Weird Types of Money
A look at some of the crazy currencies throughout the world
What is money? In fact don’t answer that, let’s ask a famous person.
We are inundated with money concerns all the time. We need money for everything. Despite it being the life source of the world most of us don’t understand it. It might as well be magic.
It doesn’t have to be this way. Lets looks at a few of the crazy currencies that have existed.
Seashells
If you ever went to the beach as a kid the chances are you picked up a seashell and put it in your pocket. They are small, portable and pretty to look at. As children we feel they have value and sometimes we collect them or make necklaces out of them.
Seashells were used as money in the Americas, Asia, Africa & Australia because of the following properties:
Small & Light
They Don’t corrode or rot
There were quite rare in the places that used them
What Went Wrong?
Once people had established that shells were valuable as money some enterprising individuals started shipping them from far off places and spending them. This made some people very rich. Unfortunately over time there were so many shells in circulation and it was so cheap to import new shells that they lost their value. Turns out you can only use shells as money when there aren’t that many about.
Rai Stones
These massive stones are a form of currency on the Yap Islands
The Yap Islands are hundreds of miles east of the Philippines.
Rai stones are not native to the Yap islands and have to be imported from the Palau islands which is 400km away. That’s long way to ship a stone. As these stones can be massive this was a significant expenditure in centuries past.
How Do They Work?
You can move the smaller ones around but the big ones were left in communal areas. When someone bought a big stone they would announce it to the community so everyone knew who owned which stone.
What Went Wrong?
The arrival of Europeans market the beginning of the end. With more modern tools and ships bigger Rai stones could be cut and transported to the Yap islands. As these new stones were produced more cheaply courtesy of European Technology they were not perceived to be as valuable to the local population. Trade for Rai stones ceased in the 20th century and while they are still a cultural symbol modern money has become the currency for the islands.
Glass Beads
Small glass beads were valued in Africa for centuries as they were small, light, desirable for jewellery and expensive to replicate.
How Did They Work?
They worked much like coins and shells. People exchanged them for goods they wanted, made jewellery out of them and kept them as a store of wealth. At the time Africa did not have much in the way of glass making technology so the supply of new beads to the market was pretty low.
What Went Wrong?
Once trade opened with Europe everything changed. European countries could produce glass beads much more cheaply in Europe than in Africa and that is exactly what they did. The Venetians especially produced huge amounts of beads. These beads were then exchanged for Africa’s natural resources (Gold, Ivory and even slaves). The Europeans produced so many of these beads and increased the amount in circulation so much that an argument can be made that it was a speculative attack on the West African monetary system. As the number of beads in circulation increased, the value of individual beads decreased (we call this inflation). The Europeans had lots of gold from the trade and the Africans were left with a soft money that could easily be made abroad.
The Wealth Gap View
All of the above currencies worked fine until someone (usually the Europeans) found a way to cheaply create more of that currency. By finding a way to create money for less than it was worth they were able to purchase valuable good from those local communities. As they pumped more and more money into the individual systems, the value of the individual units was lost as the abundance of units grew. This happened slowly over time. So slowly in fact that no one noticed. As the money making technologies improved the cost of making money got cheaper and cheaper which gave the people making money substantial buying power right up until everyone stopped believing the money was worth anything and the monetary system collapsed.
Historically the best form of money has been gold. Gold is one of the scarcest assets on earth and is notoriously difficult to refine but even the production of gold will increase once it is profitable enough to do so.
Now we have Bitcoin which cannot be counterfeited or have its supply increased. The world is about to change…
Until Next Time
The Wealth Gap