How Much do you Believe in Money?
My main goal in life is to land a well-paying job and love what I do. Money is definitely something I care about and would want to make a lot of for my future. When considering starting a family, buying a new house or renting a new apartment, the first thing people think about is finances. Finances control how many groceries we can buy, how many cars we can own or how much time we could have. Our society revolves so much around currency and we lose the thought of what money actually is in its physical form.
The physical aspect of the American dollar comes down to ink and paper. Anybody can go out and buy some ink and paper, but they cannot make it into money. American dollars are specifically made with specific designs that must be printed perfectly but when it comes down to it all, money is just paper. What can possibly be so special about paper? The ideas behind paper are simple but hold a strong purpose. A one-dollar bill has no difference then a 50 dollar bill other than design and resemblance. Why should they be considered so different when they are made of the same materials and transferred the same?
The importance of dollar bills and coins are starting to dwindle. Personally, I don’t think they will go away but the demand for cryptocurrency is rising. Online paying is starting to take the world and the money being transferred is virtual. Amazon is a huge example of an online service that you can find almost anything and order it to your house. Different shipping methods can determine when it gets to your location. Clothes stores, such as Sears, are getting hit hard because their business is being dealt online. Occurrences like these bring up questions like “is physical money actually important?”
When you leave money at the bank they keep it in a vault. Banks let people who take out loans and money to use your money but the concept of your money always stays in the bank. The money you entrust in the bank does not actually exist anymore due to it being spent and borrowed elsewhere. I can write a check to someone giving them $500 dollars but the money in my account technically never gets damaged because it was never there. The physical money we have with ourselves is the only physical proof we actually have money. Now does physical proof actually matter? Can the price of something be swayed on the sentimental value of it to the buyer and seller? What if the seller doesn’t believe something has much value to it but the buyer thinks otherwise?
There is an island in the pacific named Yap. The people of Yap have a much different economy than ours physically but the concepts may not be too far off. The currency of Yap includes giant rocks of limestone carved into wheel-like shapes. These boulders of limestone never originated from the island of Yap which make them special. If I were to want to buy a house I would lay ownership of my limestone to you. Now that I don’t own the limestone, it is not my priority to move it.
Logically you would think that cause a problem. because how would one move it without heavy machinery? No need to panic, you don’t actually have to move it at all. The rocks are much too heavy to move and nobody would want the chore of moving these weighted rocks after every transaction. The people of Yap just pass around ownership rather moving the rock. There was once a case of people sailing back from an island with the freshly carved limestone but a nasty storm flipped the boat. The people made it back to Yap safely but the rocks were lost forever. Referring back to their economy, that did not matter as long someone had ownership of those rocks. Someone somewhere on Yap has the ownership of those rocks and they will continue to be passed on through transaction.
Rocks and the economy of Yap may seem to us as a much different system but the rocks are no different than the banks. You may not have the rocks yourself but the value placed on them is yours to keep. The values of different things can be very subjective but we need to keep a price so that the economy can hold a system. Different economies have their ups and downs. Brazil’s economy was saved by 4 scholars and is now a well respected economy to follow. Inflation is always a risk we do not like to talk about but the solutions may not be so difficult to find ourselves. It all comes down on how much you believe in money.
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991
“The Invention of Money.” 423: The Invention of Money. This Is American Life, WBEZ. Chicago . 7 Jan. 2011.
Reeves, Jeff. “Bitcoin Has No Place in Your – or Any – Portfolio.” MarketWatch, MarketWatch, 31 Jan. 2015, www.marketwatch.com/story/bitcoin-has-no-place-in-any-portfolio-2015-01-28.