There is a great historical example of how physical currency can be devalued by removing the "Hard earned dollar" factor of risk and labor that is backing it and creating it's true value. This same thing happened in our country when we moved away from using Gold, Silver and Copper coinage as a tangible and physical currency. Precious metals retain value, and will always retain value because of the risks and effort it requires to obtain them. Rarity and how much ore must be processed dictates the value of each metal. A perfect example of how this works comes from a small isolated island group in Micronesia called Yap.
Yap is known for its stone money, known as Rai, or Fei,: large doughnut-shaped, carved disks of (usually) calcite, up to 4 m (12 ft) in diameter (most are much smaller). The smallest can be as little as 3.5 centimetres (1.4 in) in diameter. Because they are not native to the island all of these had to be brought from other islands, as far as New Guinea, but most came in ancient times from Palau 300 miles away. Their value is based on both the stone's size and its history, some can weigh hundreds or thousands of pounds. Historically the Yapese valued the disks because the material looks like quartz, and these were the shiniest objects available. Eventually the stones became legal tender and were even mandatory in some payments.
The value of the stones was kept high due to the difficulty and hazards involved in obtaining them. To quarry the stones, Yapese adventurers had to sail to distant islands and deal with local inhabitants who were sometimes hostile. Once quarried, the disks had to be transported back to Yap on rafts towed behind sail-driven canoes. The scarcity of the disks, and the effort and peril required to get them, made them valuable to the Yapese. For obvious reasons, the stone money was not carried around, but was mostly kept in large deposits, similar to banks. And this is the exact same situation when currency is coined of precious metals or currency is backed by precious metals as with a Gold and Silver standard system.
But In 1874, an enterprising Irish American sea captain named David O'Keefe hit upon the idea of employing the Yapese to import more "money" in the form of shiploads of large stones, also from Palau. O'Keefe then traded these stones with the Yapese for other commodities such as sea cucumbers and copra. Although some of the O'Keefe stones are larger than the canoe-transported stones, they are less valuable than the earlier stones due to the comparative ease with which they were obtained. This is the very same thing that happened in this country, and other countries when we moved from tangible physical precious metal currency, and currency backed by limited precious metals, to unchecked printing of worthless paper and coins made of readily available common metals.
Our Government and the Federal Reserve pulled a Captain O'Keefe on us. Now it takes a ship load to even think about purchasing a larger item because the dollar has been devaluated so much and continues to be devaluated. We need to go back to stable currency backed by true physical risk and labor, Back to the "hard earned Dollar".
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