I haven’t really ever thought about how abstract the idea of money is. The intrinsic value of money is fictional. Paper dollars, metal coins, and numbers in a computer system mean nothing if we don’t give them meaning. When people don’t believe in money it loses its value. Money is really just an idea, yet in our minds, the item that we chose to represent this abstract idea with, is what holds the value. This very reason is why America’s banking system collapsed and why the Great Depression occurred. When the French demanded that their gold be set aside to make sure that the United States wasn’t going to spend it, nothing changed. The United States knew its debt and they had the gold in their possession to pay it back, it was just locked away in a vault. As soon as the gold was relabeled, the United States felt as if they had experienced a great loss, when in reality they still held the gold that they “paid” the French in their vault.
The Yap, however, would have viewed the transaction between the United States and the French complete. I think that the Yap might consider the fact that we keep most of our wealth in an electrical system without much visual or tangible reassurance other than virtual numbers, the most bizarre. When you think about it though, we all really are just trading fictional numbers when dealing with money. Who says that milk should cost $3? Why can’t it cost $300 and minimum wage be $800 an hour? It doesn’t matter what the figurative cost of something is, as long as it makes sense in scale we use. Money is an idea not an object and “dollars” are an object not an idea. That is precisely the reason why different countries can have different currencies and still trade.
For money to exist, it has to be reliable. That is exactly why the Brazilians started to trust the new currency because the new money’s value stayed the same throughout the day, week, and for months to come. The amount of debt the United States is in at the current time has certainly raised questions about how reliable our money is. If the President can keep raising the debt ceiling, then what is the point of having money at all? At some point this country’s whole money system has to come crashing down unless the debt is fixed. We could be facing the same fate as Brazil did just a few short decades ago.