Is the Green Real
What really is that item we call money? Our lives seem to revolve around money with daily transactions occurring between each other. Exchanging something for a piece of paper or coins that have “Value.” People work every day and long hours to get a certain amount of money per hour to provide for themselves or family. A question I always ask myself is what if the money just disappeared? I believe we give money value in transactions for the purpose of equal medium, so nobody is short ended.
After reading the article, “The Island of Stone Money” by Milton Friedman, it has shown me new light on what people call money. On the island of Yap, the people use decently large stones for their form of currency. Their island consists of no metals so quarrying stone was the only option. The rocks with value are called fei and are shaped like wheels. Transactions between the people of Yap happen when one person will bargain for something and will simply leave a mark on the rock to show the transaction had occurred. The original owner keeps the rock on the premises due to it being too inconvenient to move. The equal medium in this situation would be the markings on the rock. I feel though in this situation this would not work for our society because we would not view this as equal, and some people may feel short end. This transaction may seem like it would never happen here, but in fact it has. The bank of France didn’t want the U.S to change the gold standard so they asked the Federal Reserve to switch their assets into gold. Instead of sending a boat load of gold across the sea, the Federal Reserve went into the gold vault and simply moved the amount of gold the French wanted into a drawer. If you think about it the money the French had was never really there and the U.S technically lost money for it. This is where the similarities are drawn between this event and the people of Yap. A verbal transaction occurred but nothing was exchanged leading to no actual money being exchanged from one person to another. Even when we think about a huge rock for money and how ridiculous it is, we have to see how in our own system it’s truly not there and we only give it value for a medium of exchange.
In the broadcast, “The Invention of Money” by NPR they shed light on how money is only an idea and really has no true value. In 1933 the U.S decided to use paper as a form of money instead of gold. In all they basically made something invaluable, valuable. Nowadays with banking online we do not physically see this money and it is only information. It is simply an idea for the banks to tell you that they have some amount of money, but you will never see this money, only believe in it. In 1990 Brazil was experiencing high levels of inflation and caused prices to rise from month to month. For decades people lived with 80% inflation and when grocery shopping, shoppers would try and race the price changers to get products at a somewhat reasonable price. The problem originated in the 1950s when the president at the time decided it would be a great idea to build a new city and they lacked funds for the city. To change the lack of funds they decided to just print a bunch of money causing the inflation problem. In the early stages of trying to combat this problem they tried to freeze the prices and make it illegal to raise prices. This in turn did not work and then they tried to make money not a thing and this also ultimately failed. Brazil turned to four economists to help solve this issue and had lots of pressure riding on them. They believed in attacking inflation at its true roots and turning off the printing press and creating virtual money. One of the main aspects to this plan was stabilizing the faith in the people that the money would work. After years of horrible inflation, the physical currency only caused more problems and by giving this virtual currency value it changed the country completely. In conclusion the economists found a perfect medium of transaction and resulted in a perfect system with no inflation.
What if printing money to deflate the economy was actually valued for businesses to invest in their consumers. In the article, “The Curious Case of Japan’s Economic Stimulus” by Paul Krugman, it tells how Japan is valuing their money in a different way. Prime minister Shinzo Abe decided this was best for the economy of Japan and in fact it was and is currently doing better than the systems we developed. In 2009 there was supposed to be an economic catastrophe for Japan because of this, but instead interest rates rose and slowly dropped to the current rate of under one percent. Abe defied what we know and our current systems and created a huge value of money to invest in the value of businesses. By creating more valuable products to spend on this in turn created a better economy and also a great market for consumers with little to no inflation on products. Instead of only focusing on the medium of exchange the Japanese government focused on the businesses themselves and they in return grew for the economy.
I believe we give money value in transactions for the purpose of equal medium, so nobody is short ended. Money is different to all societies with other societies using other forms to show it or even the ideas behind. We all use some kind of representation of transactions, but I believe it is truly money when it is an equal medium of exchange. This idea of this number we own or work for isn’t really there and in order to find true value in our economy we use numbers and information to express it.
Krugman, P., Kelly, K., Barclay, M. L., Luthra, S., Wilkins, B., Queally, J., Yerman, M. G., Kang, S., Zhang, S., Walker, C., & Corbett, J. (2013, January 22). The Curious Case of Japan’s Economic Stimulus. Truthout. Retrieved February 13, 2023, from https://truthout.org/articles/the-curious-case-of-japans-economic-stimulus/
“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)