Money is a Made-up Concept

Money is an economic exchange we used to buy goods and services. We use it in our everyday life to acquire a business, personal wants, or essential needs. A person goes into a store and purchases an item. The worker at the register scans the item and the customer hands them a green rectangle sheet of paper with a number on it. The worker takes this green sheet of paper and hands the customer their item. This thin sheet of paper holds such power that it’s equivalent to the item their purchasing. The concept of money, it’s absurd to think about. After reading “The Island of Stone Money” I have come to realize that money is only valuable because we believe money has value. In other words, if one day our society decides to stop using paper bills as currency then any paper dollar bill you own becomes meaningless, it would just be a green sheet of paper. Money as we see it is fictional.

Michael Friedman reviews the notion of stone money on the island of Yap in German, as well as compares this concept similarly enough to the situation in the Bank of France in 1933. On the island of Yap, after it was purchased from Spain in 1898, the people of this island were ordered to repair the roads of this island. However many disregard it until the government took matters into its own hands, where they send a man “to every failu and pablai….where he simply marked a certain number of the most valuable fei with a cross in black paint.”(Friedman 2) The government did this to show that they owned the stones. People started to then fix these paths only for the government to come back later and erase any black cross marks on the stones. In the Bank of France, France feared that the U.S. would not keep its gold standard at its traditional price. This leads the Bank of France to request the Federal Reserve Bank of New York to convert dollar assets that it had in the U.S. to gold. So once again, the Bank of France asks Federal Reserve Bank to store gold in their account. The Federal Reserve Bank goes to a drawer, places gold in it, and marks it as the property of France. Closely to the way, the government from the island of Yaps marks those stones with a black cross. Money in these situations appears real to the people who use it, whether it is stones or gold. Money is worth something when we place value on it and accepts it holds a value no matter what currency we use. The people of the island of Yaps believe the stones hold value just as the French believe they hold more power and wealth than the U.S. dollar because their drawers were marked. As ridiculous as that sounds, money is made up and we as an individual decide whether or not it holds a worth.

In addition, the NPR podcast goes on about how Brazil’s government tricked its citizens into believing that their currency was worth something again. The citizens of Brazil have stopped believing that money was worth something. There was a ton of inflation and prices would constantly change every week. At that point, people had lost faith in the monetary value. A new proposal was made by the president in charge at the time demanding that the people of Brazil would not be able to take money out of their bank accounts. People then started losing all respect for the government and money as a whole. Then these economists were invited to solve the solution of economics in Brazil. They suggested limiting the amount of paper money that was being made but mainly they had to stabilize individuals’ faith in money. A proposal was made to have virtual currency, to use URV to save the economy of Brazil. Everyone in Brazil had tricked themselves into believing that this fake currency was real. This story of Brazil’s economy just demonstrates how money is real if people trust it’s real. If society as a whole stops believing the currency they hold is no longer real, then it no longer exists, it’s imaginary.

Bitcoin had its first bitcoin crash in 2013 as many predict for this virtual currency. On Wednesday the value of a bitcoin was $266 only to come to a value of $58 three days later. However, Gavin Anderson, the Bitcoin Foundation’s chief scientist predicts that this will not be the end of the bitcoin era. Bitcoin was made by “an anonymous programmer who wanted currency independent of any central bank”(Renut, 2013) during the financial crisis in 2009. Bitcoin is unpredictable so there’s a risk invested in something that doesn’t a “commodity.” The system is complicated and complex since it’s created by complex codes from the computer. The only way you could cash out bitcoin is if someone is willing to buy them. However, this currency can be hacked by stealing or creating its code to create bitcoin, it’s vulnerable. People invested in this bitcoin, either way, knowing that its value is based on how much a person thinks it’s worth. The value of a bitcoin is fluid, all the more making much more sense as to why money is an invented concept by people to believe it holds value in society.

In conclusion, money is an imaginary notion that we give significance to because we believe it. Without the faith of people in society to believe the worth of the current currency, it loses its meaning, and its value overall. Humans need to be convinced that the money we hold serves a purpose or else what is there to believe?

References

Friedman, M. (n.d.). 1991 island stone money – hoover institution. “The Island of Stone Money”. Retrieved February 15, 2023, from https://miltonfriedman.hoover.org/internal/media/dispatcher/215061/full

Renaut, A. (n.d.). The bubble bursts on e-currency bitcoin. Yahoo! News. Retrieved February 15, 2023, from https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html

The invention of money. This American Life. (2018, February 19). Retrieved February 15, 2023, from https://www.thisamericanlife.org/423/the-invention-of-money