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