No matter what age you are, the majority of people have spent almost all of their lives revolving around money. Financial situations look different for everyone. Different salaries, situations, lifestyles, and hobbies that all revolve around the concept of money. But, have you ever really stopped and thought about money? It is a small piece of paper with an image printed on it. The image printed on it determines it’s worth, and that is what controls our lives. 

In Milton Friedman’s, “The Island of Stone Money”, he talks about a small island called Yap that used “stone money” as their way of currency. By stone money, they are referring to pieces of limestone. These pieces of stone were extremely heavy and hard to maneuver, so it made it rare for people to spend the money that they had. This was known as Fei. This concept allowed for trade with one another. To them, it was the idea of using a form of currency, but people from the United States look at it from a different perspective. They look at it as a new form of currency that does not revolve so highly on the numbers on the bills. 

Similar to the concept of stone money, things like stocks, bitcoin, and crypto currencies have become more popular. All of these have one thing in common, they are not physical money, yet they still hold the same value as a twenty dollar bill is worth. The idea of stocks can be highly counterintuitive. There is an allotment of money that is yours. You own a part of the company. You can sell your share of the company at any time, either gaining or losing money. The concept of crypto currencies is also one that is continuously evolving and becoming more popular. It is a currency that is not federally run. It is a “virtual currency” that allows you to buy and sell money. But where is that money? If you are up two hundred dollars, and the next day it drops, did you ever really have that money? The ideas of stone money sparked many new questions and ideas about the true concepts of money. 

    Anne Renaut talks a lot about Bitcoin in her article “The Bubble Bursts on E-currency Bitcoin”. She discusses the rise in popularity Bitcoin has experienced, and the effects of its first major crash. Being a relatively new company, price swings are obviously not ideal. However, Bitcoin Foundation chief scientist, Gavin Andresen said that “‘We believe that as the value of Bitcoin grows, and the infrastructure around it grows and matures, the price relative to other currencies will get more stable.’” With the internet and social media becoming so popular, Bitcoin was originally created as a currency that was an independent financial institution, one that was not run by the government. It is similar to Stone Money in the sense that it gives people another way to look at currency. There are hopes that bitcoin can become a new found common currency among people all over the world. However, some are skeptical. A main point in the article was the fact that it crashed and can crash in a very short span of time. There is also the risk of cyber attacks, and people accessing personal information that can be dangerous to your identity and invade your privacy. Another dangerous aspect of putting your money into electronic currency is that it has become more common that people are putting way too much money into the system and they are losing all of their money. It is almost a version of legalized gambling that can be highly addictive to someone. People can also be swayed by famous celebrities like Elon Musk or other wealthy stock owners. The risk and reward ratio is something that must be widely considered before beginning your investments in Bitcoin, but some say it is the new, best thing. 

    In a podcast by Chana Joffe-Walt called, “The Lie That Saved Brazil” talks about the new way of paying for things. They use installments over the span of a few months. Four men were put into a position to help solve or better the current financial crisis that Brazil was going through at the time. When Jacob Goldstein, an interviewer in the podcast, talked with his aunt, who was a highly successful businesswoman, she said that, “‘Money is fiction. So the answer to the question, where did the money go when the housing market collapsed turns out to be that the money never existed in the first place. All those houses used to be worth a certain amount and now they were worth a lower amount. Simply because that’s what everyone now agreed. No money changed hands, no many vanished.’” This concept was extremely clear, yet so confusing. Who decides that inflation goes up? Why do people just accept it and pay the higher prices? Why has nobody ever “stood up” against the prices and demanded a change? 

    In a way, the idea of money has become a foreign concept after reading all of these articles. Who agreed that the value of money is what it is? Can a retaliation against inflation make a change in our society? Only time will tell us if things like stocks and electronic currencies like bitcoin and cryptos are more effective than regular money. The ideas of Yap and stone money have definitely changed the way many people in the United States view money. It has allowed people to realize that money is only the value that it is because we agree to it. Changes can be made if people retaliate and begin spending their money more effectively and efficiently. I have gained a new perspective of what money truly is and the control that it has on society. I am extremely curious to see if there will ever be any drastic changes to our primary version of currency, cash and coins. So, I ask you, do you think that money is a fiction?

References

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. 30 Jan. 2015. http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil/ 

423: The invention of money. This American Life. (2017, December 14). Retrieved February 14, 2022, from https://www.thisamericanlife.org/423/transcript https://www.thisamericanlife.org/423/transcript

Yahoo is part of the Yahoo family of brands. (2020). E Based Currency. https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html?guccounter=1