Category: Stone Money

Non Portfolio writing assignment. The Counterintuitive Nature of Money

Stone Money- Dirtyjerz065

Money is something we cannot live without but we cant take it with us when we die. Our daily life revolves around money rather we like it or not. We go to school and wake up in the morning to make money because money runs the world. Without money we can’t eat, we don’t have a place to stay, we will live a stressful life without money. The more money you have the powerful you are. The most powerful figures on this planet are filthy rich. You can earn money in a million different ways and I believe that’s the reasoning for a lot of criminal activity because people are money hungry and will do anything for money.

In the article, “The Island of stone money,” by Milton Friedman he discuses the Yap people unique money system. According to the article the people of the Yap have been using a single currency if money for several years. The currency is a massive stone wheel called rai. With no precious metals on the island they resorted to limestone. The most interesting thing about the currency is that the stone don’t come in small exchangeable pieces but with massive discs with an opening in the center. When someone wants to make an exchange for the stone like a house, the seller would simply knowledge that the disc belongs to them. Its based on trust because you cant exchange the stone between one man and another. The people of Yap didn’t need to see the stone to know it exist just like we don’t see every dollar of our pay checks.

Broadcasting journalist a NPR radio told the story of Brazil 1950’s massive amount of inflation. The president of Brazil was responsible of prize freezing and restricting people from moving money to their bank which caused locals to be furious because their money was held captive in the bank. In 1993 Brazil’s finance minister turned to economist Edman Bacha for help. He wanted people to have faith in money again. He came up with is virtual currency. The people of Brazil had no problem in adopting this form of currency into their lives. That sense of financial stability was returned to them and surely enough, inflation rates decreased dramatically.

 

 

 

Stone Money- moneyonmymind6

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.

References

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

Stone Money – Jeprr

The concept of money is not as concrete as it seems. Money is not the same everywhere. How it’s accepted is called a currency. Over many centuries, the physical attributes of money has changed. In the paper by Friedman in his “The Island of Stone Money” he mentions the people of Yap using ring shaped stones as currency. The value of the stones come from the labor that the workers put in. So, if we consider our paper system in the U.S. to have some “value” and the people of Yap recognize their stones to have “value” as well, then what’s the difference? Money is an abstract where people define its wealth. People as a whole within a society have to recognize the value of that abstract and such object has to be transferable one way or another. If something is not seen as something valuable then it cannot be considered as money.

I have known that the U.S. currency is based off of nothing. Before, the U.S. currency was based on how much gold was available. This is not all that different from what the people of Yap did. Both used one or more than one mixture of metals as their object of currency. The U.S., as well as other countries, used gold because it was rare. Whoever had the most gold had the most “money”. The people of Yap could not use this same concept because stone isn’t rare so, they brought a new concept: labor. The idea is that even though stone is abundant they crafted these stones into giant discs with a hole in the middle in various sizes. This required a lot of labor which drived the value of these giant disc shaped structures. A common aspect of both currencies is that the objects that they use are rare. An abundance of something is not valuable but something of rarity can be recognized to have value. And, if two parties recognize the object’s value then it can be used as currency. Gold is rare and the stones that the people of Yap are not found everywhere because they are handcrafted. The U.S. produces the dollar, a currency based off of nothing. But, if the dollar is made out of just paper and lint, then how is it rare and how can it be money? The U.S. Mint limits the amount of dollar bills produced. The dollar bills also have security features to make it harder to be reproduced. This produces a form of “rarity”. The more of these dollar bills are produced the more value of the dollar is reduced. In order for paper money like the U.S. dollar to have value we, as a society, have to accept the value of a dollar as such value and worth.

Cryptocurrency is a new form of currency that is digitally based. This form of currency takes the same idea from paper currency where it’s based off of nothing but it has a limited total amount. The difference with this currency is that this isn’t managed by a central bank. The most well known cryptocurrency is Bitcoin. The formation of Bitcoin can be seen as something similar to what the people of Yap did with their stone money. Bitcoin has been made as an alternate, baseless form of currency without the need of some central organization. People in today’s society have to recognize the value of a unit of Bitcoin to give it real meaning. The uniqueness of Bitcoin and other forms of cryptocurrency is that it is built to prevent inflation, meaning the Bitcoin will never lose its value because more time would be needed as more Bitcoin is made. This is the nature of mining Bitcoin. The issue with Bitcoin is its perceived value. The value of Bitcoin is not a fixed set which makes it volatile. This is usually caused by the lack of trust and a uniformed agreement about this new concept of a currency. Investors are scared off by the media thinking this is a bad investment. However, Bitcoin is a good concept and a step forward to a global currency where it is not managed by our governments with the potential to inflate its value.

Unlike cryptocurrency or even our fiat currency, gold had a major issue where its global supply grew too slowly which could potentially cause nations to overspend and approach inflation. With our current fiat currency, we aren’t much different from the people of Yap. One group uses stones and the other uses paper. Other than that, both are not backed by a physical commodity but rather given intrinsic value by the people who uses them. If we are to still use the fiat currency then I do see cryptocurrency as a better alternative to our current system, just not established enough. This new system has to be polished for more people to place their trust and their recognition of value.

 

References

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

Stone Money- PeterBomersbach

Money currently in the United States means more than a piece of linen with random symbols on them. There are plenty of poor people out there where a dollar can seem like a hundred and vise versa, a one-hundred follows bill could seem like one dollar to someone else. Money to me has more meaning than the number printed on the piece of linen. It represents the amount of hard work I put in at work etc. to derserve the lives of linen in return. The whole system here in the United Statates is very fishy in my opinion with the visible money and money that goes in to banks.

If I cant physically see the money I own, does that still make me rich? An audio blog cast by NPR referenced the meaning of money in the United States and they said the same thing which was the fact that we can’t even see our money if we walked into the bank and asked to see it. So in return, if I have 500 thousand dollars in my account and I couldn’t even see it, would that still make me rich? In my opinion, that still means I am rich just with a different type of currency used online instead of visible currency. There are other regions that do not use the same currency as the United States. For example: Europe uses £ and Mexico uses Pesos which are different than the American dollar.

There is a western island part of the Caroline Islands in Micronesia called Yap with a population of around 6,000. The article from the Island of Stone Money written by Milton Friedman said the currency they use is called fei and it is made up of large lymestone wheels, ranginging between one foot to twelve feet in size. The large stone wheel has a hole in the middle which also varies in size. If the fei want to move the stone, thay have to use a wood stick and roll it to the designated area slowly.

The fact the United States can easily print money when needed makes it a lot easier for the government to control how much is put out into circulation. Too much money can lead to an increase in prices. The value of the American dollar has changed since it first was started by decreasing the meaning behind it. A dollar way back meant you were Able to buy what you wanted and everyone could see you had money. Nowadays people don’t know the meaning of a dollar because everything is much more expensive and that fact that not nearly as many people can physically see their money compared to decades ago, it is all being transferred online.

The Fei has a much different story compared to the United States. A BBC article written by Robert Poole explains the value and effort put in by the Yap to acquire such currency for their Island, the Yapese sail all the way to Palau, an island nation 400km to the south-west just to collect their precious material used for currency, and they don’t always make it back. The value of the lymestone has not changed since the Yap first started it but with the exception of the Germans changing the currency for a short amount of time just for their pleasure so the Yaps follow orders building roads.

References

Poole, R. M. (2018, May 03). Travel – The tiny island with human-sized money. Retrieved September 25, 2018, from http://www.bbc.com/travel/story/20180502-the-tiny-island-with-human-sized-money

Friedman, M. (1992). The Island of Stone Money – Items – Collected Works of Milton Friedman. Retrieved September 25, 2018, from https://miltonfriedman.hoover.org/objects/56723/the-island-of-stone-money?ctx=128abf37-5644-46f6-9f5f-32fa286cb160

Goldstein, J., & Kestenbaum, D. (2010, December 10). The Island Of Stone Money. Retrieved September 25, 2018, from https://www.npr.org/sections/money/2011/02/15/131934618/the-island-of-stone-money

 

 

Stone Money- veleze22

In todays world money is quoted “the root of all evil”. It’s used to ultimately get what you want, when you want. People say “money talks” and in an instant will do damn-near anything if the price is right. It doesn’t matter what form it comes in either as long as that slip, app, or physical dollar comes with a good number on it. I begin to ask myself, how do we know it’s all real? How do we know that those numbers aren’t just there for satisfaction and to make us feel good?

 

Reading Milton Friedman’s “The Island of Stone Money” really opened my eyes and helped me understand how currency and it’s value all came about. It makes me question our currency today and how it really works being that there are all types of forms we use to transfer funds between one another. The government only tells us their price for what our currency is worth. For all we know it could be worth nothing at all. It could literally be what it is, a piece of linen and cotton with a number on it. In the article the German Government bombarded into the island of Yap and claimed everything that wasn’t theirs. They took control and claimed the paths and highways were in bad condition. The chiefs of the several districts were told that they must have them repaired and put in good condition. Whoever questioned it got their fei slapped with a big X of black paint, it was then the German Governments fei. That’s like my bank account being frozen for failure to pay off a bill or not keeping enough money in my account.

 

The islanders of Yap resorted to stone being that there was no metal supply. They needed a form of currency that allowed their people to be able to purchase goods and trade. Fei was then created of limestone found on an island 400 miles away. It consisted of large and solid stone wheels, which ranged anywhere from one foot to twelve feet in diameter. Some of them weighed more than what a car would today. They were not mobile at all. The way it worked was by ownership. If you traded a giant stone for something big in return it was now your possession and everyone knew it. There wasn’t any way of transporting it to their home if you will, it stayed where it was originally.

 

After listening to “The Invention of Money” on the NPR broadcast I started to think about where does all my hard earned money go after every week? Does the government keep the actual value as I hold a slip with computerized numbers on it? Brazil’s inflation rate hit 80% for every month, it lasted about 5 decades. A bag of chips could cost a dollar one month and by the next month they’d cost $2 and by the time the year is up the price could be $12 for that same bag of chips. Brazil was putting their trust in president after president. It was like a continuous cycle of failure. A virtual currency system came into play which was used to trick people into thinking that the currency was real. People still had and used the existing currency, the cruzeiro but everything would still be listed in the real. Everyone was promised to receive their wages and pay for all the prices in the new currency. The inflation basically ended and the economy was turned around. Brazil became a major exporter and 20 million people rose out of poverty.

 

In 1932-33 Bank of France worried that the U.S. would not stick to the gold standard at the traditional price of $20.67 an ounce of gold. It asked the Federal Reserve Bank of New York to convert dollars in the U.S. into gold. They wanted to avoid shipping the gold overseas so it requested to keep the gold in the Bank of France’s account. The Federal Bank Reserve went to their gold vault and basically did what the German Government did in Yap, they put a label on their separate drawers which made it known that it was the property of the French. The markets saw the U.S. dollar as weaker and the French as stronger, that led to the banking panic of 1933.

 

This whole topic has left me with the conclusion that our money isn’t really ours whether we work for it or not. Years from now physical currency will no longer be a thing and all currency will be virtual. It makes me want me to save as much cash as I can before it comes to an end. Then again who knows if it would even be valuable. It sucks that we can’t trust our government, who knows what else could be going on behind the scenes. Let’s create our own, new and improved form of currency!

 

References

 

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, http://www.thisamericanlife.org/423/the-invention-of-money

 

Goldstein, Jacob, and David Kestenbaum. “The Island Of Stone Money.” NPR, NPR, 10 Dec. 2010, http://www.npr.org/sections/money/2011/02/15/131934618/the-island-of-stone-money.

Stone Money- whosthatguy2

There is one common goal that everyone on this earth has and it’s to make money. Everyone wants to have a lot of money. People go to college to ensure they can get a good job to make “good money”.  People work every day for this material that is so important in our everyday lives. Money helps you survive, money helps you buy the things you want and the things you need but the craziest thing about it is that money isn’t even real.  Money is a way to class people as lower, middle, and upper class but how do you classify people on a system of monetary value when the monetary value isn’t even real. People carry little amounts of cash in their wallets every day but money in the bank isn’t actually yours.

After listening to the podcast “The Invention of Money” everything makes sense. In this podcast they talk about the question “How much money is there?” and there’s no way to actually know. If people ask you how much money you have you are going to count the money in your bank and in your wallet but once that money goes into your bank it is loaned to someone else and now that person has your money. In this podcast they talk about how you cannot count that money twice. So if everyone is sharing the same money how do you count it, how do you know what’s yours and what’s not? How can their be so many questions about such a simple thing.

In Martin Friedman’s “The Island of Stone Money” he discusses the way that the people of Yap use money. In Yap the carve these giants wheels made out of limestone that they call “fed” for their money. These stones are huge so the people of Yap don’t carry them around with them. These stone sit in the same spot but everyone knows that it’s their stone. Once you trade that stone to someone else it still doesn’t move. It is known by everyone that it is your stone regardless if you have it with you or not. The people of Yap have to go to a different island just to carve these stones and once they even dropped a stone in the middle of the ocean due to a storm but they still use it as money in their economy. You might think this is crazy think about it but it’s really not. This is almost the same thing we do today. We do online shopping and we pay our bills online and where does this money go? The bank does hand the the money to the bank or give the money to the people you are shopping from. Money online is just and exchange of numbers over to another place. In “The Island of Stoney Money” Martin Friedman shows this concept again. In 1932 The bank of France needed gold from America. America told them that they set aside their gold for them and they didn’t transfer it to them. France was fine with this and happy they had their gold. The odd thing is that they didn’t have the gold it was in America so why were they satisfied with it.

In the piece ” How Fake Money Saved Brazil” the inflation was 80% which Joffe-Walt explains that a $10 pair of sunglasses would be over $10,000 in a year. They had no way to fix this. Year after year the Brazilian economy was changing. This happened for 50 years.  People in Brazil were losing money every day. They tried to fix this with a price freeze but than merchants started hiding their merchandise waiting for the prize freezes to go away but once that failed President Collar tried to help but his deal was that you were not allowed to take your for a while. Finally their came four Economist to solve the problem. These four people had a plan that they discussed for years over the Brazilian inflation. They came up with URv’s and URV’s are stable. The URV made people stop panicking. This made people think that there was no more inflation. The inflation was still there but it was lowering by the years. This fake currency saved Brazil just because everyone was tricked into it being real.Finally in 1994 they made a new currency that ended the inflation. People stopped panicking because of a simple trick in money. How can money do something like that over so much panic.

References:

Joffe-Walt, Chana . “How Fake Money Saved Brazil.” NPR.org. 4 Oct. 2010. 30 Jan. 2015. http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil/ 

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

 

 

Stone Money- muggastackz

What is the whole point of money? Money is key in today’s society. The significance of money has been around for decades. Most people in my generation would say, “If you ain’t getting money, then what you doing?” Money is power and that is what everyone needs to help them get through life. In general, money is supposed to make people happy. This green paper bill allows people to purchase items that are needed, but is that all the money can do? Money is generally the root of all evil! Money can cause depression, financial stress, divorce and gambling problems. Is money significantly important to society or is it just a social problem that keeps the world going? It amazes me how much money is in the world right now currently being spent.

Money can come in any shape or form. A small country in the Pacific Ocean called Yap created their own source of money. The way they created this was from limestone. But they created this stone to be a huge rock deposit. The people on the island Yap knew that they had to make things do with the resources on the small island. They realized that they needed to put value into this mass stone. When I first listened to the podcast by NPR, I would have never thought a rock could be a source of money for people.  Milton Friedman talks about the island of Yap in his research report called “The Island of Stone Money”. He shares that the Yap islanders brought their own manifestation of wealth by creating the stone money (Friedman 4). Also, their source is worth a significant amount of money even when it isn’t being used.

Some objects that we have today are known to be materialistic items. Purses, shoes, clothes, cars, etc. Personally, I am one of those people who spend money frequently and focuses on stuff that money shouldn’t be deprived on. When spending money on objects that have no degree or meaning to life isn’t helpful in society. The items you purchase shows where you come from and how much money you have. We as people see famous celebrities or business gurus with their items that they purchase with all of the wealth we have. Rappers spending thousands of dollars at jewelry stores and strip clubs; causally throwing money down the drain. People who are “rich” or “wealthy” don’t care about their money as much. These people know that they will always have money that can just be replaced with another movie deal or music video. Their value of money isn’t the same as regular citizens idea of money. The idea of money can come from several perspectives; everyone sees the value of money differently.

Money has definitely changed over time. As decades went on, technology has come through over the years to show that spending money can be in different forms than just cash, coins, and checks. Society can use cards through apps to transfer and receive money. Apple products can now pay for food and other items through there device. There once was a time you had to go to a store and actually purchase items. People don’t have to get out of bed to do any shopping. Technology and money go hand in hand in today’s world. Linking your credit or debit card will have us to make purchases whenever we want. Money has also changed by people converting money into bitcoins or people trading Forex. By watching the charts or letting money sit will give you some fast money in just a couple days. More people find the easy way out to make quick money and it seems to be working just fine for some people. I tried to make fast money by doing Forex for a couple weeks and surprisingly I made a couple hundred dollars by just marking up my stock charts and picking good currencies to trade with. Everyday money is changing as the years go on.

Even the way money looks its starting to change throughout the years. The faces of paper bills have changed several times decades after decades. The. bigger bills like 20, 50 and 100 are always switching up from the original. The $100 bill would have new enhancements while the smaller bills (ex: $1 or $2 bill) would receive no improvements(Mcmorrow-Hernandez). When creating new enhancements to the bills, people of today’s society are always thinking of ways to make “fast money”, counterfeit money is being used each day for spending. Along with making counterfeit money, bad money checks are being used get $1000s of dollars within hours. People put too much thought into having fast money. My mother always told me, “Fast money isn’t good money.” Stated previously, money can cause problems that could jeopardize futures.

When it comes to different terms regarding money, they are always misinterpreted. Society gets the term wealth and the term rich mixed up. Wealth is the idea of having valuable possessions that are abundance over time. Being rich is having money at the moment for big success. Cash is the paper form of money, people use cash sometimes due to the fact that there are debit and credit cards. The value of money goes hand and hand. Each amount of money has a different value, every bill, a coin has a significant value than another. The form of money can be converted through several forms. An ATM helps transfer money in and out for people to make deposits and withdrawals. The ATM is also known as an electronic bank machine.

the importance of money is very valuable. It could be for valuable for people who are rich or poor. The idea that money isn’t everything, isn’t true. Money holds a lot of power to society. It is how we get our household items, personal items, cars,  houses etc. Without money or another form of money, what would we do and how will we react each day if money wasn’t in demand?

References

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

Hernandez-McMorrow, Joshua. “How Paper Currency Has Changed In Our Lifetime.” CoinWeek, May 23, 2017.  https://coinweek.com/paper-money-2/paper-currency-changed-lifetimes/

 

Stone Money- jokerthefool

Money is an abstract concept, it’s value is fluid. Changing, to and fro depending on numerous circumstances. After learning about the people of Yap and the currency they use, it made me redefine how I think about money. The people of Yap use Stone Money. Money made from large circular limestone that has intrinsic value in their culture. It made me wonder what truly gives value to money. The people of Yap have entirely different means of showing wealth compared to the United States. Yet both societies illustrate just how fluid the value and definition of money is. In fact, we live in a day and age of liquid money.

In Milton Friedman’s essay, The Island of Stone Money,” it’s explained that the people of Yap have no way to mine precious metals for money. So they use large limestone coins, called fei, as their form of money. They have to get on a raft and go hundreds of miles to get the limestone, carve it into a circular shape, and then bring it back to the island. This entire process shows just how the people of Yap view money. The value of the fei is not dependent upon proximity, nor does the owner need to ever touch the fei for them to be wealthy. The process by which to obtain the limestone coin is tedious and takes time, therefore the fei is worth something. Now this concept that a large stone coin is worth something seemed strange to me at first. I needed to know how the money of the United States and the Yap could both be called money. They couldn’t be anymore different yet we call them the same thing. The best explanation would be that money’s value is fluid. What one group calls money, and what another group calls money could be completely different. Society is the one that gives value to some object, and once that object is worth “something”, and others are willing to take it, it becomes money.

The NPR broadcast gave an interesting perspective on money. Money is fiction. In the United States we live in a day and age where most people don’t even carrying physical money. Many of us access our money electronically. We transfer money to pay bills, or between accounts. But in most cases that money doesn’t physically exist. None of us have to touch it, nor be near it, yet it still has value. This is similar to the people of Yap which lead to me think that money’s value is fluid. Going as far to say that it is fictional is a bit of stretch for me personally, because money does physically exist in the United States. The idea that certain items are worth money is a good example of money’s fluidity. For instance, most would say that an extremely nice sports car is worth a large sum of money. The moment the car is drove its value begins to drop. If the car is in some of sort of accident its value plummets. However, the car is still the same hunk of metal and parts that it was before. People believe that the car cannot serve its intended purpose as well as before therefore it is worth less money. People are less and less willing to take the car which diminishes its value. After thinking about this I began to wonder what really is “money” in America.

Now looking at the history of money is a good way to see how the United States arrived at its current money. As society developed past the primitive bartering system of old, we needed something more advanced. A way to say “hey, I’m wealthy and contribute to society,”. For a long time this was done using precious metals. Silver, and gold coin were made from refining ore and whoever had a lot of gold was wealthy. Eventually, the government began to print paper that represented gold and silver, because it made transporting money much easier. Things carried on like this for quite some time until we arrived at the modern age. Today things are quite different, in fact, the money in any given person’s pocket isn’t even backed by gold. The only thing backing today’s money is belief. Money’s value is flexible, and doesn’t rely on anything tangible. Instead, society gives value to money because we want it to be that way. We want it to be worth something, therefore it is. A very good example of the evolution of money would be bitcoin. In an article titled, The Bubble Burst on e-currency Bitcoin”, I learned that a single bitcoin went from being worth around $266 to around $54 in just three days. Now the interesting thing about bitcoin is that it was never backed by a commodity of any kind. Yet it went from being worth a lot to a little. The money seemly vanished, which would seem to add to the argument that money is fictional. However, the money didn’t vanish it simply changed its value because of people’s beliefs. Many believed before hand that the e-currency market was going to crash, so the public’s belief that bitcoin was valuable was shaken. This show that we live in a society of liquid money that changes depending on what we believe is valuable and what isn’t.

Exploring what money is and how it is defined has been interesting. I believe that our current money is liquid and is backed on hopes and dreams, as corny as that sounds. The physical money in our pocket, is only worth the paper its printed on. The electronic money that many of us use also is worth the same as the giant Fei of the people of Yap, as much as we want it to be. The idea of liquid money also explains why bitcoin prices can fluctuate so easily. The money didn’t disappear, we simply believed that bitcoin was worth less so it was. As long as we kept believing in money, no matter what that money may be, it will be valuable.

 

Stone Money– BeezKneez

It is very easy to come to the conclusion that money is every society’s idea of wealth. Money can literally be any object that is tangible or represented electronically such as Bitcoins. Historically, money is any item accepted as payment for goods or services. Shells, coins, limestone, and even barley have been used as money. 

The NPR broadcast by the Planet Money team tells the story of the Island of Yap. Yap is an island located in Micronesia where limestone is used as money. The people of Yap travel to a distant island by canoe to harvest pieces of limestone to bring back to their home. They call these pieces of limestone fei and they are sometimes as large as a car. One would consider this very impractical. However, the natives of Yap do not carry around their money in their back pocket the same way we do in the United States. The large stones  are left in one location and it is just acknowledged by the islanders that the owner is good for the money. One could think of the stationary piece of limestone the same way as their bank account. We just carry around debit cards to link us to our hypothetical piece of limestone. 

Milton Friedman further explains the value system put in place on the island of Yap in his educated article, “The Island of Stone Money.” The German government assumed ownership of Yap in 1898 and asked the chiefs of several districts to repair several roadways that were in bad condition. Upon inspection by the Germans, many roadways were not repaired like they had ordered. Therefore, by painting black crosses on various pieces of limestone to claim them as property of the German government the natives of Yap lost some of their precious wealth. The people of Yap saw this as a huge loss in value and began to repair the roadways. Germany then erased the black crosses to give back their stones. This is very similar to a situation that occurred between 1932 to 1933 involving the United States Federal Reserve and the country of France. The French government wanted to convert assets they had in the United States from dollars to gold bars. The Federal Reserve agreed to comply with France’s request but the gold remained in the Federal Reserve’s bank instead of shipping it across the ocean to the country of France. Even though the gold was labeled as France’s, the financial world saw this as a loss for the American financial system and which possibly contributed to the beginning of the Great Depression of the 1930’s. Based on these two situations, I can further see that money , gold or stone, has a fictitious  value based solely on someone’s belief. 

The article The Bubble Bursts on E-Currency Bitcoin reminds me of the Super Mario Brothers video game of my youth.  Cryptocurrency, as it is called, is all stored online. It can go up or down in value and is literally its own type of money.  Just like in Mario Brothers, I could collect a wealth of “coins” and with Bitcoin I can collect a wealth of virtual online bitcoins. For some, it can become a real game of keeping track every minute of the day to check in on your status of Bitcoin value. There are even special Bitcoin ATMs in most major cities.  

From the beginning of time, there has always been some type of currency that people used to carry out their daily lives. Whether it was exchanging produce that farmers grew or selling pieces of gold. After thoroughly analyzing the sources, it is very easy to come to the basic conclusion that money is really a fictional idea of wealth. Back in the day, money was “real” per say. The United States government had enough gold to back the value of every piece of US currency in circulation. That is not the case in today’s world. If everyone living in the United States went to their bank and wanted to withdraw all their money in cash, it could not be done. There is more money in people’s bank accounts than their is cash in circulation.

As time progressed and the idea of currency changed, money became more of a tangible thing that helped people determine their status. However, what people do not realize about money is that money  does not really have a set monetary value. For example, we see in the stock market that the value of company shares goes up and down all the time. One day, someone can be worth millions, but then the next day they may have lost it all. 

Furthermore, money is an abstract concept that can mean many different things. In today’s society, many people traditionally used tangible items to demonstrate their personal wealth to the people around them. However, as we move forward into the future, we are seeing that having many material items or anything tangible to portray one’s socioeconomic status is becoming much more obsolete. Instead of people spending endless amounts of money on material items that they will eventually throw out , they are trending towards investing in the stock market or mutual funds. The purpose of people starting to invest their money I believe is because they realize that tangible items usually depreciate in value fairly quickly. If one was to invest money into bitcoin or another e-currency company that company may decrease in value, but it also may triple in value in a very short period of time. Having the knowledge of knowing when to hold or fold is the key to financial success.

The people of Yap recognized their wealth through large pieces of limestone. The people of the United States use paper and coins to carry out their means of exchange. We trust the fact that it is backed by the Federal Reserve Bank .  It is this common belief that all of these items are worth some amount of value This leads me to believe that everyone everywhere can decide which item they would like to use as a form of currency.  

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