The Idiocracy of Money
The concept of Stone Money is one that stands out to me. What is money anyway? While it may be something that is exchanged for goods and services, no one truly questions the fact that money is what society makes it to be. Us as Americans take a cheaply made piece of paper and say that its value is one, five, ten, and so on. In more recent times, people are making drawings of monkeys known as NFTs and calling that a form of currency. The same thing happened with cryptocurrencies such as BitCoin and DogeCoin. The question is this: what constitutes a currency? A piece of paper? A digital image? A huge wheel of limestone? The point being that anything can be money, it’s just that society decides what has value and what doesn’t. Money can be anything, it doesn’t change the fact that it is a social construct designed to put a price on things. It shouldn’t rule how you live your life and that is why I think money is a stupid concept overall as it is something people blindly put their faith in.
As explained within Milton Friedman’s article, The Island of Stone Money, islanders from Yap carved giant wheels out of limestone and made that their currency. Friedman states, “The Yap Islanders regarded stones quarried and shaped on a distant island and brought to their own as the concrete manifestation of wealth.” This just goes to show that the Yap were so inclined to have a physical currency that could be a representation of their status. The Yap gave those giant limestone wheels they had carved out value, which is similar to what is happening with cryptocurrencies in the present day. The podcast titled The American Life has an episode called The Invention of Money which details more about the Yap. As the Yap had physical wheels of limestone to demonstrate their worth, there was allegedly a limestone wheel lost to the bottom of the ocean in which it still held its value. In the podcast, Jacob Goldstein states “We believe you and this stone money, this giant stone on the bottom of the sea, it exists. It’s still good money. Somebody owns that stone, even though it’s sitting on the bottom of the ocean.” The Yap decided that while the physical stone was not present, it still held value. This instance is similar to modern day banks where they state that we have a certain amount of money in our accounts, yet we physically don’t see it because it is being loaned out to other people. You can open an app on your phone that displays how much money you have and you just have to roll with it. You don’t even see the money in front of you in the exact same way as the Yap. The people of Yap had blindly put their faith into something they deemed to be of worth.
In the same episode of the podcast The American Life they discuss an economic crisis involving extremely high inflation rates in Brazil. In the podcast, Chana Joffe-Walt explains Brazil’s situation as follows, “Say they’re selling for $10. One month later, with 80% inflation, the price is $18. Six months later the sunglasses are $340. And by the end of the year, that price tag reads more than $10,000. Brazilians lived with high inflation like this for decades. They could not figure out how to fix it.” In short, Brazil’s inflation was a cause for concern. Because of the monetary system created by the Brazilian government, the Brazilian economy was in crisis. It wasn’t until four people who were very understanding of the economy came up with a new system to help solve their problems. This plan involved the use of URVs which is a lot like cryptocurrency. The main difference is that URVs helped to strengthen the economy. The URV may have helped the Brazilian economy, but it is still a fictional concept that people put their faith in. As Chana Joffe-Walt puts it, “People were the problem. People had to be tricked into thinking money had value, when all signs told them that was absolutely not true. So Basha says, they wrote a plan for a new currency, one that was stable, dependable, trustworthy. The only catch was this currency would not be real. It would not be printed. There would never be coins. It was fake. They called it a virtual currency.” Since the currency would not be real, the URV system would rely heavily on people’s faith.
In an article written for Independent magazine titled Crypto is Ultimately Pointless – and the Price Collapse Proves It, author Sean O’Grady discusses his observations of cryptocurrencies. O’Grady states, “When people believe that the value of something can only ever go up, it creates a feeling of what we now call FOMO, which of course spirals the price still higher. The novelty with cryptocurrencies is that the thrills also derive from their extreme volatility, and the tempting prospect of making some money out of trading on their very volatility – gambling on the gamblers, if you will.” Not only do people willingly put their faith in money, they have put their faith in crypto as well and O’Grady believes that it is the novelty of it that draws people in. To wrap up, I do think money is a useful and maybe even beneficial part of society, however I believe that it is not something we should be putting our faith in. We should not be putting our faith in some giant stone wheel under the sea. We shouldn’t put faith in a virtual currency. It is unwise to put our faith in things we don’t know for sure are there.
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University, 1991. https://miltonfriedman.hoover.org/internal/media/dispatcher/215061/full
Independent Digital News and Media. (2022, May 12). Crypto is ultimately pointless – and the price collapse proves it | Sean O’Grady. The Independent. Retrieved September 26, 2022, from https://www.independent.co.uk/voices/bitcoin-cryptocurrency-ethereum-market-regulation-b2077363.html
Planet Money. (2018, February 19). The invention of money. This American Life. https://www.thisamericanlife.org/423/the-invention-of-money