Although we use money every day, most of us never think about the true concept of money. Money is the abstract idea of worth. Paper dollars, metal coins and numbers in a computer system don’t mean anything if we don’t give them worth. Think for example about how much it would cost to see a Beyoncé concert. Why would it cost more to see Beyoncé sing than a normal unknown person with the same amount of talent? They both are providing the same service, but the worth that we assign to someone that is famous has the same logic behind it as the worth that we assign to these pieces of paper and metal coins. The amount a person gets paid for their job and the amount that they pay for different goods have been assigned that price.
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. When the French demanded that their gold be set aside to make sure that the United States wasn’t going to spend it, no money changed hands. 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” to the French.
The Yap, however, would have viewed the transaction between the United States and the French complete. These Yap people traded huge lime stones as money, but instead of it changing hands once a deal was made, they just metaphorically gave it up to the person while still keeping the stone outside of their house. 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. Even though the Yap never literally gave the limestone up when they paid, they at least could go see their money existed in the real world and they could touch it. We can only look at numbers on a screen or a little ticket to tell us how much money we have and just as easily as we can look at the numbers someone can change them. For us, it’s like owning a cow that lives somewhere else. We can have someone send us pictures of our beautiful cow, but we can’t go see him and pet him. Using the same analogy, the Yap would own the same cow, but they can go take a walk a couple blocks away and make sure their cow still exists. That is why the Yap would find it harder to understand only being able to see their money in a virtual world. Although the one stone that sunk to the bottom of the sea wasn’t able to be seen in real life because it sunk to the bottom of the sea, I’m sure not everyone was able to recognize the sunken stone as legal tender right away unless they were having the wealth of it bestowed upon them.
Money is an idea not an object and “dollars” are an object not an idea. That is why different countries can have different currencies, and that is why there are exchange rates for different types of money. Every country at one time created a monetary system and followed it. Since the beginning of time, different countries have traded and that is why we have to have exchange rates.
For money to exist, it has to be reliable. Just a few short years ago, Brazil was in a debt crisis because the government was printing more money than it could back. For many years, the Brazilian monetary system was completely out of whack, prices were increasing daily at alarming rates and the citizens had lost faith in their money. When Brazil changed their money to the real, and made it so that it was stable, 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’s the point in establishing a certain number that we cannot surpass in debt? It’s supposed to stop our government from spending our country into oblivion but the debt ceiling is just as unstable as Brazil’s old money system. At some point this country’s whole money system has to come crashing down unless the debt is fixed or we could be facing the same fate as Brazil did just a few short decades ago.