Counterintuitive Spring 2023

The Power of Faith in Intangible Money

As a child, seeing my mother purchase food for the family and work late hours made me understand that money was crucial to everyday living. However, one day I saw the need for money intensify when I witnessed people with sorrowful faces stretching out their hands for spare change. That image stuck with me forever and my view on money was how much it was the center our lives. Never would I have thought that our money’s value was based on our faith and the idea of money was all in our heads.

In the media, money is often viewed as corrupting and controlling over people’s lives. Yet, according to Brazilian’s economic history, money is actually controlled by people’s faith. Brazil once faced economic crisis because of a huge inflation. According to NPR Broadcast’s “The Invention of Money,” the government printed too much money, which lowered the value of it and made it difficult for the citizens to afford goods. A memorable story from the broadcast was when people rushed in to buy food before the sticker man placed the changed prices. You could image the horror of having your cash loosing its value each day; people lost faith in their currency.

The surprising solution to this was introducing fake money, called Unit of Real Value, also called urv. By making the prices of the items in urv, the prices was able to stabilize. Gradually, more people started to use the fake money and have more trust in the currency. As a result, urv became the official type of money and people were able to finally afford things. This plan was successful because people had faith it, which demostrates how much power people had over money.
While Brazil suffered inflation, Japan experienced the opposite. Japan had a problem where people were not spending enough money, making the economy slow. In Hiroko Tabuchi’s article, “Japan Approves $116 Billion for Urgent Economic Stimulus,” it stated that the government was “pumping mor e money into the economy” so that the Japanese people could spend more. Though Japan is already in debt, Japan has a lot of problems to overcome such as the shrinking population and income. Consequently, the government is putting much effort in doing their best to give people a better income and more job opportunities by spending even more money. Clearly, the value of money in a country is heavily weighted on the people.

Another thing I realized is the value of money is decided in our minds whether we are able to hold it in our hands or not. For example, according to the broadcast there is this island called Yap, and the civilians there use gorgeous limestone sculptures as currency. What is interesting about their type of currency is the variety of sizes of the stone money . Another thing that is fascinating is the larger the stone, the more it is worth and it has even gone to a point where these stones would be created taller than the person who owns them; being too heavy to carry, people would usually stick a pole through a hole in the stone money and with the help of multiple people, roll it to places or they would leave the money in one place. If the money stays in one place, how could the owner purchase anything? There is actually no need for documentation or an exchange of papers, but to announce the transaction in front of the villagers and the purchase would be complete. What makes these stone money valuable is the fact that limestone is not found anywhere in the island. The people have to sail to another small island and make the stone money and sail back to Yap with the heavy stones. There was an incident where one of the heavy stones had to be dropped off the boat due to a vicious storm and the stone sank to the bottom of the ocean. Despite it never returning to the island, it is still valuable and part of the owner’s wealth. I thought that the people should at least be skeptical. After all, what if the person lied about making the huge stone, what if it doesn’t exist?But then I soon realized how much of my money didn’t exist as well.

The NPR broadcaster did a wonderful job at demonstrating how much of the money in America did not exist when he asked how much money is out there. People couldn’t even count that because the money in the bank is given to other people to borrow. What we truly have is only a number on a piece of paper or on a computer system of the amount we have, but physically we do not own it.

Ultimately, I find it really scary that the amount of money we technically own isn’t physically out there as ours but I am also relieved that when things go wrong, people are the one who truly accept and decide the value of money.

Works Cited

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” Npr.org. NPR, 4 Oct. 2010. Web. 6 Sept. 2015

Krugman, Paul. “The Curious Case of Japan’s Economic Stimulus.”Truthout. Truthout, 22 Jan. 2013. Web. 08 Sept. 2015.

Tabuchi, Hiroko. “Japan Approves $116 Billion for Urgent Economic Stimulus.” The New York Times. The New York Times, 10 Jan. 2013. Web. 08 Sept. 2015.

“The Invention of Money | This American Life.” This American Life. N.p., 7 Jan. 2011. Web. 04 Sept. 2015.

A Trusting Agreement: Money

We all know that our money, at least in the United States, is worth…well what it’s worth. We rely on the Federal Reserve to do its job by deciding the value of each unit of money and we all agree on that. What we do decide, as the people using this money, is how much our goods and services are worth using money as a base. The trade of goods since the time of bartering has always been about exchanges of similar value and money has not changed that but only become an intermediate for such exchanges. Other cultures’ forms of money may seem ridiculous because of the differences in values and the way it is handled but the concept of money is the same across all forms of curreny in all cultures.

The island of Yap has a form of currency made of stones that can be so large, they are traded only through the simple agreement of exchange and trust of ownership. This type of exchange is no different from a gold exchange between the French and the United States where the only change that was made was the label on a drawer of gold and the agreement of ownership of that gold. Not only do these very large exchanges rely on trust but our everyday exchanges as well. We trust that the cashier at Wawa values a bag of chips at a dollar and he trusts that we will give a dollar for those chips. The trust we have in money is what makes it valuable, not what the money is made out of. But because many people see it as the other way around, they find trading stones for homes but it is no more ridiculous than changing numbers in bank accounts with pieces of paper.

We trust in our government to give value for the money in our pockets and our bank accounts but Bitcoin, the solely electronic form of money, is only based on the trust of the other Bitcoin users. Those exchanging the Bitcoin agree on the value of it and the value of the goods being traded and agree to trade Bitcoin for goods. That being the only point of reference for the value of Bitcoin, this newborn form of money has had its value has had its value up and down like it is still learning to be money. Why would we trust the dollar bills in our pockets if one day it can buy a bag of chips, the next day a cow, and the following day only a grain of rice? For Bitcoin to grow up and stand on its own, it needs more people to trust in its value and agree to use and accept it, like any other form of money. With the creation of bitcoin, we have witnessed the birth of a new form of money and we are able to analyze it every step of the way giving us a better understanding of the concept of money.

Money exists because each form has enough people that trust it and agree to use it. No matter the material or purpose, the concept of money is universal. We trust that our money has value and agree on how much things are worth and that is how we conduct business.

Money and Perception

I believe that perception is everything. If you perceive something to be true, whether it is actually true or not, it becomes your reality. Do you believe money has value, whether or not you can hold it in your hand, or see the invisible power it has when you swipe your credit card? History has shown us faith in currency can save countries, and dictate appropriate societal behaviors. History has also shown us that if people lose faith in their government, and their economy, then chaos is the result. So the question is, is money real or is money fictional? I say that it depends on your perception. As a science major, when I hear the phrase “money makes the world go round”, I think it is actually the conservation of angular momentum that makes the world go round, and that the Earth continues to spin because of inertia.   But then again, it is a matter of perception!

For example, an imaginary currency called the URV was imperative in the recovery of Brazil’s economy in the 1990’s, which I learned about through the NPR broadcast, The Lie That Saved Brazil. In the 1990’s, inflation was at a staggering 80% per month. The problem began when the government started printing money to compensate for the trillions of dollars spent on building a new city. Subsequently, every dollar lost 50% of its value when new money was printed. Prices of goods and services changed on a daily basis. The people of Brazil stopped believing in the currency, stopped believing in their government, and this caused the economic chaos. Inflation became the number one political issue in Brazil. President after president tried to fix the problem with no success. The solution was to stop creating money and to stabilize people’s faith in money using an imaginary currency called the URV. The URV prices never went up or down, never increased every month, and most importantly, renewed the people’s faith in money. A currency made up by a few men became a real lifesaver to the people of Brazil.

Another example where perception is everything is the story of the island called Yap. In Milton Friedman’s essay, Island of Stone Money, he tells the story of vast wheel- like stones that were used as currency by the islanders, and were often saved for big purchases, like to buy a house or to bring back a soldier who died on enemy territory. However, unlike pieces of paper or coins, these stones were hardly moved. They would sit in one place and only the owner would change. If it was purchased, the people would know who it belonged to and respect it. When the Germans took over the island, they noticed that the footpaths were in horrid conditions. They recruited the people of Yap to fix them. Yet, the people of Yap were unwilling to do so. The Germans decided to mark a symbolic black X over the stones and claim them. The people of Yap worked hard on the roadways until they looked like new, so the Germans went around and erased the black X’s and everything returned to normal. The perception of the people of Yap that these stones have monetary and religious value would obviously not be shared by people of New Jersey.

My final example of how powerful perception is when it comes to currency is my grandfather’s idea of keeping his money safe. My grandfather grew up during the Great Depression, and witnessed his family suffer the loss of all their savings when the banks failed, and there was no insurance to replace the money lost. He watched his father struggle to find work, and provide for his family during a time of poverty and despair.   My grandfather is a hero, serving in the overseas military during World War II. Between his pension and social security checks he does not want for much. He has a credit card, and a checking account for his mandatory direct deposit for Social Security checks, however he has no faith at all in the government protecting his wealth. Anyone investing in the stock market is an absolute idiot in his eyes.   So my grandfather keeps his stacks of paper money hidden in the proverbial mattress, and has purchased gold coins which are probably buried in the back yard or hidden in the basement walls for us to discover later. I learned that the power of person’s life experiences can dictate perception, and my grandfather is a stellar example. I asked my grandfather if money is real to him, and he pulled out a stack of gold coins and gave me one. He told me its value is around $350, give or take. So not only did I learn an interesting story about my grandfather’s past, I am also $350 richer!

Works Cited

“The Invention of Money | This American Life.” This American Life. N.p., 7 Jan. 2011. Web. 07 Sept. 2015.

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” Npr.org. NPR, 4 Oct. 2010. Web. 7 Sept. 2015

Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.

Phillips, John. “Bitcoin: What to Expect in 2015.” CNBC. N.p., 15 Dec. 2014. Web. 07 Sept. 2015.

Reeves, Jeff. “Bitcoin Has No Place in Your- or Any-portfolio.” Market Watch. N.p., 31 Jan. 2015. Web. 7 Sept. 2015.