Is Money Real?

When thinking about money, many people imagine green one hundred dollar bills or rooms filled with riches and gold. But what we often overlook is that money could also be a piece of monopoly paper, a big stone, or even this Starbucks coffee cup right next to me. What is considered money changes will differ from person to person. Like squares and rectangles, cash is considered money but money is not considered cash. Cash will always stay the same. Twenty dollars will always be twenty dollars. However, the value can differ. Twenty dollars thirty years ago will get you a lot further than twenty dollars in today’s society. In order to be considered money, something has to have value and worth. Between different societies what is considered money will change, but whatever they consider their money is because it has value to them.

Previously in America, all currency was backed by gold. In order to buy something, you had to have the value of the product in gold. After 1933, they would get rid of that system. America started using dollar bills that represented the idea of money. Likewise, as explained in the NPR broadcast, most transactions in today’s society are not even with paper money. When getting paid, the company does not handle you a bunch of one hundred and twenty dollar bills. Instead, it goes right into your bank account. Likewise, when paying bills, you are not handing the cable company Eighty-seven dollars in cash which is the average cable bill per month according to cable.tv. How is money so important in our society if most of the payments do not even require anything of value. What I thought extremely interesting during the NPR broadcast is that they do not even know how much cash there is. When depositing money into the bank, that money is used elsewhere like giving someone a loan. Although you still have the money in your account, the physical money is somewhere else. If they tried to count, it would be impossible not to count the same twenty dollar bill multiple times. It is known that the government cannot print money due to an increase in inflation, but since there is a larger amount of money than physical cash how would that truly affect anything? Since the amount of money out there is unknown, how can there even be a value to it?

Another interesting topic in the NPR interview was when talking about the Yap’s. The Yap’s were people on an island that used gigantic stone coins that were taller than a man and heavier than a car. Although these were not for everyday purposes, they had extreme value. Due to their weight, they would not move them around. Rather everyone knew whose stones belonged to who. What I found most interesting about the Yaps was the story of the guys bringing the coins back over to the main island. One day, there was a big storm, and in order to survive, they had to throw the coin overboard into the ocean. When going back to the main island everyone believed them that the coin was at the bottom, so they still had the value of the coin without having the physical coin in sight. At first I thought that was crazy and absurd, but that is just like how our money works. We do not need the physical copy in order to give something its value. Whatever has value in their society will be considered their money. Since they need to get the stones from neighboring islands, there is a lot of work just to get one. Therefore, each stone will have a lot of value. 

When listening to the podcast about how money does not have physical validation to explain its value, it made me think of NFTS or Non-Fungible Tokens. These were created in 2015, but they have recently spiked the interest and popularity amongst many millennials and gen z. The whole point of these tokens is that they are in the form of some kind of digital content. It can be a picture, writing, a skin in a character game, but they are all online. There can even be multiple versions of the same NFT. For example, there are two-thousand different versions of the Karma Key NFT which is just a teddy bear sitting on top of a key. If you buy one of these, you now own the rights to whatever it is you just bought. Many of the more famous NFTs have sold for thousands of dollars with the most expensive one selling for 91.8 million dollars. Like the dollar bill and stone coins, NFTs have nothing to back up their value. And although many people might disagree, they are often just pictures online. We might think the Yaps were crazy for giving value to large pieces of rocks, but we are giving extreme value to a digital picture. Likewise with the Yaps, these tokens are valuable to some people, so their worth is going to increase. Especially ones with limited supply or rarity, they are going to be worth a lot to obtain.

As explained in the Milton Friedman essay, “Our own money, the money we have grown up with, the system under which it is controlled, these appear “real” and “rational” to us. The money of other countries often seems to us like paper or worthless metal, even when the purchasing power of individual units is high.” Unlike previous times, money is never backed by anything of true value. Given by people, what we consider money is whatever object our society has established as value. We may think the stones on Yap’s island are impractical. Likewise, they may think our paper money is impractical. I even believe NFTs having such value is extremely impractical. However, they are all still worth something in our different societies. Value will always be subjective. Some people may want cash over a Venmo. However, they are both worth the same amount in our society. So, next time you go to your local Wawa, try paying for your $1.69 pretzel with a random object. They might find it has more worth than the $1.69 itself.

References

1991 Island Stone Money – Hoover Institution. miltonfriedman.hoover.org/internal/media/dispatcher/215061/full.

“The Invention of Money.” This American Life, 19 Feb. 2018, http://www.thisamericanlife.org/423/the-invention-of-money.

The Most Expensive Nfts Ever Sold – Top 10 List – Business 2 Community. http://www.business2community.com/nft/most-expensive-nft.

OpenSea. “Karma Key 5 #402/1000 – Whisbe.” OpenSea, opensea.io/assets/ethereum/0xa53e7fd6abc0fe9769690af55f19c2b4a13f2bc3/25600050402.

Randy Harward Edited By Mikayla Rivera Share | Nov 17. “How Much Is Cable per Month?” CableTV.com, 17 Nov. 2022, http://www.cabletv.com/blog/how-much-should-i-pay-for-cable-tv#:~:text=TV%20plans%20run%20between%20%2420,plan%20costing%20around%20%2487%20monthly.&text=The%20average%20cable%20TV%20plan%20costs%20around%20%2487.

S, Ravikiran A. “What Is NFT and How Does NFT Work? Everything You Need to Know.” Simplilearn.com, Simplilearn, 27 Jan. 2023, http://www.simplilearn.com/tutorials/blockchain-tutorial/what-is-nft#:~:text=NFTs%20are%20individual%20tokens%20with,transfer%20of%20tokens%20between%20owners.