Rougher than the Pacific Seas
Our analysis of the abstract concept of money begins in the Pacific Ocean, on the island of Yap. Money is well known to be used as a trading device for goods and services but don’t quite understand the actual idea of the money. This island’s money is made of stone, used just as change would be for the most part, but the unique part of there money is that they have a handful of giant (some 8 feet tall) stone currency that are heavier than a car! Now, these coins (if you can call them that) are meant for the most important/expensive things to them but it’s more than obvious that they cannot be moved easily and without a large amount of either aid or time. So what did the islanders do instead, why they just created their independent idea of virtual/spiritual currency, or rather, just the concept of money. The islanders kept track of who owned the slab and made sure that it was known when they were traded between people and so despite there being no evidence of ownership the rock that was once laying on the ground holds behind it a sense of power, trust, and the concept of money.
The islanders have created something similar to how our money works today. We have trust in the money and understand its value while it is actually a simple piece of cotton or plastic credit card. We perceive its value, think/plan with that value in mind and spend that money with the understanding that you’ll need more for later in case something occurs. This concept may have been different from the Islanders of Yap as their currency is more for everyday things and then large purchases (those 8 foot tall coins) while they probably still traded and exchanged services alongside their shiny rocks but the concept mimics many strange problems and solutions throughout history involving loaning and borrowing money from one nation to another.
Now that the inhabitants of Yap have created this nearly fictitious form of money we may begin to understand our own money. Our money holds the power to purchase anything from your cup of coffee in the morning to a skyscraper in Dubai. The only thing stopping you is how much more of the concept you have in your bank account. Your money you see through bank statements and recent mobile apps are nothing more than ink or pixels blotted on a surface for you to look at. Money exists, of course it does, there are pennies, and nickels, and five dollar bills, and much more, but not all money can be held by that person at all times. When you give a bank your money for interest or insurance the bank gives your money out to a person looking for a loan, that’s your money, that belongs to the bank, that belongs to the person that got the loan, for them to pay back, and for the bank to collect your money back and then keep the profit for themselves. There’s no way to count how much money is in circulation because that money always belongs to several people at the same time.
On top of this possibly new and fascinating news it would be worth mentioning that the Federal Reserve Board doesn’t print most of the money they release into the market they just type a little bit on some keys and a few million dollars have been added unknown to almost no one but them. This concept is a testament to how fragile money can be and a prime example of this is Brazil about three decades ago when the people lost faith in their currency. The whole idea of currency is to have faith in an object that has been bestowed a value and otherwise would be nothing more than a cool trinket. Brazil got to the point where if you were making a good that took more than a few hours to make then you’d be losing vast amounts of money. But, their issue was fixed by reinstating a new currency and forcing people to trust it (more like tricks, but the people didn’t really have a choice whether they realized it or not). People began to believe in a currency and that currency stabilized and completely fixed the inflation issues that were caused by a lack of faith (catalysed is a better word because the construction of a palace is what started it).
France in the early 1930’s had a significant amount of money invested in our economy and when the price of gold was about to change the best solution was to give france their gold as assurance for their investment, but doing that would take time and money so instead the bank labled that the gold belonging to france in their vault in the basement and France found no issue with it. As far as the french were concerned their gold reserves had just increased, and as far as the people in the United States were concerned they just lost a large amount of gold to France and led to distrust of the gold backing their dollar in the bank. Yet the only physical thing that indicated that the U.S. didn’t own the gold was the fact that it was put into a bin that said it belonged to France and a moral code that said we had no access to it and could not use it despite France never wanting to cross the ocean for it.
From giant stone slabs on an island to the French gold in the banks vaults to the modern day keys on a FED employee’s keyboard, money has kept the same core functionality and mysticism since before the days of Yap and works all the same. We’ve also bared witness to the destruction of nations because of its fragile concept and we’ve seen others thrive off it, it’s a strange idea that helps drive our world’s even stranger people.
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.
Joffe-Walt, Chana . “How Fake Money Saved Brazil.” NPR.org. 4 Oct. 2010. 30 Jan. 2015. http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil/
“The Invention of Stone Money.” 423: The Invention of Stone Money. This Is American Life, WBEZ. Chicago . 7 Jan. 2011.