The valuable paper called money

   How interesting it is to know that everything in this world revolves around green piece of paper yet it’s nothing more than simply an idea. It’s not believed to be just any rectangular paper instead there’s something valuable on it which makes it important. Sometimes as long as money is there it doesn’t physically even have to be there. In fact the people of the Yap Island, far by pacific used hard enormous rock which just sat on dry sand. It seems very shocking and unusual for me to learn that something like a stone can be used as money. These gullible preindustrialized folk of Yap believed that the rock resembles how wealthy an individual is. Now imagine taking large stone rocks to pay for Rowan University tuition fees. Since this heavy rock, twice the height of human was unmovable; people were allowed to just call it their ownership. There was need of paper work or putting in safe place like we do now days.

First time when I read Milton Friedman’s article, it all seem like made up story of people of yap using a stone as currency system. After getting in-depth information from this article called The Island of stone money by Milton Friedman, I realized this historic yap situation is similar to current USA money concept. The Yaps had fixed mindset of thinking money is still part of the owner even after they lost possession of it in storm incident. Similar to today’s world, physically money isn’t taken out it’s simply just numbers changing through wire pulses that give us an idea. It actually made me think and wonder what happened to the money if it’s only digital numbers changing from one account to another to satisfy a payment.

The concept of money is universal and understood well no matter where you are from. When the Germans visited Yap Island and claimed the rock to be theirs by simply painting black cross over it, it was understood by the yaps. They respected the German’s ownership and agreed to pay by the fine to regain their fei. You may think there bit foolish enough to fall for it. However USA had done similar thing that it led to the banking panic of 1933.

The problem that this country called Brazil went through in history is an evidence of how blindly people believe in how much something has cost of. I learned that money is really worthless and it’s just an idea that makes it going. The NPR broadcast called “The lie that saved Brazil” explained how entire economy of Brazil was changed just from introduction of a new imaginary currency called real. This was smart idea to give people an illusion of thinking their cruzerios price weren’t changing but it was. I realized how important it was for this plan to be created by Bacha and other men to stabilize people’s faith in money itself. During inflation, The Brazilians couldn’t grasp the concept that the value of cruzerios didn’t change just the idea of how much they would be able to buy. But this fake currency URV which was totally made up changed their perspective and their expectation of increase in price since the URV was stabled

There’s another currency that had been fluctuating over past year. This new currency is large antique shiny coin which is called bitcoin. It made me more doubtful about this new creation coming in. It had no central bank behind it, meaning it has no monetary value. Its value had dropped from being high which means it’s currently very unstable. It will take people some time to be acquainted with this new digital currency. According to the articles, there may be hope for success for Bitcoin Company.

We all around the world use money for our food, shelter and living throughout our life. Whether it’s using rupees, euros, peso or dollar, we all around the globe share common idea about money.  Money can be anything as long as population has faith in using it.

Workcited

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

“Bitcoin Has No Place in Your – or Any – Portfolio.” MarketWatch. N.p., n.d. Web. 07 Sept. 2015.

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

“The Invention of Money | This American Life.” This American Life. N.p., n.d. Web. 07 Sept. 2015.

Understanding the Linen Wallet Liners- Money

 Today I was surprised to learn of that the Yap in Micronesia use limestone rocks called fei that they polish to a shine as a form of currency. These shiny rocks are only found on an island four-hundred miles away. The people of Yap own small pocket-sized fei for smaller purchases and large car-sized fei for larger purchases. I learned of a Yap man who had a group of miners, by makeshift raft to the island where the limestone money is mined. The miners retrieved a a fei unlike one they’ve seen before, remarkably large and shiny as if it were coated in a satin blanket. Unfortunately there was a treacherous storm and the fei had to be cut from the dainty raft. Unlike the glorious fei, the mines returned to Yap safely. The miners spoke of the tremendous fortune that had been harvested and they took his word for it. Without question, they believed the tale and he is considered to be inconceivably wealthy. Despite never actually seeing the enormous fei, the people of Yap are trusting in their system. It is remarkable that these people who live on such a small and underdeveloped island have such an effective and honest economic system. On Yap, if a fei, is too large to transport after a transaction, the people simply verbalize that the fei now belongs to someone else and all the people are comfortable and trusting in that system. This is incredibly refreshing because we live in a society where such trust would be inconceivable. In retrospect, the fei itself is just a rock. It is the idea of the fei that holds value amongst the people.

I came to the conclusion that money is worthless. When Germany held control of Yap, they requested that the natives construct roads for easier transportation. The people of Yap were happy with their unpaved gravel roads and did not meet the commands of the Germans. To retaliate, the Germans claimed the large fei in Yap by painting large black x’s on them. The Germans didn’t value the money they took from the Yap. They just knew that the natives were so honest and trusting in the system that the Germans were able to manipulate the people of Yap into doing what they wanted. When the people of Yap finally paved the roads, the Germans went around and scraped the black x’s. The concept of worthless money is also similar to an experience we shared with the French. When the French were afraid that our bank wasn’t going to stick to the gold standard they requested that their money b exchanged for gold. Shipping mounds of gold back to France would be a very difficult, so France and United States decided the gold would stay in the Federal Reserve. The United States would just put a little name tag on the French gold drawer. Even though the French didn’t have the gold in their possession, they were perfectly fine believing the gold being theirs.

In Brazil, there was a point in time where the people stopped believing in their economic system. Inflation was so high that prices on goods were rising each day. They tricked the people by introducing a fake money system known as URVs. The URVs gave people the idea that they weren’t spending outrageous amount of money because the URVs always kept the same numerical value. They used conversion table to equate URVs to their actual money system known as a cruizeiro. The amount of cruzeiros changed but products remained the same amount of URVs. This gave the illusion that people weren’t spending more money. The people of Brazil just valued the idea that their money was worth more so they were able to save and spend better.

After listening to the radio broadcast “Weekend at Bernanke’s” I found out that the Federal Reserve is not actually part of the government. They are an independent institution that is given the task of withholding the nation’s money. I never realized that creating money is such a delicate balance. If we produce too much, money will lose its value but if we don’t produce enough it is also not a good thing. I didn’t realize that circulating the new money was such an extensive process. The Federal Reserve buys bonds from banks in order for the banks to lend out the newly created money. There is also a large amount of money in our system that isn’t physically present. In these days, people do a large amount of banking and bill paying online. Many times money doesn’t actually switch hands, numbers are just moved around in a computer system.

Bitcoin is an online currency system that is entirely new to me. Until recently reading articles on it, I had never heard of it. It’s exceptionally interesting because essentially, it has no value. According to the article there is not a central bank behind bitcoin so they have no monetary value. But according to another article there are some driving forces that will move the company forward this upcoming year.

In just two days my idea of those green pieces of paper has changed completely. After all the articles I’ve read and the broadcasts I listened to, money just isn’t the same. It just seems like an idea and not so much a physical asset anymore. Don’t get me wrong, I still appreciate carrying a bill with Andrew Jackson on it, but it’s still just a piece of paper with an idea attached to it. However, I really enjoy the concept that the people of Yap use when it comes to trusting their friends and neighbors when it comes to exchanging currency. Even though it’s not physically in their presence, they respect that it belongs to them. I’ve also learned that wealth is just a concept and that carrying a lot of money around doesn’t necessarily mean that you are wealthy.

The Concept of Money

Money have always been a huge part of modern life that defines how successful and wealthy you are. However, money itself is just a fiction. All these green papers and numbers in our bank accounts exist because long time ago some people agreed that it’s gonna worth something. While it seems normal and obvious for us that paper money is a normal thing, it sounds unbelievable that some people used massive stones as their currency.

From the very beginning, Milton Friedman’s article “The Island Of Stone Money” looks like a joke: a group of people, living on the island, and rolling huge circle-shaped limestone coins from one shore to another. In fact, for the people of the island Yap the stones named fei, were equal to our gold; people had to send ships hundreds miles away from the island to get some “money”.  It would be shaped in wheels with a hole in the center and varied in sizes from the foot to twelve feet.  Just imagine rolling your limestone salary to the nearest bank and asking to make a deposit. In American banks the reaction would be priceless. We got used to having our money everywhere with us and being able to buy whatever we want in any moment. In case with fei, you can’t just take your money with you and walk around.It might sound ridiculous for us, but it is just as ridiculous for people of the island Yap to buy a nice and shiny car with a bunch of green papers with some weird symbols and faces on them. Stone money have some minor inconveniences, but fei was very stable and valuable currency on the small part of the world, but it worked for the people who lived on the island. The big coins were placed in certain parts of the island, they had their owners, everyone was acknowledged of the owners and it was unquestioned. Money that we’re using every day could be just as unreal as fei. We have some papers, or some number on our bank account and we believe that it’s worth something, just like people who have limestone coins and they know they are valuable. Belief in money keeps money stable and improves the economy.

We’re used to think that how much money worth does not depend on us, or our thoughts. It has been proven by Brazilian students who tricked the entire country and saved it from inflation that most of our problems are in our head, including problems with money.   Joffe-Walt talks in the article “How Fake Money Saved Brazil“ aboutFour students from the Catholic University in Rio  that were invited by new finance minister to embody their idea of stabilizing the economy of the country. The idea was to create one stable currency that would be placed along with the existing currency, cruzeiro. All the prices were changed to Unit of Real Value — URV. When the price of URV would be changing all the time, still all the prices in the stores would show same numbers of URVs wanted for products. After few months people got used to new currency and stopped expecting prices to always go up. It stabilized the economy and prevented the inflation. As for me, this is an amazing example of how people can control the value of money just with the mass thoughts. When people stopped expecting bad and started thinking stable, it also stabilized the economy of entire country.

The value of money, and money itself will be always changing, adopting to new people and realities of the world. It is quite possible that in nearest future we won’t be seeing our green paper bills and shiny coins, they’ll become grandpa stories and museum exhibits.

WORK CITED

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

Joffe-Walt, Chana . “How Fake Money Saved Brazil.” NPR.org. 4 Oct. 2010. 7 Sep. 2015. <http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil&gt;.

Reeves, Jeff. “Bitcoin Has No Place in Your – or Any – Portfolio.” MarketWatch. Livefyre, 31 Jan. 2015. Web. 07 Sept. 2015.

Glass, Ira . “The Invention of Money.” NPR.org. 4 Oct. 2010. 7 Sep. 2015. <http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money?act=0#play

The Communal Fiction We All Agree To

Everyday we are convinced to invest our hard earned green slips of paper, we call money into a bank account. After hearing about the concept of Stone Money, I thought the idea of people using anything other than paper slips as money is obviously senseless. However, as I began to read The Island of Stone Money by Milton Friedman and articles published by the NPR broadcast, I became very attentive in analyzing the Yap’s unique monetary system and the similarities it has with America’s monetary system.

The first similarity I found between Yap’s currency and America’s is in Milton Friedman’s essay, The Island of Stone Money. When the German government took ownership of the Yap island, they demanded that the people of Yap fix the pathways that they considered to be in bad condition. As a fine for disobedience, the Germans marked the most valuable Fei as a way to claim what is now theirs. This is very similar to what had happened in 1932, when the Federal Bank Reserve of New York converted U.S. dollars in gold to avoid shipping money across the ocean. The same way the French marked the U.S. gold as theirs, the Germans marked an X on Fei money.

The idea of knowing that it isn’t necessary for the people of Yap to carry the stones as form of proving their possession gave me mixed feelings at first. However, after listening to the interview from the NPR broadcast, they mentioned how money is fiction because no one knows where money goes when it is deposited into a bank account. This made me think where does my hard earned money go when I deposit it in my checking and savings account? How do I know my money isn’t transferred around or played with? Also why did I allow a bank teller to trick me into opening an account not knowing exactly where my money will go? The idea of Americans putting money into a bank account is no different than the people of Yap leaving their coins, undisturbed on another owner’s property.

When the NPR broadcast said that money is fiction, it reminded me of the article How Fake Money Saved Brazil and how people view the concept of money. In this article, the people of Brazil were tricked by four economists into saving the country from inflation by slowing down the creation of the cruzeiros by developing a fake currency called the “real”. The comparison to the real and the people of Yap stones as well as Americans with bank accounts is that money always isn’t physical. Instead the real was virtual money that convinced the people of Brazil that the prices weren’t always going up in order to save the country. This expresses the idea of money being fictional and how the people control the real value behind it.

After reading about the concept of Stone Money and various articles on money, they all reiterated that money is nonetheless a communal fiction that we all agree to. From the people of Yap using stones as their currency, to the citizens of America depositing green slips of flimsy paper into intangible accounts and to the people of Brazil allowing virtual money trick them into thinking prices won’t go up demonstrates that there a lot of similarities within our economic system.

Works Cited

Friedman, Milton. “The Island of Stone Money.” The Island of Stone Money (1991): 1-5. Print.

Joffe-Walt, C. (2010, October 4). How Fake Money Saved Brazil. Retrieved fromhttp://www.npr.org/sections/money/2010/10/04/130329523/how-fake-money-saved-brazil

“The Invention of Money.” This American Life. N.p., 7 Jan. 2011. Web. 7 Sept. 2015. <http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money&gt;

  The Purpose & Ways of Money

 Money will always play an important role to anyone’s life from today to thousands of years ago. In order for most people around the world to live, including the United States and other countries, they need money. People need money to purchase food to feed themselves or their family, need money to buy clothes to wear, and also need money to shelter ourselves. Money today in the United States is determined by the government. They are the ones, who give each bill its specific currency, like the dollar bill or ten dollar bill, as well as the metal coins. In other countries its the same way. For an example, the Philippines; their type of currency they use in pesos, which is determined by their own government.

People around the world have mainly realized that money has became a way of life. Which ever the country a person may live in; they follow the given currency to government provides and value it to the life they live. Not only do other countries besides the U.S, Philippines, Brazil, and others live this kind of way of money following a lifestyle, but also small islands that people hardly recognize. The island of Yap, which is a small island in the Pacific Ocean, doesn’t use paper bills or metal coins, they use chunks of limestone found on another island 400 miles distant from, where the people of Yap live. Although many of the stones were ranged at a high value, they never moved from the spot they were first left in. These stones weren’t pocketable like money in the United States, so they remained in the same place just traded from different kinds people. Many islanders of Yap who owned these stones made trades for anything they needed to live, whether it was their type of clothing, jewelry, or even food.

Although the people from the Island Of Yap use stone as their form of “money” or “currency” to live their life, the country of Brazil used paper bills like the U.S, but called it Cruzeiros. Cruzeiros is their form of money/currency they used to buy food, or any necessity that was needed to live. The problem that Brazil faced with the Cruzeiros was the inflation rate increasing to a high value. For an example, a piece of food would cost $4 one day, then cost $10 months later, eventually cost thousands later on. A way people found to live with this problem was to create and use fake money called, URV, Unit of Real Value. People created this to stop people from seeing the inflation arise every other day and month. URV’s adapted quickly to people and found it to be better to everyone in Brazil. In fact, URV eventually took over, which became the new currency, called the real and inflation ended in Brazil.

Money has always played an important factor of living life. Money through-out the world is in different matters, but is used in the similar ways for the similar things. In the United States, we call it dollar bills, other countries they call it pesos or cruzeiros, and islands along the ocean use stone. Everyone including myself need and use it for the same thing, to live. We need it to buy food to keep us from starving, need it to buy clothing for our bodies, any necessity we need to live the lifestyle we chose.

Works Cited

Friedman, Milton. “The Island Of Stone Money.” (n.d.): n. pag. Hoover Institution, Feb. 1991. Web. 8 Sept. 15.

Walt, Chana. “How Fake Money Saved Brazil.” NPR. NPR, 4 Oct. 2010. Web. 08 Sept. 2015.

Bellis, Mary. “The History of Money.” About.com Inventors. About.com, n.d. Web. 08 Sept. 2015.

“The Island of Stone Money, WWI History & Traditional Culture – Yap.” Yap Island History & Culture. N.p., n.d. Web. 08 Sept. 2015

Money has always played an important factor of living life. Money through-out the world is in different matters, but is used in the similar ways for the similar things. In the United States, we call it dollar bills, other countries they call it pesos or cruzeiros, and islands along the ocean use stone. Everyone including myself need and use it for the same thing, to live. We need it to buy food to keep us from starving, need it to buy clothing for our bodies, any necessity we need to live the lifestyle we chose.

Many individuals have come to the conclusion that money is fictional. However, when they say this, it is unclear if they are simply being metaphorical. The modern application of money doesn’t necessarily have a concrete foundation or guidelines of which to dictate how it functions, but simply calling money fiction is a bit of a crude generalization. Different fields of study could view this notion in a different more substantial way. A field such as Anthropology.

Edward Burnett Tylor, father of modern anthropology claims culture “in its ethnographic sense, is a complex whole which includes knowledge, belief, morals, art, law, custom, and any other capabilities and habit acquired by man as a member of society” This means, simply, culture is how humans in a society behave. All over the world all people are part of individual segmented cultures, divided by tradition, environment, and perhaps most importantly, language. Money, however, seems to be immune to these societal boundaries and is more than just fictional, it is an ideology shared among multiple cultures, linking them together.

The tribal culture of Yap, used limestone disks as a form of currency. These disks varied in size and the bigger the disk the more wealth it represented (some even went up to 12 feet in diameter). All it took  to claim possession of one of these disks is simply a general consensus among the villagers of to whom it belongs. Eventually this island became part of a German colony. The Germans wanted these islanders to clean up the paths they used to get around the village, but to the villagers, the paths were perfectly fine as is. After failing to convince the islanders to clean up the paths, they resorted to the one thing that was understood against these highly contrasting cultures; money.

The Germans took black paint and painted crosses on the largest of the limestone disks and claimed ownership of them. This acted as a sort of fine to the Yap people for not being obedient. They then immediately got to work cleaning the paths. After the job was complete the Germans removed the black crosses and restored the wealth to the islanders. While sharing no common language, tradition, lifestyles, and overall culture between the Germans and Yap; the concepts of fines, debts, wages and wealth was understood equally from both parties.

Culture originally exists because humans needed cooperation in order to survive, due to them not having any phenotypically superior traits other than intellect and perspiration. It took banding together under a common ideology to ensure their survival.  Culture itself is not represented as a physical item, it is represented through behavior, just like money.

Money is as real as culture, and while there are so many independent cultures, money is a common cultural trait shared among most of them. Perhaps the idea of money is the first step towards universal cooperation among all of humanity. Which may never happen, but either way, money is, most assuredly, more than just fiction.

Work Cited

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

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

Tylor, Edward. 1920 [1871]. Primitive Culture. New York: J. P. Putnam’s Sons

“Japan’s Latest Economic Transfusion” nytimes, 13 January 2013. Web. 8 September 2015.

The Superiority Complex of Concepts of Money

When someone goes to a different country, they are inevitably going to experience culture shock, or some sort of reality check, that forces them into perplexity. It’s the idea of ethnocentrism. We, no mater where we are from, may believe that our customs and norms are superior to others. It may be as simple as a rolling of the eyes at having to explicitly ask for the check after finishing a meal in a restaurant in Paris. Or, it could be a feeling of fear when an old, haggard gypsy forces herself into one’s personal space, begging them for money outside of an H&M in Milan. These instances are examples of mindsets that one may adopt when learning or experiencing things in another culture. They may think of the customs as odd, illogical, or incorrect; yet in reality, they face similar instances everyday in their own culture. This feeling of ethnocentrism relates to all aspects of differences in culture. A specific example would be different currencies in cultures, like those in America, the island of Yap, and Brazil. Although there are diverse forms of currency, the concept of transferal is similar to other cultures around the world.

To modern Americans, the idea of using huge rocks for currency seems illogical, but it’s no more abstract than our own money. Milton Freidman explains this in his essay; “The Island of Stone Money.” On the island of Yap, the form of currency is limestone. Although it is not in the form of a tiny rock, instead, the Yap wields gigantic, care-sized slabs of limestone. Using such large means of currency seems redundant to us, since spending small pieces of linen is so simplistic in our culture. American currency pales in the size of fei, yet we find a delicately flimsy hundred-dollar bill immensely valuable than a huge slab of rock. Imagine pushing around a large piece of limestone to ShopRite to buy groceries versus carrying a crumpled piece of green paper that lives in the depths of a pocket in a pair of jeans, the latter is obviously less ridiculous. Friedman explains that since the fei was too large to transport, a new owner would simply claim acknowledgement of the fei, thus the rock would remain in physical possession with its previous owner. This may appear as unfair since the fei was not physically in the new owner’s possession, but this concept is not much different than that upheld in America. When someone gets a paycheck from their workplace, they do not physically receive the cold hard cash they earned. They instead have a piece of paper, or an acknowledgement that they own more money. This acknowledgment is similar to the Yap, in that they are not given the gigantic rock to prove their worth, they just know. Acknowledgement is in the place of ownership in both instances of the Yap and Americans, meaning that even though there are different means of currency, the concept of ownership and transferal remains the same.

The problem Brazil faced is another true example of how regardless of the type of currency; there are great deals of similarities in financial systems across the world. In the article, “How Fake Money Saved Brazil” Chana Joffe-Walt explains that four economists created the Unit of Real Value, or the real, to attempt to fix the inflation issue in Brazil. The URV was used as a conversion rate between cruzeiros, the actual currency of Brazil. Soon enough, the problem of inflation was solved because the people of Brazil started thinking in the ways of the invented currency. The invented currency was not a physical object, like fei or a U.S. dollar. It was an intangible idea that people learned and adopted. It seems rather absurd that a “made up” currency would fix a problem a whole country had faced for many years, yet it’s the same idea of acknowledgement that is seen with the fei and American money. In America, when we pay for our groceries or a new pair of snow boots, we can hand our plastic credit card to the seller and an intangible amount of money is transferred. It is a belief, and numbers on a screen, that supports the idea that we paid for a new object, even though there is no tangible evidence. With the Yap, if a family pays a dowry with fei, the accepters of the dowry acknowledge that the large piece of rock is now theirs. They do not physically touch the fei, but they have a belief that they own it. Although the people of Brazil were still using cruzeiros, they did not physically have the new currency, the real, in their physical possession. They instead had a belief that acted as an acknowledgement of the real. So, while Brazil had an unusual form of currency, the ideology of the monetary system is comparable to the rest of those in place in other cultures.

It is an automatic response to find other culture’s norms and techniques as irrational and outlandish. But looking at the grand scheme of things, it’s also easy to discover similarities between our ways and theirs. We, as Americans, use physical pieces of tiny material as currency, but we also use intangible numbers on a screen to communicate and transfer. The Yap use substantial pieces of limestone as their currency, as well as an intangible acknowledgement or belief for means of transferal. In addition, Brazilians used tangible pieces of material, or cruzeiros, along with the intangible idea of URV’s that solved the country’s biggest economic problem. Overall, there are clear contrasting means of currency with these examples, yet we are able to view certain similarities within the economic systems. From these similarities we are able to understand that no one concept of money is better than another.

Works Cited

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

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR.org. 4 Oct. 2010. 30 Jan. 2015.

Rock Dollars and Invisible Cents

The idea of currency is imaginary, a complicated idea to many. However, the value of said money within the our currency system is very real to us all. Who is to say that rocks cannot be money? A NPR radio broadcast  told of people known as the Yap that inhabited an island known as Yap that used polished limestone disks, known as fei, as a currency. These fei ranged in size from coin sized to car sized and were used to purchase everything from food to cattle. The Yap all agreed that these pieces of limestone had a value just as we Americans all agree that pieces of linen with a number on them have value (since out system is no longer even backed by anything), or the same way that those in Spain, or Mexico, or Brazil have their paper currencies.

It gets better however. Banking is a very strange phenomena. We give money to this institution, a few numbers are changed in our accounts to institute a deposit or withdraw, then the paper money is lent back out to others.  We know how much we have to spend, and we spend our money through use of credit and debit cards and do not even see the physical dollar. Well, going back to yap, a fei of large value was lost at sea, but was put into circulation on the island as those transporting the fei were able to describe it in such detail that the residents of the island all agreed on its existence. This is similar to how our money can be in a bank, basically invisible, yet the money can still be spent.

While on the topic on invisible currency, bitcoins are a new up and comer in the realm of currency.  This is a form of currency that is entirely electronic. There are a few issues that some have with bitcoins; this includes the fact that bitcoin’s prices are not very stable, and also that since they are all electronic it would be “easy” to hack and steal someones bitcoins. These people think the bitcoin will die out due to it being, for lack of a better term, made up. However, all currency systems start this way, and once it evens out and becomes more accessible to the everyday consumer, some feel that the bitcoin could become standard use. In the near future this “invisible currency” could become the future. In retrospect isn’t our current system invisible already? Already made up?

Works Cited

Friedman, Milton. “The Island of Stone Money.” (1991): n. pag. The Hoover Institution, Stanford University, Feb. 1991. Web. 7 Sept. 2015.

“The Invention of Money.” This American Life. NPR.org, 7 Jan. 2011. Web. 07 Sept. 2015.

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.” MarketWatch. N.p., 31 Jan. 2015. Web. 07 Sept. 2015.

     Money – The Elusive Concept

     Imagine, if you will, back to the days of trading and bartering. Tangible, useful items, such as cattle, poultry, and grains, were passed back and forth as a sign that the chickens one person was receiving were worth the baskets of grain they were giving in return. These cows and grains didn’t intrinsically have this value. It was placed on them by the people trading them as a means of obtaining something else they needed but didn’t already have. Sounds old-fashioned doesn’t it? Now think of the modern-day system of money used in most countries. Our wealth is no longer represented by our livestock, but rather by little slips of linen in our pockets, or numbers on an ATM screen. We no longer even have physical items to back up our wealth. There seems to be very little, if any, difference between our system and the way it used to work. We place all of our trust in the numbers on our computer screens that tell us how much money we have in our accounts. Money is essential to our way of life, but its value is only that which we have placed on it.

Let’s take a walk on the small Micronesian island of Yap. The Yap people don’t use paper money or metal coins as currency, they use limestone disks called Fei. They have been using this system for hundreds of years. They make a long journey to carve the disks out of the limestone, and bring them back to the island. The bigger the disk, the wealthier the owner. In some cases, the Fei can be too large and difficult to move. When this happens, the Yap agree that the stone has changed hands, while in reality it sits where it was originally placed. They are content with the idea that it now belongs to a different owner. The difference in currency aside, this system is very similar to our own.

Money has an interesting psychological aspect to it. We put so much faith into its so-called “value”, and blindly trust that items are worth the amount of dollar bills assigned to them. But there is a downside to this. Several countries around the world suffer still from inflation and high costs of living. Brazil, for instance, was suffering from extremely high inflation rates: 80% each month. The government had to create an entirely imaginary type of currency, called the real, to trick its people into believing the rising prices had stopped. In reality, the amount of cruzeiros – the actual Brazilian currency – still changed every day, but once items began to be priced in the stable real, people stopped panicking and eventually the inflation rates did go down considerably. Just a few years ago, Japan was experiencing similar economic crisis. A shortage of jobs and lack of economic stimulus. The prime minister introduced newly printed money into the country and made an effort to create new jobs, in order to start the process of stabilizing the country.

Money is such an essential part of everyday life. We have become so dependent on it, and our respective societies are so centered around it, that we couldn’t function without it. We think that economic systems such as that of the Yap are illogical and old-fashioned, but if we take a closer look we will realize that the heart of the idea is the same and always has been.

Works Cited

Japan Approves $116 Billion for Urgent Economic Stimulus

Japan’s Latest Economic Transfusion

The Lie that Saved Brazil

Money is Just a Piece of Paper

The concept that money does not exist is mind-boggling. In the American society, money is no longer a physical object. Money is handled through the computer more often than it is handled physically; yet, there are still some places that handle money more of a traditional way.

The island of Yap is a prime example of physical money. The islanders of Yap have a unique currency system that is odd to the American Society. They use  lime stone to create these massive coins called fei.  The bigger the fei, the more wealthy a person is; however, some of these stones are too heavy to move. Because it is so heavy to move the fei will usually remain in one place. When the owner of the stone changes, people will know that there is a new owner (the message would be passed orally). The islanders of Yap traveled 250 miles off shore to find these lime stones to create the fei. One man had several workers go off to make a big fei; however, when the workers sailed back, there was a storm. The stone ended up in the bottom of the sea, however, the workers came back and told everyone about the stone. At the end, the stone’s value was still recognized.  This may seem counterintuitive because these rocks are high in value; however, it is not in our possession and it is too heavy to carry around. This type of currency may seem absurd, but it is no logically different from ours.

Back then, our currency used to be gold (which was always held in a bank). If we wanted to pay for something, we would get a piece of paper stating the amount of gold that is getting paid. The idea of money is so abstract; we never see the money get deposited or moved. When another country wanted the gold, the label under the gold is changed (just like the fei). In the NPR broadcast “The Invention of Money”, a member of the Planet Money brought up a good idea to further inspect. When a person gets a job, the boss does not hand you the money, instead it is directly deposited. This happened to me personally, because when my boss paid me, I did not get the check directly. All I wait for  is the numbers to change in my bank account. Money is just an idea that we all believe in. Anyone can change the value of currency and we would still believe in it.  In the end, money is something so abstract. We are the ones that put the initial value on money (in Yap, stones).

The NPR broadcast “The lie that Saved Brazil”, is about the inflation that happened in Brazil. The price of goods would rise every week in Brazil, this is the product of the new city Brasilia. This is a city that was built in 1950. Then the government of Brazil started to print a massive amount of money. Now, Brazilian money started to lose it’s value. In March 27, 1993, the government sought out four friends who had an idea on how to stop inflation. They wanted to restore the faith people had in money. These four friends developed a currency called Unit of Real Value a.k.a URV.  The URV is a form of virtual currency that everyone started to use. The government saw the progress of Brazil and decided that the URVs will be the new form of currency. While listening to this broadcast, I realized that our form of currency can be altered. In Society today, I always wonder how the value of money came to be. Holding a dollar bill in my hand makes me thing why is this different than the fifty dollar bill. These to bills are just printed by the government in the end.  How society thinks of money is what we could by with the bills we have. One dollar can buy us two bags of chips instead of ten. The only difference in these bills is the products we get from them.

We might think of electronic currency to be absurd; yet, in the American economy there is a currency called Bitcoin. Bitcoin was assimilated into society about a year ago. Bitcoin has no true value; but, people still believe in it like the URVs in Brazil. People get tricked into thinking currency is already at a valued price. Bitcoin will cause a network affect.  Everything is done electronically so this creates a chance for bitcoin to succeed.   If other people use the currency bitcoin, that means other people will use it as well. People will trick themselves into thinking that bitcoin is a real currency. This is the same situation in Brazil without  inflation. This situation also makes us as counterintuitive as the Yap. We can say that we own a lot of money, but we can never see the money except on the computer. We cannot physically touch money except look at the numbers online.

Going back into our economy, money is handled through the Federal Reserve. They can create money whenever they want and they can control the amount of money the economy gets. The real question is where does this money all come from?  Did the money just come from some void? The federal reserve decided to print more money. They would give banks millions of dollars by buying treasury bonds. I found out that the Federal Reserve would press a single button and that will change how much the bank would get. It’s scary how the government can manipulate and make money. How do we know if someone is wealthy? We can never see the money, but we believe in the numbers that are presented to us on a single piece of paper.

Money has a set value because we perceived them that way. Money is just  piece of paper that has been printed from the computer. In Yap, the stones are an odd concept to uphold; however, we had gold which had a similar concept to the fei. In Brazil’s currency  changed because the government decided to; that’s happening now in America because of Bitcoin. The creators of bitcoin are hoping people can influence each other to use this new currency. This is already happening in today’s society. People were told the value of money so we believe in it. Money is not a physical object anymore, it’s just a statement on the computer. Money is just an idea that we believe in. People set forth how much a dollar bill is worth and how much a hundred dollar bill is worth. Money is just a piece of paper that can be manipulated and we would be okay with it.

Works Cited 

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

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

Phillips, John. “Bitcoin: What to Expect in 2015.” CNBC. N.p., 15 Dec. 2014. Web. 04 Sept. 2015.

Reeves, Jeff. “Bitcoin Has No Place in Your- or Any-portfolio.” Market Watch. N.p., 31 Jan. 2015. Web. 4 Sept. 2015.

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