Money is fake, it is an idea that was created by society as a way of payment for exchanged goods more often than not. As money came to the forefront around 1933, the USA was originally backing gold until America decided it was time to stop backing gold and just use the paper money America now uses today. America has grown as a country to become a leading power in the world and our dollar holds great value among other countries. As America started economically booming we started to create banks and the stock market where people can put their money in these banks and the stock market to save and hopefully grow their money.

Today though you always hear on the news from time to time that America is in trillions of dollars in debt or the housing market has lost millions of dollars. This never made sense even to me because I always would wonder who lost this money and how it just vanished in thin air. Once I listened to “The Invention of Money” by Ira Glass, Planet Money, Chana Joffe-Walt, Alex Blumberg, and David Kestenbaum, I finally had a grasp of the idea of money and was also intrigued by how money originally started.

You see way back when, money used to be a giant stone rock that would be exchanged for a warrior’s body who had fallen in battle. Interestingly enough this giant stone would be seen as a form of payment for the warrior’s body. They would move the stone to the person who possessed the body of this warrior or they left the stone on a road or path somewhere and would name the stone for instance, owned by Jimmy the slayer of the warriors. Once this would happen no one would touch the stone as they knew it would not be theirs to own.

But why do we not use stone money today, well we as a society have grown technologically enough to not need giant stones as a form of payment you see paper is much easier to carry as well as create. But why does so much paper money go missing?

Well when we take our money and give it to banks so we can “save our money”; the banks take this money and update the electronic number in your account to the amount of money you should have, but in reality the banks take that money you gave them to save for you and just loan it out to other people so the bank can make money on interest for things like loans and mortgages. For the real estate market, houses lose value when inflation goes up. This is because when inflation rises interest rates and rental costs tend to go up leaving people less likely to take out mortgages to purchase a house. This leads the demand for houses to decrease as well as the prices for houses to drop. Inflation is caused by an excessive increase in the printing of money or its supply.

Usually inflation increases when there is too much money in circulation compared to the size of a country’s economy. This means that the purchasing power of this country goes down as prices go up. Brazil is one country that became economically depressed due to inflation rates in money. Brazil’s inflation rate around 2015 was sitting at a high of 20%. Brazil was losing many lives due to the decrease in value in their money as many people would take their lives because they could not pay to live. Brazil reacted as a country and began to do something that has not been done before.

They began to get the Brazilian people to believe in their currency. Brazilian people began using credit cards way more and using installation payments for everyday things so the Brazilian people can pay it off over time. This increased national debt, but allowed Brazilian people to live. Although debt was increased Brazil did something smart and froze the prices of products and things for periods of time so they would not rise with inflation. This would help Brazilians pay for things they need while all prices are rising. This helped decrease inflation over time. 

For America when it comes to money we run on the Federal Reserve. The Federal Reserve is not apart of the federal government of America, but the Federal Reserve is in charge of our economy and making sure our money and economy is good. So the Federal Reserve is not a part of our government but they still make an important decision for our nation. This decision would be either to print more money into our economy or not print more money.

There are consequences for both actions. If we printed more money it would create more jobs and give banks more opportunity to give loans and mortgages, but it would also decrease the value of our dollar. If we did not print more money the opposite would happen as the value of the dollar would go up, less jobs would be created and less loans and mortgages would be handed out. If the Federal Reserve puts more money into circulation this also would raise inflation rates.

According to “The Invention of Money, Act Two” by Alex Blumberg and David Kestenbaum the Federal Reserve creates money through a meeting where they make the important decision to create or not create more money to put into the system. Interestingly enough though it seems the Federal Reserve just goes into a computer system and adds a zero to the end of the next printing of money. Over time the Federal Reserve has reached the trillion dollar mark. So the Federal Reserve has created an unprecedented amount of money to the point where inflation is destined to rise. It has caused people in our own government to question if we should trust the group of people who run the Federal Reserve.

At last, it appears although money is fake the way the Federal Reserve is printing it. It appears the value of the US dollar in the future will be worth no more than the giant stones that were used by our ancestors.

Sources:

“The Invention of Money.” This American Life, 19 Feb. 2018, https://www.thisamericanlife.org/423/the-invention-of-money. 

“FDR Takes United States off Gold Standard.” History.com, A&E Television Networks, 24 Nov. 2009, https://www.history.com/this-day-in-history/fdr-takes-united-states-off-gold-standard#:~:text=On%20June%205%2C%201933%2C%20the,to%20demand%20payment%20in%20gold.