (Vilner 2017). PayPal, Venmo, Apple Pay and CashApp are the most popular ways people transfer money to others now. Most people are into online shopping as well, which means that the credit card number is needed for the order, but the actual card is not needed. Even the way that people are dealing with their money is moving with the modernity of the world. 

The recurring theme in all of these is creating money from nothing. People are putting their faith into the system and believing that there is money for them. The value of money is ultimately coming from the faith people have. There could be numbers written on a bank statement or on a banking app on phones that tells a person how much money they should have, but in reality no one actually knows where the money is at that moment. 

References

Freidman, Milton. (1991, February). The Island of Stone Money. Retrieved from: https://counterintuitive2015.files.wordpress.com/2015/01/stonemoneyessay.pdf 

Joffe-Walt, Chana. (2011, January 7). The Invention of Money [Audio podcast]. Retrieved from: https://www.thisamericanlife.org/423/the-invention-of-money

Renaut, Anne. (2013, April 13). The Bubble Bursts on E-Currency Bitcoin. Retrieved from: https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html

Vilner, Yoav. (2017, December 15). The Age of Credit Cards May Be Coming To An End-And That’s A Good Thing. Retrieved from: https://www.cnbc.com/2017/12/15/yoav-vilner-the-age-of-credit-cards-may-be-ending-and-thats-good.html

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3 Responses to Stone Money Draft-a1175

  1. davidbdale says:

    A, there’s a lot of good explanation here and a faithfulness to your chosen theme that demonstrates your ability to pursue a narrative across several paragraphs and examples. When I return for a more thorough analysis, I’m going to try to help you clarify your claims about credit, which are muddying your argument a bit, particularly in your explanation of the Brazilian URV. A conversation might be the faster way to accomplish that give-and-take, so if you happen to raise the topic at your first Mandatory Conference, we might have time to get started on your feedback then. If not, watch this space for an expanded reaction to your draft.

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