In today’s modern and competitive world, every single person is running after earning money and wealth and not after a comfortable, peaceful and respectful life. As we look around us there is only talking going on that is, about money and ways to earn it. Like in newspapers, magazines and news we often come across stuff like due to lack of money a person committed suicide or yesterday a multi-million dollar company bought shares of this or that company, etc. and by seeing such kind of news, we believe that the world is functioning by money only.
But is the money there..? That’s a big question. According to the article in ‘The American Life’, the money is fiction. It is was never there at the first place. Even the money in the banks are not real because it’s not in physical form, as they are just in the air; that you have this much amount of money in your checking account or saving account. You don’t have it in your hand, whereas the money which you carry in cash is the real money which is in physical form. On seeing the example of the people of YAP, they rather used completely impractical and counterintuitive methods for trading; which was using massive stone sculptures similar to the shape of coins.
These massive stones were used for big things, like for dowry, bring a warriors body back to their island with respect. But all the functioning of the money in YAP was based on belief and trust on each other. As for the stone money, it was huge and weighs thousands of pounds, it cannot be taken from one place to other. So instead they kept the stone at one place and when they buy or sell something big they kept the money at it place, just the owner got changed. And also as far as belief is concerned, the people had to travel about 250 miles to another island for the limestone. And on the way back something happens to the stone then they used to believe the person who narrated them the story of the incident.
Not only this, there was a time when Brazil also faced hardships in the 1990’s. The government produced money in large amounts for developing a new city, due to which the whole country faced inflation. The inflation was very severe, and the prices of the thing was increasing day by day. And this horrible inflation continued for 5 decades. Even the president Collor in 1990 announced that they will confiscate the citizen’s money, so that they can end the inflation somehow. Due to which many people committed suicide.
According to the article of Milton Friedman, even in the American history the topic of the stone money is mentioned. Around the year 1932-1933, the France government had feared that there will be an increase or decrease in the price of the gold, as they knew that USA will not stick to gold standard traditional price. And due to which they converted dollar assets into gold. So that they can avoid the shipping of the gold through the oceans. And hence, the New York reserve bank shifted their gold to separate lockers and marked the lockers as French reservation account. And this can be compared to the YAP people, as they also kept the money steady at one place; so does the French people did, they also kept their physical form money into the bank lockers as they considered it safe and also it didn’t move from its place. It was just there.
As the YAP people used huge stone money, similarly there is a term known as “Economy”, which was quite unknown until 20th century. After the 20th century the terms like GDP, National Income, VAT, etc. came into function. And all these became an overnight sensations. Because after that all over the world were making their own national GDP, army and airlines. It is another way of calculating the money which is not even there, it just measures the economy.
Friedman, Milton. “The Island of Stone Money.” Counterintuitive, Stanford University, Feb. 1991, https://counterintuitive2015.files.wordpress.com/2015/01/stonemoneyessay.pdf
Glass, Ira. “The Invention of Money.” This American Life, 19 Feb. 2018, https://www.thisamericanlife.org/423/the-invention-of-money.
Goldstein, Jacob. “The Invention of ‘The Economy.” National Public Radio, February 28, 2014, https://www.npr.org/sections/money/2014/02/28/283477546/the-invention-of-the-economy