Stone Money Rewrite-edwardnihlman

Does Money Truly Exist?

For as long as I can remember, I have always viewed money as a physical item whose digital presence only existed for as much money as there really was in the physical world. However, NPR’s broadcast on money made me realize that money is not truly physical, but more so an idea that expresses wealth. Through further research on the topic, I learned not only that money as an idea has been seen throughout history, but how it works and even helps.

Initially, I was introduced to the concept through the aforementioned NPR broadcast. The hosts of the broadcast discussed how all money cannot be truly accounted for. If someone makes a deposit of cash to a bank, then it is possible for that same cash to be loaned to a startup business. The money that the original man deposited is still his, but its physical form is no longer in his possession. (NPR) Despite not having physical money, an individual’s wealth is undisputed through digital numbers. A significant amount of purchases, withdrawals, deposits, etc. occur by simply transferring these numbers. For example, if someone wanted a computer then they would give them money in order to acquire it. Where this gets interesting is that most people will not purchase an expensive computer with physical cash. Rather, they will swipe a debit or credit card and their digital numbers will transfer over to the store. Now they have officially bought the computer as far as the business is concerned. This may appear normal at face value, but when I was thinking critically about it, it was almost baffling to consider that someone can get a real item with the use of non-existent currency. This made me realize that money is more imaginary than it is real.

Alongside the broadcast’s discussion of money as an idea, one of the hosts brings up a story that is elaborated in Milton Friedman’s The Island of Stone Money. In this essay, Friedman talks about the Island of Yap and how its residents would use giant stones to make major trades. These stones stayed in one spot even if it was traded. Natives of the island simply took a mental note of who the new owner was. (Friedman) While it may come off as a foreign concept, the idea of stone money being traded in a mental, almost imaginary space is no different from the way modern day countries have their “money” as numbers stored in a digital space. The stones of the Yap culture share the same exact presence and purpose as the digital currency of present day.

This concept reminded me of discussions I would have with my father. He had been experimenting with bitcoin mining, and as such would frequently talk about it. However, I never could grasp the concept of people digitally mining money that had real world value until now. Bitcoin miners have machines that compute complex code in order to generate bitcoins into a virtual wallet. These bitcoins can then be used as currency while remaining anonymous. (Renaut) What had always perplexed me was how these bitcoins, which didn’t exist in the real world, could have value to them. Through my recent research, I realize that people hold value in bitcoins, because they trust it. The people of Yap learned to trust the stones. The people of America have learned to trust the number shown in their bank account page. It may seem overly simple, but it really is just that. If something can be vouched for, then people will trust it. The wealthiest family of Yap did not even have a stone on the island. People simply vouched for their ancestors that their stone was not only the grandest of all, but it had fallen into the ocean. What banks of the modern day do is no different. A bank is simply assuring its users that the numbers they see in their account are legitimate.

The idea of money not existing in a physical sense had even saved the nation of Brazil. During the 1950s, Brazil printed so much paper money that over the years they faced a massive problem of inflation. In 1992, four men countered this by coming up with the Unit of Real Value or URV. URVs was a virtual value of everything from prices to wages. The URV of any given thing never changed, but the amount of cruzeiros, Brazil’s currency, that a URV was worth did change. (Joffe-Walt) While this concept of imaginary money is a little different from the ones previously discussed, it still relies on people’s faith in a non-physical form of currency. While people are going out using cruzeiros as a means to purchase items, their paper money is only worth as much as its value in URVs. Citizens of Brazil have to put their faith in a constantly changing URV similarly to how the people of Yap put their faith in the value of stones.

After all of that extensive research, it is still a little hard to swallow that money has to be trusted and is not something that can be known for sure. What if banks mess with an account’s numbers? What if the wealthiest family on Yap lied about their giant stone at the bottom of the ocean? Despite the abundance of questions I may have, I did get an understanding of how it works and in the case of Brazil, how it can even help.

Works Cited

Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.

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&gt;.

Renaut, Anne . “The bubble bursts on e-currency Bitcoin.” Yahoo.com. 13 Apr. 2013. 30 Jan. 2015. <https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html&gt;.

“The Invention of Stone Money.” 423: The Invention of Stone Money. This Is American Life, WBEZ. Chicago . 7 Jan. 2011.

2 thoughts on “Stone Money Rewrite-edwardnihlman”

  2. I didn’t provide you feedback on your original Stone Money post, Nihlman, so this is my first chance to comment on your work on this topic. It has a title and a credible Works Cited, but its citations are a mixed bag of MLA parentheticals and informal in-line citations, so expect some notes about how to correctly cite your sources along with feedback about your argument.

    As you know, you’ll receive initial grades in four grading criteria: Argument, Rhetoric, Mechanics, Scholarship (ARMS). Grades can always be improved by revision. To understand your grades, you need to know your Grade Code, which I shared with you in class MON SEP 19. I’ve numbered your paragraphs for easy identification. The Writing Center offers free peer-to-peer writing instruction appointments to suit your schedule. And additional feedback is always available from me upon request.

    Argument (Grade D)
    Your opening begins impressively, Nihlman. It makes an actual claim about precisely what you believed about money before you were exposed to the Invention of Money storyline. Now, we have a baseline to compare your old notions to your more enlightened ideas later. You falter in your final sentence by saying not one thing clearly.

    Through further research on the topic, I learned not only that money as an idea has been seen throughout history, but how it works and even helps.

    Huh? This is just as ineffective as your first sentence is effective.

    You really go around and around on the topic of whether money is physical or not, Nihlman. Your P2 bounces back and forth from observations about whether “the same” money can be possessed by two people, whether possession of physical currency is needed for wealth, whether people have actually paid for a computer when they don’t hand over dollars. I got lost twice reading your paragraph:

    Initially, I was introduced to the concept through the aforementioned NPR broadcast. The hosts of the broadcast discussed how all money cannot be truly accounted for. If someone makes a deposit of cash to a bank, then it is possible for that same cash to be loaned to a startup business. The money that the original man deposited is still his, but its physical form is no longer in his possession. (NPR) Despite not having physical money, an individual’s wealth is undisputed through digital numbers. A significant amount of purchases, withdrawals, deposits, etc. occur by simply transferring these numbers. For example, if someone wanted a computer then they would give them money in order to acquire it. Where this gets interesting is that most people will not purchase an expensive computer with physical cash. Rather, they will swipe a debit or credit card and their digital numbers will transfer over to the store. Now they have officially bought the computer as far as the business is concerned. This may appear normal at face value, but when I was thinking critically about it, it was almost baffling to consider that someone can get a real item with the use of non-existent currency. This made me realize that money is more imaginary than it is real.

    It could easily be reduced in size and complexity to this:

    The broadcast began with the startling claim that not all money can be accounted for. It soon became clear that they meant there aren’t enough physical dollar bills for everyone to transfer their wealth into currency at any time. But money is different from currency. If someone deposits a check for $1000 into a bank, the bank can lend “the same” $1000 to a startup business without currency being involved at all. The $1000 that the original man deposited is still his, and the startup also has $1000, but the startup owes the bank some money, and the bank owes the original depositor. Most purchases, withdrawals, deposits, etc. occur by simply transferring these numbers. For example, an expensive computer is usually purchased by swiping a debit or credit card. The cardholder’s account goes down; the store’s account goes up. This only seems baffling until we get used to the idea that real goods and services are transferred for the sake of non-existent currency. Money may be imaginary, but its effects are real.

    I’m not sure the argument is quite coherent yet, and I would never consider modeling all your paragraphs for you this way, but I hope you can see the value of being careful with your terms in an abstract argument. Money and currency, for example, must be distinguished.

    In P3, I don’t think you can quite maintain the equality of digital currency and the stones of Yap for at least two reasons. 1) The Yap made mental notes whereas today we require documentation or verifiability; 2) Those big stones are very physical whereas there’s little physicality left in most of our transactions.

    In P5, I want to be generous to you since the anecdote of the Real is SO hard to describe, but I must still say that if I hadn’t heard the story myself in its entirety, I’d have no idea what you meant by most of your comments here. It’s a tall challenge, I admit.

    In P6, I admire that you conclude with reluctance and concern. Getting used to the idea of money’s insubstantiality should take time. I wonder if you could sketch out a scenario that illustrates the concern. Banks used to provide books into which they would type a number for every deposit and update the balance. That practice was replaced by paper statements through the mail, which in turn gave way to electronic statements that nobody looks at. Considering what happened recently at Wells Fargo, it’s easy to imagine bankers defrauding customers. What would be the recourse if someone swapped a few digits on our accounts? Where’s the evidence that we “have” any money at all?

    Rhetoric (Grade D)
    For most essays, Argument and Rhetoric are closely related, Nihlman. For you in particular, if your language use is clearer, your arguments will be easier to follow. Only then can we start to polish your delivery so that you can make the most persuasive case for your clear thinking. You write well when you’re in command of your material.

    Mechanics (Grade F until you fix your citations)
    As for citations, here’s an example of how you should be indicating your sources in your paragraphs.

    Ownership of the stone could change without the stone ever moving from its original locations. “They often talk about the stones themselves not changing hands at all. In fact, most of the time, they wouldn’t,” says Milton Friedman in “The Island of Stone Money.”

    That’s it. No MLA-style parenthetical additions.

    Scholarship (Grade C)
    You make fair use of the sources you cite, Nihlman, but, for example, the use you make of the bitcoin article is entirely trivial, seems forced. I do appreciate that you could cite your dad as a resource, but if you invented his experience I wouldn’t know it, and frankly the fact that you name him as a Bitcoin dabbler provides you no evidence for your argument.

    OVERALL
    Take heart, Nihlman. Your current grade is a reflection of how this work would be graded if it were submitted as part of your Portfolio. The semester is young and help is available. Every post can be endlessly revised. I will meet with you any MON or WED in personal conferences and provide continuous feedback in and out of class. Furthermore, you can enlist the FREE help of a peer writing counselor through the Writing Center for one-on-one sessions on your schedule. You may request a grade update in the Reply field for this post, but only after you’ve made substantial changes to your entire essay (not merely corrected the grammar and mechanics).

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