What’s it Worth?
During everyday life, people do not always stop and think about the form of money and how it has grown and changed through different eras. Before we started talking about the idea of money in class, I hadn’t either. After listening to the NPR broadcast, “The Invention of Money”, I was quick to understand that even though the form of currency we use has changed, the idea is still the same. This only opened up my mind to try and better grasp what money really is and how crazy it can be.
“The Invention of Money” brings a lot of great points into view. The NPR Broadcast explains different forms of currency, its history, and tries its best to explain what “money” truly is. Money technically has no value unless we give it one. It’s a strange concept but one that makes perfect sense. Money was just paper until we were told it held value. This is one of the things that intrigued me most since I had never realized it before. Technically anything could be given a value if the right person says it, and this can best be seen beginning on the island of Yap.
Milton Friedman’s piece “The Island of Stone Money” quickly dives into talks about an island known as Yap. Yap was a small island civilization that had a form of currency called Fei. Fei is “large, solid, thick, stone wheels” that were formed hundreds of miles away and brought to the island. Since there was no metal on the island to create coins, they had to use this limestone. One of the most significant facts being when fei is exchanged it technically does not have to go into the new owner’s possession, it is just acknowledged. When the island was sold to the German government, fei was still used since it is what held “value” to these people. If patrons didn’t abide by what the government said, “fines” would be enforced, and black crosses would be drawn across the fei. When the debts were finally paid, the crosses would be removed.
The island of Yap clearly had a system of currency that worked well for them even though they could not tangibly exchange it. Even after Germany became apart of the situation, they also adapted and were able to keep track of who’s money was who’s. Also mentioned in this article is how the United States did something very similar to this in the 1930’s. The Bank of France worried at one time that the United States would not stick to golds standard as they did. With this being said the French asked the United States to convert their dollar assets to gold and instead of shipping them put them on Frances account. The United States Federal Reserve Bank literally “went to the gold vault, put in separate drawers the correct amount of gold ingots, and put a label mark on those drawers indicating they were property of the French”. Even though there was no physical movement of currency the U.S dollar was made weaker and the French was stronger from this transaction. This is much like we see in the current world today.
In the U.S there is an overwhelming use of credit cards, Venmo, Apple Pay, and other forms of electric payments that have taken over our economy. Even paying your bills now days is done through the touch of a button and not an actual exchange of currency, kind of like fei. You physically don’t have the money, but it is still being exchanged as such and deducted from a bank account. The US dollar is not as tangible as it one was. Its being developed to become more and more digital. Personally, half of the money I own I have never even seen since it just is deposited into my bank account. This knocks down a lot of barriers to what the meaning of possessing money actually means. For me, all of this information poses the question, will paper money diminish completely?
The currency of money is always advancing and changing as previously stated. Jeff Reeves wrote an article called “Bitcoin has no place in your -or any -portfolio”, in which Reeves speaks about a form of money in today’s world. Bitcoin is “digital currency that took the world by storm”. It technically has no true value and is only worth what the next bidder will pay. This is confusing and still a very new concept. It isn’t regulated by a central bank and since its all-digital, Bitcoins can easily be stolen. Things such as these put this form of currency at risk and make citizens skeptical to invest in it. Although there are some downfalls, Bitcoin allows for a world of new “innovation and improvement in how transactions are made”. For now, Bitcoin will continue to make advancements, but it will be interesting to see where it goes and how other digital currency evolves as time goes on.
The saying “money makes the world go round” is one of the truest statements. Everything runs through the process of money and the economy depends upon it. It is confusing, complex and really takes a lot of research to truly understand. With time money will continue to advance and take on new forms depending on what’s important and holds value. Money isn’t necessarily real in the way we are but will always be represented as such. Limestone, gold, paper, coins, or electronic all represent money and tie us together in the same sense. As a coin shortage has begun, maybe electronic money will be the next world standard. For me it’s interesting to think about what could possibly even be next in store after electronic payments. The monetary system is now something I view as unique and unpredictable. Understanding not only our own current currencies, but past, and other countries present currencies, is important for the future of where we take money and how we can evolve it.
Friedman, M. (1991, February). The Island of Stone Money. Retrieved September 21, 2020, from https://counterintuitive2015.files.wordpress.com/2015/01/stonemoneyessay.pdf
Glass, I., Joffe-Walt, C., Blumberg, A., & Kestenbaum, D. (2018, February 19). The Invention of Money. Retrieved September 21, 2020, from https://www.thisamericanlife.org/423/the-invention-of-money
Reeves, J. (2015, January 31). Bitcoin has no place in your – or any – portfolio. Retrieved September 21, 2020, from https://www.marketwatch.com/story/bitcoin-has-no-place-in-any-portfolio-2015-01-28