Stone Money–runnerd4

The Abstract Reality of Cash

When someone thinks about the concept of value, they generally think about how much cash or currency something is worth. Throughout history we’ve had many forms of exchange. We have moved from bartering, to metal coins, to a complicated form of paper money, and then  finally to today’s form of paper money. After listening to NPR broadcast “The Invention of Money”, my whole view of money has shifted. The broadcast went into the history of money, along with many examples that made the audience realize that money truly has no value unless we give it value. The funny thing about that is that money itself is worth nothing unless we give it a value. Today, money seems like a simple concept to just about everyone, but the true abstract concept of money is surprising. 

Let’s start off with a brief history of money to give us some background on the concept we will be reviewing today. First, we began with bartering. Bartering is trading one good or service for another. For example, one may have traded a spice for a piece of fabric or the service of a blacksmith for the service of a seamstress. Bartering worked well for business conducted within the same community, but as trade expanded, it no longer suited the needs of the people. Next, people began to use gold or other precious metals to pay for goods or services, but the weight of these metal coins made these transactions very inconvenient. From here, people began to assign value to other objects to make the transactions easier. In the NPR broadcast, they discussed an example of going from gold to objects that were assigned value with the French. The French had stores of American gold, but instead of sending the gold back, they sent a receipt to show that the Americans owned that amount of gold in the French supply. Next, we moved onto a more complicated form of paper money. According to the NPR article “What is Money” with Jacob Goldstein, there was a time in American history where there was actually around 8000 different kinds of paper money; each bank printed their own bank notes and every merchant had to have a certain book to tell them which bank notes were actually valid. This became very complicated so finally, in the United States we moved to currency backed by gold, printed by the federal reserve. Now, as money is no longer backed by gold, the concept of money has become even more complicated, especially taking into consideration the concept of online banking . Cash, or currency, in countries around the world truly has no true value. We have assigned value to each bill and have over time, tricked our brains into thinking that cash itself holds the value. 

Although the forms of currency we have used throughout history seem to be drastically different, they all follow the same concept. In Friedman’s essays, he described the similarity of the events involving two drastically different types of currencies. The Yap form of currency was varied sizes of stones, from small to about twelve feet in diameter, called the Fei. As the Germans took over their land, they wanted the Yap to fix their roads and paths to make them easier to travel. When the Yaps did not do it, the Germans decided to fine them. The Germans saw no point in transporting the enormous pieces of stone that had nearly no value to them, so they just drew a large “X” on the Fei that belonged to the German government. A similar scenario happened between the Americans and the French. When the French became worried that the United States would not stick to the gold standard, the French requested that America would convert all of the dollar assets they had into US gold. Instead of shipping all of this gold to France, they simply put them in drawers and marked them to show that they belonged to the French, just as the Germans did to the Yaps. The two extremely different forms of currencies were viewed the same from the people of the country that the currency came from. The Yap and American people both felt as if they were losing money. The reason for this is because although the forms of currency were completely different, we all add the same type of value to these objects, whether paper or gold or stone, that makes us feel like we’re losing money. 

An example that reveals the abstract concept of money is of the resolution to the financial crisis in Brazil that I learned about in the NPR broadcast, “The Invention of Money”, Act 2. Brazil experienced a period of hyperinflation after printing money to pay for a project that they wanted to complete in the capital. After many failed attempts at fixing this issue, the Brazilian government persuaded a group of four economists to solve the problem. They realized that the main issue was that the people of Brazil no longer had faith in the Crucero currency, because the hyperinflation gave it near to no value. The economists figured out that they should create a new stable currency, called the URV, which would never be printed. The new currency would allow the Brazilian people to have more confidence in their money due to the stability of the URV compared to the Crucero currency. This plan worked as the people of Brazil tricked themselves into thinking that the URV actually had value. Just like the United States Dollar, the URV had no true value unless it was assigned value. 

Ever since we have advanced past the barter system, currency has become increasingly complex. We assign value to objects to make it mean something to buyers and sellers. This idea of assigning value to an object is the same even between the large pieces of stone that the Yap used, called the Fei, and the present day United States Dollar. Now with electronic baking, there is not even an object assigned to the value, there is just a bunch of numbers flying through the internet to represent deposits, withdrawals, and bill paying. Many people view wealth as having a large amount of money, but nowadays, even the concept of being wealthy seems a bit abstract. 

References

Glass, I., Joffe-Walt, C., Blumberg, A., & Kestenbaum, D. (2018, February 19). The Invention of Money. Retrieved September 18, 2020, from https://www.thisamericanlife.org/423/the-invention-of-money

King, N., & Goldstein, J. (2020, September 08). What Is Money? Jacob Goldstein’s Book Explains ‘Shared Fiction’. Retrieved September 18, 2020, from https://www.npr.org/2020/09/08/910586930/what-is-money-jacob-goldsteins-book-explains-shared-fiction

Friedman, M. (1991). The island of stone money. Stanford: Hoover Institution, Stanford University.

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1 Response to Stone Money–runnerd4

  1. Pingback: Reflective- runnnerd4 | Counterintuitivity

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