Money is an abstract concept, it’s value is fluid. Changing, to and fro depending on numerous circumstances. After learning about the people of Yap and the currency they use, it made me redefine how I think about money. The people of Yap use Stone Money. Money made from large circular limestone that has intrinsic value in their culture. It made me wonder what truly gives value to money. The people of Yap have entirely different means of showing wealth compared to the United States. Yet both societies illustrate just how fluid the value and definition of money is. In fact, we live in a day and age of liquid money.
In Milton Friedman’s essay, The Island of Stone Money,” it’s explained that the people of Yap have no way to mine precious metals for money. So they use large limestone coins, called fei, as their form of money. They have to get on a raft and go hundreds of miles to get the limestone, carve it into a circular shape, and then bring it back to the island. This entire process shows just how the people of Yap view money. The value of the fei is not dependent upon proximity, nor does the owner need to ever touch the fei for them to be wealthy. The process by which to obtain the limestone coin is tedious and takes time, therefore the fei is worth something. Now this concept that a large stone coin is worth something seemed strange to me at first. I needed to know how the money of the United States and the Yap could both be called money. They couldn’t be anymore different yet we call them the same thing. The best explanation would be that money’s value is fluid. What one group calls money, and what another group calls money could be completely different. Society is the one that gives value to some object, and once that object is worth “something”, and others are willing to take it, it becomes money.
The NPR broadcast gave an interesting perspective on money. Money is fiction. In the United States we live in a day and age where most people don’t even carrying physical money. Many of us access our money electronically. We transfer money to pay bills, or between accounts. But in most cases that money doesn’t physically exist. None of us have to touch it, nor be near it, yet it still has value. This is similar to the people of Yap which lead to me think that money’s value is fluid. Going as far to say that it is fictional is a bit of stretch for me personally, because money does physically exist in the United States. The idea that certain items are worth money is a good example of money’s fluidity. For instance, most would say that an extremely nice sports car is worth a large sum of money. The moment the car is drove its value begins to drop. If the car is in some of sort of accident its value plummets. However, the car is still the same hunk of metal and parts that it was before. People believe that the car cannot serve its intended purpose as well as before therefore it is worth less money. People are less and less willing to take the car which diminishes its value. After thinking about this I began to wonder what really is “money” in America.
Now looking at the history of money is a good way to see how the United States arrived at its current money. As society developed past the primitive bartering system of old, we needed something more advanced. A way to say “hey, I’m wealthy and contribute to society,”. For a long time this was done using precious metals. Silver, and gold coin were made from refining ore and whoever had a lot of gold was wealthy. Eventually, the government began to print paper that represented gold and silver, because it made transporting money much easier. Things carried on like this for quite some time until we arrived at the modern age. Today things are quite different, in fact, the money in any given person’s pocket isn’t even backed by gold. The only thing backing today’s money is belief. Money’s value is flexible, and doesn’t rely on anything tangible. Instead, society gives value to money because we want it to be that way. We want it to be worth something, therefore it is. A very good example of the evolution of money would be bitcoin. In an article titled, The Bubble Burst on e-currency Bitcoin”, I learned that a single bitcoin went from being worth around $266 to around $54 in just three days. Now the interesting thing about bitcoin is that it was never backed by a commodity of any kind. Yet it went from being worth a lot to a little. The money seemly vanished, which would seem to add to the argument that money is fictional. However, the money didn’t vanish it simply changed its value because of people’s beliefs. Many believed before hand that the e-currency market was going to crash, so the public’s belief that bitcoin was valuable was shaken. This show that we live in a society of liquid money that changes depending on what we believe is valuable and what isn’t.
Exploring what money is and how it is defined has been interesting. I believe that our current money is liquid and is backed on hopes and dreams, as corny as that sounds. The physical money in our pocket, is only worth the paper its printed on. The electronic money that many of us use also is worth the same as the giant Fei of the people of Yap, as much as we want it to be. The idea of liquid money also explains why bitcoin prices can fluctuate so easily. The money didn’t disappear, we simply believed that bitcoin was worth less so it was. As long as we kept believing in money, no matter what that money may be, it will be valuable.