Money is defined as something generally accepted as a medium exchange, a measure of value, or a means of payment. We use money as part of our everyday lives and it can dictate what we think is valuable to us. There are many ways that we can use our money and how we would like to spend it. There is this one money system that we learned about in class that shocked me. The Planet Money team at NPR introduce and broadcast the stone money story. A preindustrial society on the island of Yap, uses giant stones as currency. The people on this island Yap did not have their money in possession. To me, that seems strange to me. After listening to the NPR broadcast about this, my perspective has changed. In the broadcast, they said that a crew was bringing back one of the limestones that they cut and suddenly, a storm came. The crew had to let loose the stone, leaving it at the bottom of the ocean. The crew eventually made it back to Yap and when they told the people they said it was fine and that it was no problem. To the people of Yap, they are thinking that it exists, and it is still good money even though it is sitting at the bottom of the ocean. To them, it is a logical extension of what they are already doing. It seems bizarre to me because if money ended up at the bottom of the ocean I would be devasted.
After reading Freidman’s essay on the Island of Stone Money, it made me begin to understand the money system of the island of Yap. The island of Yap does not have any metal. Meaning that they could not make coins, a type a currency that we have in the U.S. Therefore, the people of Yap had to resource to stone. Their main medium of exchange is called fei, which consists of large, solid, thick, stone wheels, ranging in diameter from a foot to twelve feet. The stone “coins” are made out of limestone that was found on a island that was 400 miles distant. Families had never even laid their eyes or hands on their wealth and they are okay with it. Freidman mentioned that the people of Yap did not need to document any exchanges. In a way, the island of Yap’s monetary system is similar to our money system. Many people have debit/credit cards and different accounts that advise us about our money. Sometimes we don’t see or physically get to touch our money. It can be hard to manage our money without seeing it, but for the people on the island of Yap it seems to not be a problem and it works for them. To them, the concept of money is probably not as important like it is for us.
In Brazil, everyone stopped believing in their currency. The government tricked 150,000,000 people into believing that their money was worth something when in reality there was no evidence to support the claim. The credit card was a new concept that was introduced in Brazil. People thought that it was amazing that they could pay for something like a handbag in five installments. In the 1990’s, Brazil had high inflation. The inflation was 80% per month, not year, a month, which was a problem. For example, if a pair of sunglasses were selling for $10, in the next month with inflation being at 80%, the new price of the sunglasses would go for $18. Brazilians lived with this high inflation for decades and did not know how to deal with it. Since the prices of things kept changing every day, in a supermarket someone had to change to the prices all the time. In Brazil, inflation lasted for 5 decades, so year after year Brazilian money was worth less and less. The Brazilian economy was at a low point. People had to be tricked that their money had value. They ended up making a fake currency called a virtual currency. People would still have the local currency in their pockets, but when they got paid their wages would be listed as URV’s. Taxes were URV’s, and all prices were listed in URV’s as well. This type of currency was stable. Inflation began to go down which was a good thing. It took the government to come up with this fiction of a currency to get the people of Brazil to believe that money actually had value. Just like on the island of Yap they believed that their stone money worked for them, in Brazil when the government made up the fake currency it ended up working for the country of Brazil and positive effects came out of it.
Another article that I was called The Bubble Bursts on E- Currency Bitcoin by Anne Renaut. Bitcoin is a form of e-money and it can be sent from one virtual wallet to another. It ends up bypassing banks and remains largely anonymous. The people who choose to engage with the Bitcoin users trust that the money is there but accepts the risks that come with it. Renaut mentions that Bitcoin users can only cash out their money if other people want to buy their Bitcoins. The central bank noted that the virtual currency has been vulnerable to cyber-attacks. Cyber attacks are when hackers target virtual wallets and wipes out some peoples accounts clean. For people, Bitcoin is becoming a new trend. Even if some aspects of the concept can be seen as odd, it can make some people millions.
After doing this assignment, I have a better understanding of how people perceive money. To some people money means everything to them. In other cases, money means nothing. I feel as if that money can be a problem in the world. If it is a problem, then why do people feel the need to resort to it. Like the people on the island of Yap, they are happy with their current monetary system which is the stone. I feel as if maybe people need to find a happy medium like that to solve their problems.
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
Renaut, Anne. “The bubble bursts on e-currency Bitcoin.”, 13 Apr. 2013, https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html