Money Needs Faith
The idea of money is drastically different under varying viewpoints. For children, trading snacks at lunchtime for better goodies is the same as adult men trading services that more or less even out to an equal exchange. Obviously, one is more valuable than the other, but in a child’s mind, a better snack to them is worth that of a service one man can provide for another. In terms of actual currency, some places value a piece of paper, some value simple coins, and others find significant value in stones. One may seem way off when compared to the other forms of currency that are seen as having value, but that’s precisely the point. Money holds a specific value when looking at place to place, not everyone holds money to the same standards.
The island of Yap uses the most interesting yet bizarre form of currency: limestone discs. However these discs aren’t small and they surely cannot fit into one’s hand, they’re actually bigger than the people that use them for money. Due to the height and weight of these stones, the people of Yap simply understand which discs belong to who based solely on word of mouth which passes ownership from person to person. Even the wealthiest family on Yap cannot see their riches as it is currently at the bottom of the ocean, and yet, everyone still recognizes their wealth. While the island of Yap may seem quite bizarre, their tactics of handling their currency is exactly how the United States handles theirs. The idea of using a phone or card to purchase items is comparable to how the Yap use their stones. When using a card, a person will only see the numbers on their account go down and still, they will understand that the company they purchased from got their money without even physically seeing this happen. This is the same concept as the Yap transferring ownership over a stone disc; the stone may not move but everyone understands that the stone is under a new owner.
Similar to Yap’s stone discs and the United States’ electronic form of transferring money, France’s gold situation was settled without any physical proof. Milton Friedman, who also discussed the island of Yap’s interesting form of currency in his “The Island of Stone Money,” described the 1932-1933 gold situation. France seemed to fear that the United States would not stick to the standard price of gold at $20.67 an ounce, so they wanted to have their gold back (Friedman, 1991). The Federal Reserve wanted to avoid shipping the gold, so they simply marked the cabinets that belonged to France as theirs. None of the gold moved and yet everyone accepted that those specific cabinets were France’s and France’s alone. This move can also be related to the banking system. Each member of a bank has their accounts labeled, but even though these members will never physically see them, they will all still understand that their labeled money is theirs and theirs only.
The use of fake money can be disastrous, but for one country, this practice saved its entire economy. During the 1990’s in Brazil, the inflation rates were dangerously high at around 80% a month. In the podcast, “How Fake Money Saved Brazil,” Chana Joffe-Walt walks through the story of how Brazil was essentially saved by four drinking buddies, who also happened to be economists, when the person in charge of economics had zero clue on how to fix the issue after there was some trial and error beforehand. Edmar Basha, who was one of the drinking buddies, talks on the podcast about the plan they had come up with to help with the ridiculously high inflation rates. Basha explained that the currency they would be introducing would be reliable but fake: “We called the unit of real value, URV. Yeah, it was a virtue that didn’t exist in fact” (Basha, 2011). Everyone in Brazil was tricked into believing that the URV was real, which in turn caused a rise in faith of the currency. For any form of money to become successful among a large group of people, there needs to be that solid feeling of faith in that particular form of money. If the faith is not there, then the foundation of that money will crumble and collapse.
In terms of fake money being harmful, up comes the name Bitcoin. This application is a form of digital currency that is bought with real money and then traded among user to user without any interferences. Bitcoins are stored on a user’s hard drive and can be sent to another user while being completely anonymous. In The Bubble Bursts on e-currency Bitcoin,” the European Central Bank has warned that this seemingly innocent application can become a “monetary alternative for drug dealing and money laundering.” This is due to the whole idea that users are anonymous which in turn invites these types of illegal activity to occur. Along with this harmful possibility, there is also the fact that Bitcoin is a very complex application. The software is so complex in fact that it is hard to even generate new Bitcoins (Renaut, 2013). Compared to the case of Brazil in which fake money actually goes some good and solves a country’s economy crisis, Bitcoin seems to only serve as an area to where crimes could take place and rarely would anyone find out about them. The case surrounding Bitcoin is just another reason as to why fake money usually does more harm than it will ever do good.
When it comes down to it, there cannot be a single definition on the value of money. The currency used throughout the world is varied in both looks and the deemed value. For the United States there are dollar bills, for Great Britain there are pounds, and for most of Europe there are euros. However, for places like the island of Yap, the people there use stone discs. While that is hard to believe for most people, the Yap may find it insane that most people nowadays rely on electronic forms of currency, trusting numbers on a screen. Despite feeling as though the Yap’s form of currency is completely out of this world, there needs to be this sole reminder: the value of money is immeasurable as not everyone holds it to the same exact standards.
Friedman, Milton. (1991, February). The Island of Stone Money. Retrieved from: https://counterintuitive2015.files.wordpress.com/2015/01/stonemoneyessay.pdf
Joffe-Walt, Chana. (2010, October). How Fake Money Saved Brazil. Retrieved from: https://www.thisamericanlife.org/423/transcript
Renaut, Anne. (2013, April). The Bubble Bursts on e-currency Bitcoin. Retrieved from: https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html
Bloom, I’ve had only a few minutes to scan your work, but I’m impressed with how well you describe complex situations with a minimum of apparent effort. You’ve been very selective in the details you share, which makes your work efficient. A strong first draft.