The Difficult Understanding of Money
Most people’s goal in life is to be financially stable to the point where they don’t have to stress about certain things. How does one become financially stable though; Money is always the answer. Money dictates a lot of things in our life. For example how we are educated, how healthy we are, and the overall quality of living. We all strive to obtain an abundance of this paper or virtual paper we call money. The value of money can go up or down depending on the country you’re in and the period you’re in. If you think about it, money is just paper or random numbers to let us know how good or bad we are doing in life. Society has established a certain amount of money on each paper to differentiate them. The idea of money keeps people waking up every morning and chasing their dreams and to one day be financially stable.
In The Island of Stone Money by Milton Friedman, he talked about how people on the island of Yap use stone money as a form of currency. The author talked about how when they make trades they will usually keep the stone untouched at the former owner’s land even though he doesn’t own it anymore. Having money is an idea and mindset as shown by the people of Yap because even though they don’t physically have the stone with them they have the stone in their name and head. This process is similar to the United States process when they started to move from gold to paper. Over time, people got tired of holding the heavy pieces of gold so the banks took the gold and exchanged it for paper money which we use today.
In NPR’s podcast, The Invention of Money by Ira Glass discussed the 2008 financial crisis with Jacob Goldstein who is the author of Money: The True Story of a Made-Up Thing. Jacob asked his aunt who is a very successful businesswoman what happened to all the money that just vanished. His aunt stated that “money is fiction.” The money never really existed in the market like they said it did. All the houses used to be worth a certain amount but plummeted which is the reason why all the money was lost. All the houses just lost their original value. Essentially no money was lost during this financial crisis the money was just devalued.
To look deeper into the idea of money being an idea and fictional we can look at The Lie That Saved Brazil by Chana Joffe-Walt. The Brazilian government tricked 150,000,000 into believing their money had value, when in reality it didn’t. Brazil had a problem with inflation due to the president wanting to build a massive city in the middle of the jungle. The government didn’t have the money to build that city so they just printed more and created more money from nothing. As each year passed with them building the city, the money in Brazil became more worthless by the day. A beer manufacturer stopped making beer during this saying, “making beer just takes too long. You buy all the wheat and the hops and by the time it was brewed everything was worth so much less.” The money in Brazil was losing its value as soon as they got it like a car right when you drive it off the lot. This shows you money is fictional because even if you get a $100 bill that bill might not be worth $100 in an hour. The value might decrease to $98 but it’s still the same bill.
As I was reading the article regarding the Bitcoin, E currency it was interesting to see how fast something could drop so fast. On Wednesday the price of bitcoin was at a high $266, but then on Friday, it dropped to $54. In three days the price of bitcoin dropped $212. This goes to show you how unrealistic money is, and that is just the idea of a person. No one would have been able to predict the drop of bitcoin to plummet that far down because no one knows how much the world has. On the contrary, having electronic money may be good to save space and make it lightweight but it is definitely easier to steal your money earned. In 2014, Mt.Gox hackers were able to make off with bitcoins that were worth roughly $460 million dollars.
Money isn’t always in the form of paper or coins. It can be in the form of a virtual presence called e currency. Jacob Goldstein stated that, “the most money he has or gets paid is usually direct deposit.” He never actually physically touches the amount of money he makes every pay cycle. When you pay bills online money never changes hands. The numbers on the computer will just change on your screen. You just see numbers from the other side of the screen. For example, bitcoin is a very popular virtual currency that is made from complex computer coding. It can be accessed virtually by anyone on the computer. You never really see your bitcoin money unless the user wants to cash out. The 21st century is heavily influenced by technology and how to make our lives easier. This way of money is starting to become the new norm in society.
To think about the concept of money is very complex and difficult to get a full understanding of it. Money has changed in so many ways throughout history from when it was first invented to now. The idea of the money went from having heavy coins, to having printed paper, to replace the coins – to now having virtual money and credit cards and people rarely seeing their physical amount of money. We could see inflation starting to rise due to the fact of the growth of the economy and how fast it is moving with e-currency on the rise. The amount of money will keep going up and down as the economy continues to move, putting a whole spin on if money is real or fiction.
Friedman, M. (1991, February). The Island of Stone Money. https://counterintuitive2015.files.wordpress.com/2015/01/stonemoneyessay.pdf.
Glass , I., & Joffe-Walt , C. (2018, February 19). The Invention of Money. This American Life. https://www.thisamericanlife.org/423/the-invention-of-money.
Park, H. Money’s Role in Society. Money’s Role in Our Society. http://scripts.cac.psu.edu/users/h/w/hwp5131/Assignment%205.html.
Reeves, J. (2015, January 31). Opinion: Bitcoin has no place in your – or any – portfolio. MarketWatch. https://www.marketwatch.com/story/bitcoin-has-no-place-in-any-portfolio-2015-01-28.
Renaut, A. (2013, April 13). The bubble bursts on e-currency Bitcoin. Yahoo! News. https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html.
What is MONEY? Jacob GOLDSTEIN’S book Explains ‘SHARED FICTION’. (2020, September 8). https://www.npr.org/2020/09/08/910586930/what-is-money-jacob-goldsteins-book-explains-shared-fiction.