Money: A Figment of Our Imagination
Money is an item we are all familiar with. It is a piece of paper with green lettering and a number on it that determines its value. Or it is an electronic number that is on our technological devices, that represents the amount of money we have that is located in our bank accounts. But what IS money, truly? Why do we need it? Is it just a form of trade? Many most likely have gone back and forth with themselves about this thought, I know I have. By listening to a podcast and reading two essays about money and it’s past, it allowed me to delve even deeper into the conspiracy about money. And the things I learned are quite fascinating.
In the podcast “The Innovation of Money”, there is discussion about the history of money in the island of Yap. In Yap, they would use giant stone coins as their source of money. Now, you would think they would trade these coins and in return get the item that involved the trading in the first place. For example, you give someone a stone coin to get more wheat. But in reality, there was no trade at all. The podcast had used this story to describe how stone money was used: If someone from your village got killed in another village, you would use the stone money to get your warriors body back. But you would never actually give them the stone, you would just say that they now owned the stone. The stone had remained one consistent place, it was never in one’s physical possession. But its value remained because owning the stone was their form of payment. In fact, in one of Yaps journeys to go where they made these stones, they dropped it in the ocean on the way back to their homeland. The people expecting the stone did not give it a thought, they believed them and still used this sunken rock as a form of currency! Although that sounds crazy, we are still using a variation of stone money today. No, we do not use rocks as payment, but we use electronic money and that has the same concept. When we get paid with direct deposit (meaning the money goes right from the employers account to your account) we never actually see or have possession of physical money. It is just shared and known information; we don’t have it in our hands, pockets, wallets, etc. It’s practically a figment of our imagination.
The article “The Island Of Stone Money” by Milton Friedman restates the story told in the podcast above, but also warns us as readers to think about the U.S and how our past forms of currency relate to the innocent people of Yap before criticizing them. In 1932-1933, France was hesitant in trusting the U.S and our ability to live up to the expectation of the traditional $20.67 for an ounce of gold. To avoid this uncertainty, France had the Federal Reserve Bank in the U.S convert their dollar assets in the U.S. into gold and put them into France’s bank account. So, the Federal Reserve Bank went to their gold vault and placed the correct amount of gold into specific drawers indicating that they belonged to the French. We now come across the same idea as before, people seem to not need physical validation that they own a form of currency. How did the French trust the Federal Reserve Bank (still in the United States!) to put gold bars in their name and not another country, but not believe the U.S would live up to the price per pound of gold? This leaves us with another question: How can we judge history and how people in the past used their money/ what they object used for their money, when we are doing the same thing? Whether it was stones, gold blocks, or paper money, we all believed/believe they hold significant value. But in the end, we all never needed/don’t need to see, hold, or even visit the source of our income. We put enough trust in people to respect that it is ours, and it is someplace reachable, like the French did with the Federal Reserve Bank and their gold.
Lastly, the article “The bubble bursts on e-currency bitcoin” written by Anne Renaut shows us again how money, in reality, doesn’t make much sense. Bitcoin was created in 2009 as a form of investing in currency without the burden of a central bank or financial institution. Understandable reasoning, but what is bitcoin? After reading this article, I truly am still not sure. But what I am sure of is that the money you are invested in is not guaranteed. In the article, it stated that on a Wednesday, a single bitcoin was worth $266, then dropped to $54 by Friday. As I kept reading, I realized that if you want to cash in the money you invested in in bitcoin, you can’t unless someone else is willing and able to buy your bitcoins. What? Bitcoin is electronic money, that is not really ours, unless someone buys our own bitcoin from us, and you can’t get physical money proving you were not scammed from bitcoin…that sounds about confusing and fake as money can get! So, again we are shown that money is pretty much a figment of imagination. Bitcoin shows us that even it is in someone’s (electronic) hands, it is not guaranteed that it is ours until someone buys our own bitcoin from us. This again relates back to stone money, and how it does not matter that money is in our hands, it only matters that it is in our name.
After reading and listening to these sources it has truly convinced me that money is not real/has never been real. Although it is what we use to survive, it still somehow holds no specific value, it is simply a form of watered down, extremely simple, and sometimes invisible trade (if it is not physical money.) I never thought that something so simple like the concept of money, can make an individual think so much about how something practically fake affects our day to day lives.
Renaut, Anne . “The bubble bursts on e-currency Bitcoin.” Yahoo.com. 13 Apr. 2013. 30 Jan. 2015. https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html/
“The Invention of Stone Money.” 423: The Invention of Stone Money. This Is American Life, WBEZ. Chicago . 7 Jan. 2011. The Invention of Money – This American Life
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991. 1991 Island Stone Money (hoover.org)