Money : A Medium of Exchange

The invention of money was a major improvement in people’s lives. In the past, there was no money. People used to exchange goods in return of other goods which is called Barter system and there was no standard value of measurement which led to unequal exchange. Sometimes it would be really difficult to find the person who is willing to trade with you. It is the time and effort that people spend before they exchange their goods. In order to reduce these problems people developed the commodity money. Money is the medium of exchange in the form of coins and banknotes.

NPR’s broadcast on”The Lie That Saved Brazil” and The Island of Stone Money perspectively shows money as fiction which makes it real. In the podcast, The American Life, Chana Joffe- Walt discusses the value of currency in an episode of “The Invention Of Money” where she explains the recession and period of hyperinflation that plagued the Brazilian economy.On the Island of Yap’s they use a large rock in the shape of a wheel called “fei” as their currency.The people living on the island keeps fei with them throughout the island near the houses to whom it belongs. But it is really crazy to use such a giant rock when you can used a small currency in place of it. In the podcast Jacob Goldstein states,” We believe you and this stone money, this giant stone on bottom of the sea, it exists. It’s still good money. Somebody owns the stone, even though it’s sitting on the bottom of the ocean.”This is similar to modern day banks where they have certain amount money in the bank account, but we can’t see it physically.

Digital currency is replacing the physical money. The Federal Reserve is an organization that creates money and is a place where digital currency benefits the economy. The purpose of the reserve is to balance the economy and they are able to do so by purchasing the mortgage securities. Another new invention is Bitcoin, it is a digital currency and it is not operated by government or a person. It is a cryptocurrency and has intensively risen in value. It’s price rise more and more as people invest in it and people use it for the investment in the stock and bonds. It can be used to store money and can be connected to your debit card.Every bitcoin address has an associated private key that acts as a password to ensure that all transfers are authorized. In present it is difficult for people to understand about bitcoin and also why it is better than any other currency so these is the reason why it can’t just take off and become profitable.

Money will continue to change based on the current economy and it is beneficial for the society and it is not something we should put our faith into. Metal coins and paper currency have such a sway over the society is not because of their material value but because of its widespread conviction that they are priceless.

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 Money – This American Life. (2018, February 19). This American Life. https://www.thisamericanlife.org/423/the-invention-of-money 

Chana Joffe-Walt The Lie That Saved Brazil. (2017, December 12). This American Life.