Is My Money Really Mine?

When I open my Fulton Bank app, I am greeted by a number that represents the money in my checking account. This number sets me in a standard, limiting me to what I can and cannot access today. While the few digits I see is not something I can physically touch, it has a value that increases or decreases daily, which leads me to the questions: where is my money actually hiding? Is someone really moving it in and out of my account? Does anyone else know it even exists if they cannot see my bank account? 

The lack of physically holding the money one possesses has been a common occurrence throughout monetary history. In Milton Friedman’s “The Island of Stone Money,” Friedman highlights the Island of Yap, which was a small island in the Caroline Islands, as well as the research done by American anthropologist, William Henry Furness III. Friedman mentions that Furness visited the island for many months, studying the people and their habits. He came to the realization that Yap had its own monetary system, and ultimately wrote a book about it: The Island of Stone Money. 

In Furness’ book, he describes Yap’s currency, or fei, as “large, solid, thick, stone wheels, ranging in diameter from a foot to twelve feet, having in the centre a hole varying in size with the diameter of the stone, wherein a pole may be inserted sufficiently large and strong to bear the weight and facilitate transportation. These stone ‘coins’ [were made from limestone found on an island some 400 miles distant. They] were originally quarried and shaped [on that island and the product] brought to Uap [sic] by some venturesome native navigators, in canoes and on rafts.” These “large, solid, thick, stone wheels” would seem to be the ideal way to show the rest of the population how much fei a person has, right? Well, on the island of Yap it is not necessary for the owner of the fei to do anything other than acknowledge the fact that they own it, especially if it is too heavy to move. This acknowledgement of the fei is very similar to how banking works today. When money is transferred from one person or account to another, the only ones that know are the ones involved in said transfer. 

The idea of acknowledgement being a logistical way to account for money can be seen as the money being imaginary, or fictitious. However, money can be fictitious in a variety of ways. According to “Act One: The Lie that Saved Brazil” of NPR’s “The Invention of Money,” inflation in Brazil was up 80% a month for decades, and people could not figure out how to fix it. However, “four former drinking buddies from grad school with a plan, who were suddenly put in charge of the country’s biggest economic crisis ever,” found the fix. 

The idea these four had was to “stop the printing press, stop creating money so quickly,” but they also wanted to stabilize the people’s faith in money. So, they took this idea and created a new currency; one that was a fake, virtual currency. This currency was known as URVs. Taxes and prices of items were listed in URVs, which is where the idea became tricky. The value of the URV would change daily, but the price would remain the same. The podcast provides milk as an example. It says that the milk will appear to cost one URV, but the value of the URV will change daily. The clerk will check the paper in the morning to find a table, listing the value of the URV, and see that today’s URV is equal to 12 cruzeiros, but yesterday’s was seven. This does not change the fact that the milk costs one URV, but it does change what someone is actually paying. 

The URVs eventually brought down inflation, which made the transition from virtual currency to real currency easy for the country. The value of the URV balanced out to $1 and inflation in Brazil eventually ended. People described the four graduate school drinking buddies as heroes who performed magic, but they did not take that title. One of the men, Andre Lara, admitted, “there’s nothing magical in URV. It’s very technical and very–But basically it was just we established the idea of a unit of account that gives you the sense of value, relative value.”

The idea behind the URV changing value reminds me of Bitcoin, a virtual currency that operates independently of a central bank. Bitcoin, unfortunately, has not seen the same success that the URVs have. Anne Renaut’s “The Bubble Bursts on E-Currency Bitcoin,” informs the reader about Bitcoin and the “chaos and drama” that comes with it. Renault features the ups and downs of Bitcoin, “trading for a high of $266 on Wednesday — only to come hurtling back to Earth in just three days. By Friday, a single Bitcoin was worth just $54, according to the Mt. Gox platform, which manages 80 percent of the Bitcoin transactions and had to briefly shut down trading Thursday,” showing the fluctuating struggles of the currency. Today, a single Bitcoin is worth $19,758.90. 

Bitcoin has become increasingly popular, but not in the same way URVs did. Many professional athletes have decided that a form of cryptocurrency is the way to play. According to telecomasia.net, there are 10 professional athletes being paid in Bitcoin and Crypto. With big names such as Andre Iguodala, Klay Thompson, and Aaron Rogers converting portions or the entirety of their salaries to either Bitcoin or crypto, the trend may continue to spread, but does not seem to be reasonable for the general public.

Money has shown to be a complex idea that will continue to change based on the current economy and the ever changing aspects of society. When we look at our bank account, we accept the value just by acknowledging it, much like the people of Yap. Our bank statement is a number that we cannot fully, physically grasp, much like Bitcoin, and it is constantly changing like the URVs were when they began.

References

1991 Island Stone Money – hoover institution. (n.d.). Retrieved September 26, 2022, from https://miltonfriedman.hoover.org/internal/media/dispatcher/215061/full 

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

“The Bubble Bursts on e-Currency Bitcoin.” Yahoo! News, Yahoo!, https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html?guccounter=1. 

“10 Pro Athletes Paid in Bitcoin & Crypto.” Telecom Asia Sport, Telecom Asia, https://www.telecomasia.net/blog/10-pro-athletes-paid-in-bitcoin-crypto/