Wealth means success, and has been throughout history. One achieves wealth by holding a great amount of money. Since the beginning of time, humans have used physical currency for trade. Physical currency is simply an object that holds monetary value. What type of physical money is exchanged depends on the area in which you live. Some examples include stone or paper. In modern times, however, the physical form is becoming obsolete and society is using more electronic platforms such as apps and debit cards.
Milton Friedman’s, The Island of Stone Money, discusses their means of currency. Friedman is referring to the Micronesian’s German colony of the Caroline islands. More specifically, Friedman informs his audience of the Yap people, who reside in the island of Yap. Different from the US’s form of cash, or paper money, they used stone. On their island, they have no metal so they resort to stone. This medium of exchange goes by the name of fei. Fei, according to Friedman, “consists of large, solid, thick, stone wheels ranging in diameter from a foot to 12 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”(pg 3). Because of the size and weight of fei, their people rarely move the physical object and rely on acknowledgement of the transaction instead.
In the United States, citizens used gold as means of currency. Over time, people agreed that gold was inconvenient and it was replaced with paper, or cash. The process of this transformation consisted of gold backing the paper that people physically held. It is not that simple today, however. Jacob Goldstein looks further into the concept of modern day currency. Some questions arose including, “where did all that money go?” and “was there a big fire somewhere which burned up a lot of dollar bills?” when speaking of the stock market. While having a conversation with his aunt, she answers his questions by stating, “money is fiction.” To put it into simple terms, money can lose or gain value through inflation. With that being said, money is just an idea. Currently, we use electronic platforms to pay our bills, purchase objects online, etc… There’s no actual money being handed to one person to the next, they’re just numbers that go up and down in a system. Money is a concept created by people, changed by people, and traded by people. There is no concrete value of money, making it a confusing concept to comprehend.
Bitcoin is another example of how modern day money is just a concept. In Jeff Reeves, “Bitcoin has no place in your-or any-portfolio”, he argues that bitcoin is unreliable and nobody should participate in this digital currency. The reason behind this thinking is that bitcoin holds no true value and the only worth is based on how much someone is willing to pay. Reeves is correct in saying that it holds no value, but to say that nobody should get involved with bitcoin for that reason can be said the same about cash money. It is understood that money is just a concept, so there is little that differentiates the reliability and validity of cash money and bitcoin.
Friedman tells the interesting story of a wealthy Yap family. The family’s stone lay under the sea. An ancestor went to retrieve the stone but a storm arose. The team made it out of the storm, but the raft and the stone were left stranded. Even though the stone was not in the family’s possession, it was still accepted as if it were on land next to the family’s house. As Friedman states, “Unless you are very unusual, your immediate reaction, like my own, will be: ‘How silly. How can people be so illogical?’”(pg 5). Modern day currency can be looked at as just as illogical as the story of the Yap family. Their wealth was agreed upon the same way that wealth today is agreed upon. If cash money in the US isn’t backed by gold, and can lose or gain value, currency is just information…a concept that continues to shift with time.
It is mind boggling that money is such an essential aspect of our society yet it is all but reliable and understandable. From our society today in the US to the Yap people, currency is made up and holds no true value. As technology becomes more advanced, the future will not hold anymore physical currency and will all be digital. Monetary value will continue to diminish, further proving the idea that money is fictional.
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.
Reeves, Jeff. “Opinion: Bitcoin Has No Place in Your – or Any – Portfolio.” MarketWatch, MarketWatch, 31 Jan. 2015, http://www.marketwatch.com/story/bitcoin-has-no-place-in-any-portfolio-2015-01-28.
The Invention of Money. 19 Feb. 2018, http://www.thisamericanlife.org/423/the-invention-of-money.