The Perception of Money
When thinking of how one uses currency to purchase products, one gives a physical value in the form of denominations. If in the United States, money has a physical appearance with different set values. For example, there are denominations of one, five, ten, twenty, fifty, and one hundred bills utilized as a form of payment. Further, there are bank checks that can be used to pay when money is not in possession or if the receiving company has a preference. With the introduction of money wired transfers, the idea that a monetary transaction can be made electronically called for speculation of the perception of money. This took the physical aspect of money and gave it a different concept. Therefore, while listening to the King’s, What is Money? Jacob Goldstein’s Book Explains’ Shared Fiction, Milton Friedman’s article on The Island of Stone Money, and Krugman’s The Curious Case of Japan’s Economic Stimulus, the perception of money and its transaction was a phenomenon worth discussing.
To think that something that is not visible or an object with no defined features seems counterintuitive to assign value. In The Island of Stone Money by Milton Friedman, one can assert that value “is in the eye of the beholder.” This notion stems from the foundation that establishes a value system of currency that is provided from immovable stones. In the Island of Yap, the idea of the need to carry, count, or engage in a physical exchange of goods for money as it is done by society today seems like an artificial event. For example, the power to purchase is not so much weighted on an assigned physical number, such as in the value given to a Benjamin Franklyn one hundred dollar bill. In their monetary system, the value was not in the form of a written word; rather, it was in the form of an established idea of the value of the stone and for the purpose that it was being used. In fact, as stated by Friedman, the sunken rock had as much value in the ocean as it would have while in display on the road or in any given space; thus, the sunken stone, while not being seen, still had value and was used as a form of currency. This value assignment and its use allows one to understand the exchange of gold or stock shares between countries. As indicated in The Island of Stone Money, gold was never exchanged between France and the U.S. In this occasion, the gold was simply tagged as becoming France’s property, thus forcing a financial market crisis within the U.S. The gold was never carried from one country to another in a similar manner as it is done on the Island of Yap.
The NPR Broadcast also indicated the idea that a non-visible or undefined object has value. Here, the discussion focused on the idea that money is fiction. This idea of fiction money was motivated by thinking about the loss of trillions of dollars during the housing market crash. Here, the ironic nature of calling money fictional at first had a counterintuitive impression. In this regard, the question that came to mind was if there was no real value, and if the money is fictional, then how can a housing market crash cause a disturbance to the economy? Is the market or the stock exchange also fictional? Perhaps, King in What is Money? also based the discussion on the idea that there is no set value for a particular object that is being used as a form of payment; thus, money is fiction. As an example for not having value, the stones in the Island of Yap had no fixed value. It was indicated that the value of a stone consisted of who was giving it or owned it and for what purpose was the stone being used. This idea seems counterintuitive, especially when trying to make use of the stone for a particular payment; yet, using the same stone to pay for a completely different kind of payment. In this regard, how does one keep track of its value? The answer to this is, “you don’t!” As indicated by King in What is Money?, the stone has a value that differs by its creation and the difficulty of obtaining it. This discussion runs parallel to the established idea of value, and it is used as indicated by Friedman.
Understanding the stand taken by King in What is Money? on fictional money and the idea that a stone still possesses its value even if not present or seen as indicated by Friedman, one can appreciate Japan’s economic stimulus and the fluctuating interest rates as it relates to actual transactions. In Krugman’s article, Japan’s economic stimulus to counter deflation was believed to be crucial to stimulating the economy. Here, a 10.3 trillion dollars in Yen currency stimulus package was approved to allow spending and purchasing by businesses and consumers, respectively. As quickly as the long-term interest rates increased during a specific period due to the economic stimulus, the rates fell as the economic recovery efforts faded. Regarding the transaction of money by Japan’s government and understanding that the ability to carry that much money or have it printed may be a tremendous task, one can speculate that the stimulus was not a real physical transaction. One can make an inference that the stimulus was in the form of a non-visible or physical object.
In essence, the idea that a visible value or physical transaction is required may not be as counterintuitive as once thought. These articles provided the foundation that value and a monetary transaction do not necessarily require physical or visible. One can apply these points of view to the stimulus that was provided during the COVID-19 economic stimulus. Here, one can ask if the stimulus as a form of transaction with monetary value was similar to the idea of value given to a stone; thus, providing truth to indicate that money is fiction.
Friedman, M. (1991). The Island of Stone Money. Retrieved from https://counterintuitive2015.files.wordpress.com/2015/01/stonemoneyessay.pdf
King, N. (2020). What Is Money? Jacob Goldstein’s Book Explains ‘Shared Fiction.’ Retrieved from https://www.npr.org/2020/09/08/910586930/what-is-money-jacob-goldsteins-book-explains-shared-fiction
Krugman, P.(2013). The Curious Case of Japan’s Economic Stimulus. Retrieved from https://truthout.org/articles/the-curious-case-of-japans-economic-stimulus/