The circulation of life

What is the true value of money? For genortations money has been seen as a physical object, something we can hold and have forever. As society gets more advanced we realize most money in the world isn’t actaully physical, we can’t touch it or see it, but the money is real and still has value. But I’ve always wondered how this can happen without something physically owned. This value comes from universal participation of banks and the agreement on the value of a dollar bill. For example, the island of Yap still currently uses stone wheels as currency. Though it’s not beneficial to keep it the same way for hundreds of years. Similarly to the american dollar, Islands using stone currency this concept of who owns what and what value it holds depends on the participation of people. Money is an illusion and, better yet, whatever you deem it to be. 

Milton Friedman’s “The Island of Stone Money,” explores the Island of Yap and their traditional stone currency which has lived on for hundreds of years. The currency used On this island is known as “fei” , a large rock in the shape of a wheel. The people of Yap keep their  fei along the paths throughout the island near their houses. Although to Americans this concept may seem bizarre, it shouldn’t be hard to realize that instead of paper they use rock wheels. As long as the value is agreed upon by everyone  it will work in terms of currency. When simplified it all comes down to the concepts of exchange and value within the economy that gives currency its power. 

Understanding the people of Yap and their currency helps better explain electronic money in today’s society. Electronic money can be described in a number of different ways which include banks and credit cards. On credit cards money is never actually seen nor is it even stored away in a bank. The Invention of Money, a broadcast discussing this concept of how money works, says “It is just numbers going back and forth in the computer.” The reporters were discussing how transactions oportate between personal credit cards, the bank, and business. At no point will the bank have money stored in your name and moved at your discretion, rather the bank is constantly circulating money for people. Thus turning the physical dollar obsolete opposed to digital currecy. The Federal Reserve is the backbone of digital currency’s benefit to society and the economy because this government run organization has the ability to create money out of thin air.  This is successfully done by buying billions of dollars in bonds and giving it to the banks which then is given to the people. This further explains why money doesn’t actually exist.

 In the article “ The fiction that makes the world go round” by Richard Davies. He explains that the currency “ is partly a social compact which has the power to drain confidence.” People are wired to want the best quality and most expensive items in hopes of competing and holding social status within soictey. Digital currency is able to thrive because of this because in order to obtain a high status you must get your fair share of currency and with the limited amount of physical dollar bills in the world we must turn to “fake” digital currency. Something that similarly shows how money isn’t real is NFTs. If you’re not familiar, an NFT is an online photo or video that can be purchased and owned through multiple online currencies such as bitcoin, the idea is to own these online resources in hope that as time goes on they become more famous and grow in value. In an article titled “NFTs are still worth something – just not what you think,” by FastCompany, they state “An NFT has value because the buyer and their community believe it has value.” An NFT is just another type of currency that you can’t ever hold, but people begin to give it value based on the popularity and agreement of the product and what it is worth. Just another example of how something can be valued without ever physically holding or having a product. 

It’s crazy to think people spend most of their lives chasing something that’s simply never real. Although we can own and trade money in our everyday lives, it’s  the people who agree on its value that keeps it alive. 

Refrences 

• Captain, S. (2022, May 17). NFTs are still worth something—just not what you think. Fast Company. Retrieved September 27, 2022, from https://www.fastcompany.com/90752573/nfts-are-still-worth-something-just-not-what-you-think
• Friedman, M. (1991, October 5). 1991 Island Stone Money. Collected Works of Milton Friedman. Retrieved September 27, 2022, from https://miltonfriedman.hoover.org/internal/media/dispatcher/215061/full
• Planet Money. (2011, January 7). The Invention of Money. This American Life. Retrieved September 27, 2022, from https://www.thisamericanlife.org/423/the-invention-of-money