Counterintuitive Fall 2024

1. Belgium: Senate Approves Measure Allowing Doctors to Euthanize Children

It seems counterintuitive that individuals ranging in age from adulthood to even childhood have the right to physician assisted suicide through the process of euthanasia, when most people have a high regard for human life and view suicide as morally wrong, but that is exactly what’s happening in Belgium legally since 2002. The Belgian Senate passed a law extending euthanasia to children with disabilities while the previous euthanasia law limited people to be at least 18 years old. The law specifically granted minors the right to request euthanasia under certain conditions as well as extending the rights to request euthanasia to adults suffering from dementia. Due to the fact the law did not set a specific age limit, children who are euthanized would have to “possess the capacity of discernment.” Although euthanasia is legal in several countries in Europe, Belgium is the first country in the world to not enforce age restrictions.

The extension of the euthanasia law sparked outrage amongst pro-life advocates who argue that the law is being used as a way to “cover-up medical errors.” Pro-life advocates also argue that life should be valued, regardless of the type of disability a person possesses in which it is the government’s responsibilty to use exisitng research to provide care and relieve symptoms for patients who are phyiscally suffering in a moral way. 

2. Vancouver combats heroin by giving its addicts the best smack in the World

https://www.pri.org/stories/2015-02-04/vancouver-combats-heroin-giving-its-addicts-best-smack-world

It seems counterintuitive that heroin addicts would be provided clean syringes filled with the world’s best heroine while being under the supervision of a nurse, but that is exactly what’s happening in Vancouver, Canada- especially in one town notoriously known as the “Downtown Eastside.” Vancouver has tried to address their heroin problem for years, and in response the city created a safe zone for heroin addicts called Insite. This program treats heroin addicts by giving them free heroin two or three times a day prescribed by a doctor on a daily basis. Currently only 26 people living in Vancouver are receiving heroin treatment from the Insite program.  

As for heroin addicts who didn’t take heroin alternatives to get clean or tried countless times to defeat the heroin habit but failed, doctors then decide to use an alternative form of treatment called harm reduction which involves giving doses of heroin everyday to heroin addicts in order to keep them relaxed, focused and obedient. Furthermore, this alternative treatment plan prevents heroin addicts from causing harm to themselves and society by giving them the drug that they most desire and crave without going through extremes to obtain it ex:prostitution and theft. The harm reduction program has its roots in Europe in countries like Switzerland, Germany, Britain and the Netherlands.

Those opposed to harm reduction programs believe it is a form of blackmail in which the program targets the most severe heroin addicts because there is no hope for them getting off the drug and therefore providing them heroin daily in order for the addicts to remain obedient in society. They believe this form of treatment is a nicer way of killing them legally. Medical practitioners in rehab centers treating heroin addicts- even the most severe argue that they are able to get their patients off heroin addictions without using the harm reduction approach.      

3. Do Multivitamins Really Work?

  It seems counterintuitive that multivitamins do not actually make healthy people healthier, but there is mounting evidence proving exactly that. Nearly a third of Americans take vitamins regularly, believing the $28 billion supplementary industry that they create nutritional wonders. Despite the supplementary industries claims that multivitamins fend off chronic illness; a 2009 study conducted on postmenopausal women discovered that the multivitamins didn’t protect against any of the dieases studied which includes heart disease, lung, breast and colon cancer.

Furthermore, habitual vitamin users get their portion of vitamins from food alone more than nonusers.This proves to show that the foods we are consuming on a daily basis have an adequate nutrient intake. Due to the fact that there are increasingly more fortified foods in supermarkets, it is not difficult to consume and exceed the daily limits for certain vitamins and minerals in which in some cases it can potentially be dangerous; for example pregnant women who consume vitamins containing a retinol form of vitamin A increase the risks of birth defects. Although health officials recommend multivitamins to picky-eater kids, anorexics and specific supplements for certain categories of people like vegetarians for example, nutritionists tell their healthy patients to stop worrying about vitamin consumption and focus more on their diet.

It also seems counterintuitive that the Food and Drug Administration doesn’t regulate the labeling of supplements when the purpose of the administration is to protect the public health of Americans, but unfortunately that is the case. In a study conducted on 60 common multivitamins, Consumerlab discovered wrongdoing with roughly a third of the vitamin label claims. By forcing multivitamin manufacturers to put a warning label on they’re supplements it would highlight the potential health risks associated with the vitamins that customers should have a right to know.  

Money: Humanity’s Greatest Collaborative Illusion

While civilization has grown and become more advanced over the years, many thinkers have begun to question the reality of everyday concepts we hold dear to us such as beauty, morality, truth, etc. What if one were to suggest, however, that even money isn’t real? On the surface it sounds ridiculous; there are billions and billions of concrete bills and shiny objects that people trade with each other for an abundance of things. It’s practically the backbone of every stable civilization, manifest in what’s called the “economy.” However, evidence from ancient civilizations to the Brazilian economy suggests that money has become little more than an abstract concept, dependent almost entirely on the faith of the people in its worth.

From 1899 to 1919, there was a group of islands called the Caroline Islands, owned by a German colony. The westernmost of these islands was called the Island of Yap, with a population ranging from five to six thousand. The people of Yap, like most civilizations, had their own currency. The commodity they used to represent their currency, however, were much different from the standard American dollar: giant limestone disks. The rarity and beauty of such limestone disks was the reason they chose them to be their standard of trade; workers from the island traveled over 400 miles to an island chock-full of limestone. When they mined the limestone and shaped them into disks, they gleamed with a bright creamy-white color. Since their limestone disks were so huge and came in scarce amounts, one was worth as much as a house. So, completely different from American currency, right? Not exactly.

One day, Yap workers mined and shaped a beautiful, ginormous limestone disk and attempted to sail it back to their home island. That attempt was thwarted by a terrible sea storm, which gave the workers no choice but to rid themselves of the giant disk so as to lighten the load. When they got home, the workers told the people of Yap of the unfortunate event that resulted in the loss of such a valuable commodity. However, the people were okay with this and believed the workers’ story. They decided that, though it was at the bottom of the sea hundreds of miles away, the limestone disk retained its hefty value and was still owned by a Yap islander. This set a new precedent: money was no longer strictly represented by concrete objects, but rather the idea of money. The value of money was to be dependent on what everyone agreed and would gradually become more abstract.

When the German government assumed ownership of the Caroline Islands, they noticed its coral roads and highways were in bad condition. They threatened to enforce a hefty fine on the islanders unless they fixed the roads. The islanders didn’t budge. Representatives of the German government arrived to enforce the fine by painting black crosses onto the people’s stone disks to show that they had been claimed by the German government. This frightened the islanders immensely; they believed that this mere act of painting the stone disks meant that they no longer owned them. As a result, they relented and fixed the highways. Their efforts were met with relief when the Germans came back to remove the marks.

A similar event happened when the United States changed their currency from gold to the American dollar. The French government was worried that the United States would not stick to their original cost of gold in dollars, so it asked the Federal Reserve Bank of New York to convert the dollar assets it owned into gold. To avoid the complications and inconveniences of shipping its gold, the French government asked the bank to keep its gold and label it as belonging to the French. And, suddenly, a public freakout occurred in the US. Americans were worried that this simple act of storing the French’s gold and labeling it dramatically lowered the value of American currency.

What does the interaction between the Yap and the German government and that between the French and the United States indicate about the value of money? The Yap agreed that the value and ownership of their currency would never depend on the physical location of their respective commodities. The French held the same viewpoint and thus trusted that, though it was stored in America, their money would still belong to them and retain its original value. We have gradually changed our views of money from a golden rock that depends on physical ownership to an idea of money that depends on intellectual ownership. If that wasn’t enough of a testament to the power of the faith of the people, one may find the results of lacking such faith even more interesting.

Back in the 1950s, the Brazilian government decided to build a new capital in Brasilia. But it lacked the money to do so. They came up with the idea to print loads of more money to cover the cost. This “brilliant” idea backfired as inflation rates skyrocketed, resulting in decades of economical collapse. Presidents came and went with promises to fix the economy that never came to fruition. By the nineties, the inflation rate was 80% a month, and people had lost nearly all faith in the value of their currency. That was until everyday economist Edmar Bacha and his drinking buddies were asked to fix Brazil’s problems. They came up with a wild solution: create fake money.

That fake money was called the URV, a new “virtual” currency that became the new standard by which Brazilians would make exchanges. The only difference was that, while the inflation rate of the standard cruzeiro would still be running frantic, the value of the URV would remain the same. This gave the people of Brazil the illusion that the prices of their goods and the value of their money would not change, despite the inflation of the cruzeiro. As a result, people slowly regained their faith in the value of their money and inflation rates dropped. When it was seen that inflation was no longer a major problem, the Brazilian government got rid of the cruzeiro and replaced the URV with the real, a more concrete currency. The fact that a government was able to trick over 150 million people into believing they had real money is incredible, but it was the people’s faith in the value of their money that truly saved Brazil’s economy.

The URV was not the only completely virtual currency. In 2009, the Bitcoin, a completely fake currency, was invented by a student. It’s obtained, or “mined,” by spending hours performing calculations on a computer. The resulting Bitcoin is then transferred to the user’s hard drive and, though it’s nothing more than an unofficial virtual currency, could be spent at various places. Bitcoin, another form of currency backed solely by numbers and the idea of money, singlehandedly changed the world’s economy. It was a new and uncertain but used widely because of its excellent ability to provide reliability and trust; it did not fluctuate depending on the political and economic influences of other countries.

The value of money has become inherent more so in the idea of money and the faith of the people than the rarity or beauty of some golden or limestone commodity. The people of Yap did not care about physical ownership when it came to the value of money; all that mattered was that they agreed that they owned the money. The faith of Brazil in the value of their money proved to be a powerful influence and turned the Brazilian economy completely around. Currency may change and come in more new forms in the future, but one thing is for sure: when it comes to money, faith is everything.

References:

“The Invention of Money.” This American Life, 19 Feb. 2018, http://www.thisamericanlife.org/423/the-invention-of-money#play.

Friedman, Milton. “The Island of Stone Money.” The Island of Stone Money(1991): 3-7. Web. 25

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR, NPR, 4 Oct. 2010, http://www.npr.org/sections/money/2010/10/04/130329523/how-fake-money-saved-brazil.

Renaut, Anne. “The Bubble Bursts on e-Currency Bitcoin.” Yahoo! News, Yahoo!, 13 Apr. 2013, sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html.

                                    The Essential Role of Trust in the Global Economy 

Trust is, and has always been at the foundation of the global economy. That trust has been tested, strengthened and weakened for hundreds of years and its importance prevails amongst societies around the world. The reason why money functions as a medium of exchange is because people trust in its value. Throughout history, it becomes evident that the economy does not thrive using money, rather it is trust. When the economy gains the trust of its people, then every aspect of the economic market becomes more profitable. Brazil’s inflation crisis along with the U.S banking panic of 1933 and the islanders of Yap demonstrates how individuals trust in the economy is closely related to economic activity. 

In the NPR podcast “The Invention of Money: The Lie That Saved Brazil,” Chana Joffe-Walt discusses how Edmar Bacha- an economist from the Catholic University in Rio and his colleagues tricked the citizens of Brazil into saving the country from inflation. 20 years ago, Brazil’s inflation rate skyrocketed to 80 percent per month. As a result, stores had to change the prices of their products everyday. 

 Brazil’s economic dilemma dates back to the 1950s, when the Brazilian government printed money to develop a new capital in Brasilia. Unfortunately, by the 1980s, Brazil’s inflation pattern was set in stone. Throughout the decades, the Brazilian government was only capable of convincing every Brazilian that the government was incapable of controlling inflation. In order to combat this epidemic, the finance minister of Brazil contacted Edmar Bacha and his colleagues to help save Brazil’s crippling economy. They designed a plan to “slow down the creation of money,” but most importantly “stabilizing people’s faith in money itself”.The goal was to trick the Brazilians into believing that the money will remain valuable. 

Bacha and his colleagues developed a currency that was “stable, dependable and trustworthy”, but the catch was that the currency would be virtual. The economists called the new currency a Unit of Real Value (URV). The Brazilians were still allowed to use the existing currency which were the cruzeiro- but “everything would be listed in URVs”. The only thing that changed Brazil’s economic system was “how many cruzeiros each URV was worth”. The economists ended up developing an idea for Brazilians to start “thinking in URVs” and “stop expecting prices to always go up”. 

After a few months of the Brazilian people using URVs, they began noticing that the prices in URVs were stable. Once that trend began, the economists declared that the URV currency would become Brazil’s new form of currency which would then be called the real. As a result of the currency change, inflation ended and the country’s economy turned around for the better. In the following years ahead, “Brazil became a major exporter and 20 million people rose out of poverty”. 

Brazil’s inflation crisis demonstrates how the real magic behind restoring their economy was not remedied by money, rather it was using the power of technology to regain and build trust amongst the Brazilian people. This inflation crisis relates to the U.S banking panic of 1933 which was also caused by the lack of faith in the stability of the currency and the economy as a whole. 

In 1932-33, the Bank of France was apprehensive of the possibility of the U.S not maintaining the gold standard at the original price of $20.67 per ounce of gold(Friedman, Milton).Since France was concerned about the value of dollars they owned in the U.S and as a result wanting more tangible monetary value in their possession to maintain their fiscal security; According to Friedman, “France asked the Federal Reserve Bank of New York to convert dollar assets that it had in the U.S into gold”. To avoid shipping the gold across the ocean, France asked the Federal Reserve Bank of New York to hold the gold on France’s bank account. The Federal Reserve Bank then took the initiative to go into their vault and place the correct amount of gold ingots into separate drawers as well as labeling them- specifying that they were the property of the French. Although the gold that belonged to the French didn’t travel back to their country, everyone knew that the gold belonged to them.

Headlines were then produced in the financial newspapers about “the loss of gold” and how the French demanding their gold threatens the American economy. The U.S gold reserves were decreasing in value while the French gold reserves were increasing. The economic markets viewed the U.S dollar as less valuable while the French franc obtained more value. Unfortunately for the U.S, due to the “drain” of gold from France- this became one of the factors that led to the banking panic of 1933(Friedman, Milton). 

The U.S banking panic of 1933 demonstrates how skepticism and suspicion creates the opposite of trust as well as ultimately leading to a depleting economy. Skepticism caused the American people to question the reliability of the market which lead to a decrease in economic activity and an increase in suspicion. Thankfully for the Islanders of Yap their economy demonstrated the opposite: an economy in which people have an undeniable strong faith in the currency.  

In the western Caroline Islands, lies the tiny Pacific island of Yap. According to Milton Friedman, author of “The Island of Stone Money,” the inhabitants of Yap carved limestone deposits into massive stone discs located 400 miles from a distant island, and later brought them back to the island of Yap, where they began using them as a form of currency. The people of Yap believed the stone discs represented something unique and required hard work to obtain which resulted in making them a valuable form of currency. The stone discs appeared to be in the shape of a donut, ranging in size from small (just a few inches in diameter) to gigantic (12ft in diameter). The intrinsic value of the stone discs depended on the size of the stone (the bigger the stone, the more value it obtains) as well as quality of finish. 

Due to the enormous size of the stones, according to the NPR podcast “The Island of Stone Money”, the people of Yap would “talk about how the stones themselves were not changing hands at” in which “most of the time they wouldn’t”. The stones weren’t used for everyday purchases because of how valuable it was to the people. As a result, the people of Yap agreed that a stone has a specific owner and depending if the stone is exchanged- even without moving the stone, everybody on the island knew that the stone belongs to a new owner. Furthermore, the stone itself does not have to be on the island in order to qualify as money. For example, one family on the island of Yap is notable for having the biggest stone and therefore being the richest- but they had never seen their wealth for the past two or three generations because the stone rests at the bottom of the sea. 

The islanders of Yap demonstrates how a primitive society is capable of developing a currency that works effectively to create a culture of trust as well as creating an environment with open communication which leads to transparency amongst their people. 

Trust is a form of currency and is at the foundation of how we interact with one another. Furthermore, trust is a human instinct in which we tend to over-complicate when it comes to the economic world, but it is our responsibility to create a culture of trust in order to maintain financial stability in the economy. Throughout history, it is apparent that a lack of trust can hinder a global economy while trust gained from individuals can increase economic activity and maintain the financial security of a global economy. It can also be concluded that in order to rebuild and maintain trust in the economic system, banking institutions and or the government must work towards a new operating system that puts the interests of the people first.   

   References   

Friedman, Milton. “The Island of Stone Money.” The Island of Stone Money(1991): 3-7. Web. 25 

January. 2020.

Goldstein, J., & Kestenbaum, D. (2010, December 10). The Island Of Stone Money. Retrieved 

January 25, 2020, from https://www.npr.org/sections/money/2011/02/15/131934618/

The-island-of-stone-money

Joffe-Walt, C. (2010, October 4). How Fake Money Saved Brazil. Retrieved January 26, 2020, from https://www.npr.org/sections/money/2010/10/04/130329523/how-fake-money-saved-brazil

An Abstract Concept of Wealth

In retrospect, the currency used in society is worthless. Whether it is digital numbers on a screen, bills of paper or stacks of copper and other common metal coins, the value of the material itself is not worth anything. Yet, we associate certain values to certain bills and coins. Therefore, a piece of paper with the number “100” is worth a lot more than the same piece of paper with the number “1”. Both bills have different values than a sheet of blank paper: same materials, different values. As for the digital currency, we rely on a certain number on a screen to tell us how much money we own. We don’t see the cash; we just know we own it. This form of currency is not only gaining popularity, we have seen it before.

Cryptocurrency is a form of currency that is gaining popularity. We do not physically see the money; it is simply a concept that shows us numbers that belong to us. This concept is similar to a form of currency that was used in ancient times. Known as “rai” or “fei”, these were valuable stones that were used as money. Precious metals such as gold and silver were also used as currency in other regions of the world, as they were not present in the islands of the Yaps. Unlike paper money, however, gold, silver, and rai have value because of the rarity and beauty of such material. The people of the Yaps may not understand the concept of America’s physical currency, as paper is incomparable to a beautiful stone. In the Yaps, the larger stones held more value, but were relatively fragile, so these people relied on a system of ownership. Peter Dockrill compares cryptocurrency with the exchange system on an island of Yap. Dockrill continues to explain that cryptocurrency is exchanged by “an open record of bitcoin ownership and transactions spread across multiple computers on the internet.” This technique looks very familiar: Rai was exchanged the same way- openly passing on the ownership of the stone and the label of ownership was agreed upon and respected by everyone.

At one point, Germany took control of this island and marked the stones with black paint. One would assume that this mark would not affect the ownership of said stone because a transaction was not agreed upon. But this mark resembled Germany’s claim on the rai. Milton Friedman gives an example of how this labeling of property can also be seen in America’s transactions. He explains that the Bank of France and America came to an agreement with gold. Instead of shipping the gold and risking the precious metal, “officials of the Federal Reserve Bank went to their gold vault, put in separate drawers the correct amount of gold ingots, and put a label on those drawers indicating they are a property of the French”. There must be a great amount of trust, respect and responsibility that goes into this system, yet I live by it in a similar way. Not only does this type of transaction have to be gold, a debit/credit card goes by the same system. We do not physically have the money; the cash is in the bank. However, the bank lets us know that we own that money by showing us how much money we have on our screen. Personally, I do not care whether the physical bill is in my hand or not; the bank is FDIC ensured, so the value of the money will stay with me until I spend it. In the same way, the belief of ownership was used with the fei.

One day, a large and beautiful fei was found and was intended to be taken home. But there was a terrible storm that night and the fei was lost at sea. The absence of the fei did not affect the wealthiness of the current owner, since the loss was not the owner’s fault. Everyone in the village still knew that though they could not see or touch the stone, but the owner still had his label on it until it were to be passed on. Personally this seems to be even more abstract than it already does. If a valuable material were to be lost I feel there would be a sense of loss in wealth or value, as there would be no physical reminder of the wealth and future generations would have no proof of the fei even existing other than the beliefs of others. On the other hand, the owner still owned the fei and was wealthy, though the precious stone would have never been seen again.

When Brazil was dealing with inflation, the prices of products increased drastically. The government helpless tried to fix the problem but nothing seemed to work. One small group of graduate students had an idea that saved the country from inflation. Chana Joffe-Walt spoke to Edmar Bacha, one of the individuals who introduced the bold idea that saved Brazil. “The idea was to create a stable, dependable and trustworthy form of currency that was listed in everyone’s wages, called a Unit of Real Value(URV).” Ironically, the currency would be absolutely fake. Every product would be worth a certain amount of URVs and would stay the same price for a period of time, yet the actual value, in cruzeiros, would change. The “conversion” between cruzeiros and URVs would also change to balance out the purchase. It gave the appearance that the prices for products were beginning to stabilize, which it did. This plan amazingly brought Brazil out of its inflation, bringing millions of people out of poverty. Once the actual prices of products were stable, “the URV was extinguished and replaced with the Brazil Real at an exchange rate of 1 URV to 2,750 Cruzeiros(brickendon.com)”. Brazil was able to solve an economic crisis with currency that did not exist. This concept of money is very impressive; the simple belief of value truly does make a difference.

The public’s faith in currency is critical. That is what gives it value. Money can be seen in many different forms: stone, metal, paper and even in a virtual state. The public’s trust in the currency system ultimately sets a merit among these units.

References

Brazilian Real – The power of government intervention. (2018, May 31). Retrieved from https://www.brickendon.com/articles/brazilian-real-the-power-of-government-intervention/

Dockrill, P. (n.d.). The “Original Bitcoin” Was This Giant Stone Money on a Tiny Pacific Island. Retrieved from https://www.sciencealert.com/the-original-bitcoin-still-exists-as-giant-stone-money-on-a-tiny-pacific-island

Friedman, M. (1991, February). The Island of Stone Money. Retrieved January 3, 2020

Joffe-Walt, C. (2010, October 4). How Fake Money Saved Brazil. Retrieved from https://www.npr.org/sections/money/2010/10/04/130329523/how-fake-money-saved-brazil

                      Most parents place a lot of effort trying to teach their kids the value of a dollar. It is an extremely difficult concept to grasp for children, and the concept does not get easier as you grow. Truth is, the older we grow, the more we realize that money truly is a concept and not a very physical thing as opposed to the way it was years ago. Nowadays, you can pay someone back without physically handing them any money. Apps like Venmo and CashApp are used to send someone money electronically and you are able to transfer the money directly into your bank account. The only noticeable difference is that the numbers on your screen increase. The “value” of the dollar is extremely difficult to be taught since the value of any currency is constantly fluctuating. 

                The people who lived on the islands of Yap realized they needed a monetary system which consisted of using stones. The citizens of Yap picked the heaviest and rarest stones that required the most effort to obtain. The interesting part is that people were content with accepting ownership if the size did not allow you to move it. They used stone until the Germans started marking the most expensive stones, fei, which led the people of Yen into believing they were poorer since it did not belong to them anymore. History repeats itself in the U.S. in the 1900s when France wanted their gold and asked the U.S. to place it in a different drawer. The country freaked out because it was France’s gold despite it being on U.S. territory. This is proof that money is a concept rather than a physical item. Money solely depends on people’s belief in it. 

                 A high inflation in brazil caused extreme difficulty to the people to run their economy. The value of the currency changed so frequently depending on the plan each president had to get rid of inflation. The government continued to decrease Brazil’s money value by printing more money. Although, prices were increasing everyday, products would get cheaper which would often result in businesses shutting down because it took too long to manufacture their goods. Brazil had a huge problem until four professors fixed it by tricking the entire country into using a completely different currency. There was a conversion chart put out each morning to let the people know how much it is worth that day. The government  got rid of its own debt by creating a new monetary and adopting it. The people all choose to move on because it meant starting fresh and having a regulating economy. It all involved around a virtual economy proving how essential people’s faith is when it comes to money.

                 Bitcoin is a virtual currency which can be bought using U.S. dollars and can be used to purchase things online. It holds a higher value because it costs more dollars to purchase a bitcoin. According to Renaut, Bitcoin can be used to purchase/trade drugs which is extremely likely. Many people I know have purchased fake IDs through Bitcoin which confirms it is most definitely used for drugs as well. People were learning how to purchase bitcoins in order to buy the IDs. Bitcoins are worth more than dollars which decrease the value of a dollar. Bitcoins are worth more because it is what the inventor wanted it to be which led the rest of the world to believe it without questioning it. Bitcoins are saved on a hard drive once obtained, which again has no physical value. The value is solely in people’s heads because it is what we are taught to believe.

                  Manson, (2017) makes a good point by pointing out that people essentially pay for the experience of things. Even when you purchase a materialistic item, you are purchasing the experience that comes with using it. It is interesting that the people of Yap only seemed to care about the acknowledgement that other people had of their wealth. Even though the money was used to purchase things for the experience as well, their stones represented their wealth while experiences represent ours.

           It is impossible to literally learn the value of the dollar because there is no real value. Any day from today someone else can decide to invent a new currency in which all the people agree to use. It is solely up to the people what money is. The last time money was a physical thing was when we used gold. I cannot grasp why something abstract is so important to everybody. It is very shocking yet interesting to learn about the history of money. It is also intriguing to think about how monetary systems have come a long way since using stones. 

https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html

https://markmanson.net/best-articles

A Valueless Commodity

The currency we use holds no value. A dollar bill itself is not useful or something to be wanted. The only reason people seek out dollar bills is due to the expectation that they will be able to trade them for something that is desirable. This then begs the question as to whether our currency is worth the time we invest to use it. Older methods of exchange like the barter system require no investment and trade goods with intrinsic value. Everyone knows a camel, or a saw can be useful, but modern currency is inedible and lacks the usefulness of any common tool. So why not trade with items of value? Are credit cards, paper money, and cryptocurrency superior to the barter system?

In the heart of South America lies Brazil a country whose hyperinflation was answered by a unique solution that lends a deeper understanding of currency itself. For fourteen years Brazil suffered from hyperinflation, a period in which its currency devalued dramatically. In the PRI podcast “The Invention of Money”, Chana Joffe-Walt communicates the fear present in the people at the time. As within a month goods would routinely cost 80% more than their original price. For example: A loaf of bread that cost $1.00 at the beginning of the month would cost $1.80 at the end and at its peak hyperinflation would increase the cost of bread by over 2000% in a year meaning that same loaf would cost over $2,000.00 a year later. This instability created a run on merchants as consumers wanted to spend their money immediately rather than let it devalue in their pockets. After years the instability seemed to be a constant, but a solution was eventually found by issuing a new currency. The new currency, the Unit Real Value or URV did not affect inflation rates but it was used as a constant placeholder. Instead of seeing prices skyrocket in Brazilian cruzeiros, the value would be listed in URVs which did not change. Upon purchase an exchange rate would be used to determine how many cruzeiros were needed. The solution worked as consumers began to believe cruzeiros were to blame for the crisis and that URVs were a stable solution. After transferring to using the real as an official currency Brazil has seen no difficulty with hyperinflation. It may seem odd that belief a currency was stable could cause it to become stable, but belief is a staple of every currency.

Across the globe in the Pacific Ocean lies Yap, an unsuspecting Island with a curious currency. The fei used by the islanders are stone discs with a hole in the middle. What makes this money truly unique is its size with the largest stones being twelve feet in diameter. This makes them largely immobile so instead of exchanging the giant fei islanders simply acknowledge that ownership of them has changed. In “The Island of Stone Money” Milton Freidman describes a more peculiar situation in which a wealthy family holds possession of a fei whose exactly location is a mystery. While being transported to Yap, the fei was lost at sea and yet it was determined that this fei was still legal currency. This belief that an untouchable object can hold such value may seem strange, but as the Yapese entrust that the fei hold value the fei are exactly that valuable. This belief that an invisible, intangible exchange can trade value is not confined to the island of Yap and has found increasing usage in modern times.

In “The State of Cash: Preliminary Findings from the 2015 Diary of Consumer Payment Choice” credit cards were found to be used exceedingly often and electronic transactions are growing even faster still. These transactions are being carried out without anything physically being transferred. Rather the respective banks of the patrons partaking in the transaction communicate the transfer with one another. The people involved then trust that the banks have faithfully carried out the transaction often without seeing any evidence. This confidence that value exists in absence of evidence mirrors the use of fei on Yap and in other modern currency exchanges.

During the 2008 financial crisis Fannie Mae and Freddie Mac stocks plummeted as their investment in housing collapsed with a housing bubble burst. CNBC’s “Back From the Brink: 10 Years On” it is mentioned how loans totaling roughly $5 trillion dollars were in danger of default and media outlets spoke of the value lost from the economy. Despite the loss no money had left circulation. Instead it was the belief in the value that had changed. The housing bubble began with home values inflating ever onward and ended with the collective belief that they were worth nowhere near as much. The only value that had been lost was the value the general public believed the market to have. As an example: a house that had been worth $1 million dollars and then half as much after the market collapse would not have needed to be compromised to reduce its value. The only difference is that before the collapse consumers were willing to pay $1 million dollars, and after none of them would pay more than half that value after the collapse. This demonstrates that there is no intrinsic value to the goods we buy. Instead only we consumers decide the value of common goods. This value generation does not end with goods as it includes the very currency we use for purchases.

In Washington D.C. members of the Federal Reserve meet to discuss the future of the United States. They decide the value of the U.S. dollar by deciding the rate at which money is added to the economy. In Act 2 of the PRI podcast “The Invention of Money” the method through which the Federal Reserve creates money is explored. The process begins with the U.S. government issuing treasury bonds to finance debt or excess spending. Banks buy the bonds which accrue interest and are a nearly guaranteed investment. When the Federal Reserve wants to add money to the economy it then buys an amount of treasury bonds from banks that has been determined at committee. Although the Federal Reserve can add money by other means, this is the typical method used. This seemingly normal generation of wealth happens entirely digitally so nothing of value has been exchanged. In lieu of valuables the bank is trading an expectation of being paid over time for the belief it has money now. This expectation is based entirely in faith and has no more legitimacy to the faith that goes into any other currency.

Altogether the benefit of any one economic system over another is based largely in faith. If everyone chose to believe that giant stone fei are the only genuine source of monetary value then we would soon find ourselves memorizing each fei’s most recent owner. In the past items of value were traded without an intermediary with the barter system. Today the value of the currency we use is determined by how many electrical pulses move from one computer to another. It is as though we are simply using a more portable version of fei even in today’s era. With the constant uncertainty present in our everyday lives why not use currency with value that is certain? Are we truly better off with this monetary system?

References

Friedman, Milton. “The Island of Stone Money.” The Island of Stone Money(1991): 1-5. Web. 2 Feb. 2020.

Glass, Ira, Chana Joffe-Walt, Alex Blumberg and Dave Kestenbaum. “423: The Invention of Money.” This American Life. Prod. Planet Money. 7 Jan. 2011. This American Life. Web. 2 Feb. 2020

The State Of Cash: Preliminary Findings from the 2015 Diary Of Consumer Payment Choice Wendy Matheny – https://www.frbsf.org/cash/publications/fed-notes/2016/november/state-of-cash-2015-diary-consumer-payment-choice/ Web. 2 Feb. 2020

Olick, D. (n.d.). Decade after housing crash, Fannie Mae and Freddie Mac are Uncle Sam’s cash cows. Decade after Housing Crash, Fannie Mae and Freddie Mac Are Uncle Sam’s Cash Cows. doi: 10.5040/9781780930039.ch-008 Web 2 Feb. 2020