The Intangible Currency

The idea of success is most commonly measured in how wealthy you are, which means how much money you have. Money is the biggest motivator in the lifelong chase of being successful and we idolize those who seem to have copious amounts of it. In this race to the top, people don’t realize that money isn’t something that you can even obtain, it is only a concept. Most of the money that is exchanged isn’t even real, due to today’s digitized banking system. How much money you have is represented by a set of numbers that appear in your bank account. There are different currencies all around the world and each one has its own set of values which demonstrates that the concept of money isn’t concrete. People’s ideas of success continue to push along the desire to make fictitious money to grow the economy.

Taking a look into the fictional concept of money, the island of Yap is the perfect place to start. Milton Friedman describes in his article The Island of Stone Money that the currency on the island is large, rounded pieces of stone that represent value. These stone wheels could weigh hundreds of pounds and those were used for important transactions. The inhabitants of Yap had no need to bring the large stones with them when making a purchase, it was enough to know who the stone belonged to. Friedman says, “[A] noteworthy feature of this stone currency… is that it is not necessary for its owner to reduce it to possession.” The ownership of the stone had shifted and therefore it didn’t matter that the person who owned the stone didn’t move the stone. It’s difficult for me to understand how the people on the island of Yap were able to just trust in each other to know who the stone belonged to. It was made more clear to me when in the 1930’s the U.S took a similar approach to currency when there was a shift in how banking would be done. Americans no longer would go to the bank to exchange dollar bills for gold, instead the bills were going to epitomize money.

In the NPR broadcast “The Invention of Money”, Jacob Goldstein, producer of Plantel Money and Ira Glass, host This American Life talk through their ideas on the 2008 stock market crash. They dive into the question, where did all the money that was lost go? The answer was that the money didn’t even exist at the start so, there was no money that was physically lost. There had never been a time before this where people were faced with the fact that, as Glass says, “Money is not solid. It’s value could disappear.” What interests me is that on a large scale, there was no knowledge of the fact that money isn’t real and no one had put regulations into place to deal with the phenomenon. No one had even thought to question what money actually is and if it’s even real.

In today’s society, it seems as though we have almost gone backwards when we look at how money is handled. We have gone back to no longer needed to see physical dollar bills to be ensured that the money is actually real. The digital age has progressed the need for the convenience of not needed dollar bills to complete transactions or to even get paid. I started my current job receiving paper checks because that’s what I had always gotten at my first job. I started to have my checks be directly deposited to my bank account when I learned that I could take the step of waiting for a physical piece of paper out all together. I immediately just trusted that the money would be in my account and it would represent the amount I was supposed to be paid for. The idea of money will continue to change as time goes on, just like the GDP.

The economy wasn’t created until the 20th century, before that time there was no way to track how countries were doing financially. During the Great Depression it was clear that something bad was going on in the United States. It was the worst economic downturn in the history of the industrialized world due to the high number of unemployed and failed banks. The government decided that it was going to start calculating the national income. This number was the blueprints for today’s Gross Domestic Product also known as GDP. This number represented a country’s value of all the goods and services they produced in a year. The purpose of the GDP was never to measure the standard of living for people living in different countries. Dianne Coyle, an economist and author of GPD. A Brief But Affectionate History, brings up a valid point when she mentions that GDP is not something that can be measured as if it is a natural object.

It is difficult to think about and fully grasp the concept of money as an intangible currency. When I was younger, I believed that the money in a persons’ bank account was physical bills sitting in a box, in the bank with the owners’ name on it. As I grew older my concept of money changed and I was able to recognize that wasn’t the case. My thoughts on money now is that it is a concept that is universally known but not seen. As the ideas of money, the economy and GDP continue to grow and change their definitions will become more abstract as they will change from being physical to purely digital.

References

Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.

Glass, I. (2018, February 19). The Invention of Money. Retrieved September 21, 2020, from https://www.thisamericanlife.org/423/the-invention-of-money

Goldstein, Jacob. (2014, February 28). The Invention of “The Economy” Retrieved February 16, 2021, from https://www.npr.org/sections/money/2014/02/28/283477546/the-invention-of-the-economy