A Fiction that We Choose to Believe: Money
When we think about the value of money, it’s possible to say that it is seen as the main need of today’s world. Our lives are based on it and anything else can be bought with money, even money itself. As cash didn’t exist from the very beginning, people created other ways in order to facilitate exchange, such as bartering and metal coin. But these exchanges always depended on the value people gave to objects. For instance, people would give twelve eggs to receive two pounds of flour, because they believed that twelve eggs were worth two pounds of flour. Today we do the same thing with a piece of paper, we believe that a paper printed with number five can buy a coffee from Starbucks. Yet, there is something that doesn’t make sense in this transaction. A paper wouldn’t help improve our lives like a bunch of eggs, because it has no value unless we give it.
The first form to realize a trade between people was bartering and money was created as a substitute for it. By time, trading became popular and some other issues related to determining the value of goods showed up. Suppliers didn’t have any proof that items are legitimate and didn’t provide any consumer protection. For example: it’s normal to think that a product you would like to get is worth more than it actually is, the other person could end up underestimating the value of your product. To avoid such problems, the Mongol emperor Kublai Khan invented the very first paper money, which didn’t surprise me because a great domination is needed to convince everyone to give value to a simple paper.
In the late 19th century, the stone money started being used by the island of Yap, an island that was used to be German colony. In his book, the American anthropologist William Henry Furness III says ‘’“[A]s their island yields no metal, they have had recourse to stone; stone, on which labor in fetching and fashioning has been expended, is as truly a representation of labor as the mined and minted coins of civilization.’’, and continues ‘’Their medium of exchange they call fei, and it consists of large, solid, thick, stone wheels, ranging in diameter from a foot to twelve feet, having in the centre a hole varying in size with the diameter of the stone, wherein a pole may be inserted sufficiently large and strong to bear the weight and facilitate transportation. These stone ‘coins’ [were made from limestone found on an island some 400 miles distant. They] were originally quarried and shaped [on that island and the product] brought to Uap [sic] by some venturesome native navigators, in canoes and on rafts …’’ Those heavy rais were used up to a century ago, they would be exchanged for food, used as a gift or salary. If the stone had a story, its value would increase. Rai owners would have documents of the stone and if someone would buy it, documents would be given to the new owner. Yet, stones wouldn’t be removed, they would remain in the same place.
Even money’s value seems to be given by people, when a problem occurs, it’s not that easy to fix it. You cannot print out some money and save the economy. But Brazil did. Itamar Franco government created a solution called ‘’o plano real’’ (the real plan) to save its economy, which was stuck with hyperinflation. Brazilian people lost their confidence in the government’s money unit, but through that tricky plan the government saved its money and its public. Did it work? Yes. When the Real Plan was created, on July 1, 1994, R $1 was worth exactly US $1. In October of the same year, the dollar came to cost around R $ 0.82. The plan clearly was successful.
Money’s meaning varies from person to person, yet its value doesn’t. Because we all agreed to believe in money fiction.
Friedman, Milton. The Island of Stone Money. Hoover Institution, Stanford University, 1991
Laporta, Tais. ‘’R$ 1 chegou a valer mais que US$ 1 no passado; relembre’’. GLOBO, 22 Sept. 2015, http://g1.globo.com/economia/noticia/2015/09/r-1-chegou-valer-mais-que-us-1-no-passado-relembre.html
“The Invention of Money.” This American Life, 19 Feb. 2018, http://www.thisamericanlife.org/423/the-invention-of-money. “What Is Money?
Jacob Goldstein’s Book Explains ‘Shared Fiction’.” NPR, NPR, 8 Sept. 2020, http://www.npr.org/2020/09/08/910586930/what-is-money-jacob-goldsteins-book-explains-shared-fiction.