The concept of money has always intrigued me, the thought that a 6 by 3 piece of polycotton-linen paper can hold value is truly remarkable. The article has not really changed my view of how abstract the concept of money is because I have in fact always thought this way. The Yap islanders use stones or “fei” as their currency because metals and other materials were unavailable to them. However, the German government viewed these stones as nonsensical because they were different from German currency. Marking the cross on the fei was a way for the Germans to impose a lien on the Yap people, the Germans viewed fei as simple stones and a means to control the Yap, whereas the Yap people viewed this as desecration, rendering their funds useless until the marks were removed. The French bank and the US treasury operated in a similar mindset when they both viewed the separation of the gold ingots as the transfer of possession from the US to France.
In my opinion our view of currency is no more abstract than that of the Yap Islander’s. In fact, our view of money may be more abstract. When the “paper money” system was adopted by the United States it was backed in specie, either silver or gold, and one could exchange paper money directly for gold or silver. But as inflation took place and the system became outdated, the currency was no longer backed by the precious metals, and it was taken over by slips and checks which kept track of how much money one had in the bank. Even after all this had taken place, the United States became further removed from physical wealth by the introduction of ATMs and ecommerce. Many times when shopping online or checking a bank statement on the internet, the only proof that there is money in an account is a number on a screen. As vague and abstract as this may seem, most people have absolute faith in this system. This digital banking would most likely be the most bizarre feature of our current monetary system. And although the Yap extend credit based on ownership of a huge fei, more often than not there is a physical transfer of fei (carried on poles) which is why the US system is more abstract in my opinion.
The value of money is based on our faith in the value of money. Although this may seem strange it is true. The value of the US dollar has risen and fallen with the American mindset. One recent example of this is when we saw a small spike in the value of the dollar against the yen and euro when President Obama took office because many had hope for our future. The intrinsic value of the currency is based on the thought of owning something that can be exchanged for a good or service, even if it is no longer backed by silver or gold. Since the inception of currency this principle has been the basis for its intrinsic value. In this way we can rely on our monetary system even as abstract as it may sometimes seem.