Pay Me My Money

What is money? When first asked most will give the lackadaisical answer of “It’s what is used to buy things”. While this is true, it overlooks the counterintuitive nature of money and what it is. In reality, money is an “idea” that is used to exchange goods and services. A group of people called the “Yaps” prove this concept to be true. Moreover, the Yap is a tiny island located in the Pacific Ocean. Hundreds of years ago explorers from the island found huge limestones miles away which they carved into massive discs. From there they brought the disc back on small boats and decided to use them as a form of currency. This currency was known as Fei. Thus proving that money is just an “idea” since something simple as stone can be deemed valuable and used transactions. 

The Island of Stone Money by Milton Freidman furthers the concept that money is just a myth. Within this report, Freidman discusses how after the Germans acquired the Island of Yap they marked “Fei” with a cross in black paint. A similar incident occurred after the New York Federal Reserve Bank transferred its gold to the Bank of France, by placing the gold in separate marked drawers within their vault. Something that seems so illogical led the Federal Reserve Bank to believe they were weaker financially and the Yaps to think they were impoverished. This proves that money is no more than an illusion as none of the groups gained or lost anything yet they all felt like they did. 

The Yaps concept of money differs from Americans’ concept of money in a few ways. For starters, the Yaps currency Fei never involves the changing of hands. Additionally, the large stone discs settle in the village and switch owners with every transaction. This is also true for American currency with the presence of online transactions. However, for in-person purchases, the US Dollar involves the changing of hands. Next, “Fei’s” value was dependent on the size of the stone and how difficult it was to obtain. This differs from the American Dollar as it is issued in several denominations including $1, $2, $5, $10, $20, $50, $100. The denominations are meaningless as the value of money within the US is dependent on the economy. After contrasting the two currencies, I can help but wonder if the traditional US currency is truly efficient and if there is a better alternative similar to “Fei”. This is because the value is always changing leaving citizens unsure of how much their money is worth.

This then makes the Yaps money more abstract than the current currency used within the US. This is because the currency “Fei” is the closest to the digital currency scene within today’s society. In addition, both currencies never involve the changing of hands, but instead the changing of owners. This is especially seen within currencies like Bitcoin and DogeCoin being that they are completely intangible yet still have a monetary value. The abstract abilities of both currencies make me wonder if the exchanging of goods and services without any physical interaction is optimal as it is becoming increasingly popular. Moreover, the promiscuity of things like “NFTs”, which is digital art that can only be purchased through digital currencies like Ethereum and Solana seems pretty wise.

As mentioned before, the value of Fei is reliant on multiple factors like the stone’s mass and effort to acquire it. Since the American dollar is assigned a value that is dependent on the economy it becomes a non-fluid currency. For example, on one day $100 can get a customer 100 bags of chips making each bag a dollar each. However, if the economy is in a state of inflation, the customer may only be able to attain 50 bags of chips with $100. This then causes each bag to be valued at two dollars each, meaning that the value of the American Dollar has decreased. This makes me consider that one day my weekly $40 allocated toward groceries will allow me to even purchase more than three things. This is why the inflation problem within America must be assessed and revised.

The implementation of a virtual currency called URV’s could improve the problem with the United States economy. In the piece, How Fake Money Saved Brazil, author Chana Joffe- Walt describes the implementation and the effects of this currency within the Brazilian economy. To begin, Brazil was at its worst with an 80 percent inflation rate per month. It was so bad that customers in the store would try to beat the guy to items that were soon to be marked up. To combat this issue the URV’s would replace cruzeiros (Brazilian currency) on price tags. For example, the price of milk would cost 1 URV one day which was equivalent to 10 cruzeiros. The next day the cost of milk would still be listed at 1 URV, but equivalent to 20 cruzeiros. The purpose of this was to distract consumers from the fact that prices were going up to end inflation. With time, the fake currency did exactly that. Therefore, integrating a system similar to Brazil’s on things like groceries, electricity, and furniture, can eliminate the issue of inflation within America. 

Having all that said, what we consider money is no more than a fantasy. It was something that was established as a medium of exchange, but holds no real value. A better alternative is cryptocurrency as it can serve as a safe store of value, something that the standard currency lacks. Next, they can allow for owners to control their money, rather than having the banks do so all time. Lastly, they will allow for instant transactions, whereas some can take up to a week. This is why it is time we take the step forward and consider the new future of “money”.

References

“The Invention of Stone Money.” 423: The Invention of Stone Money. This Is American Life, WBEZ. Chicago . 7 Jan. 2011.

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/