When I first heard about the stone money on the island of Yap I thought it was insane. Then I realized it was pretty fascinating that they could trust each other like that. Then the thought came to my head, what really is currency? It is literally just a piece of cloth/paper that has a number on it. In the world we all have a price on everything but what constitutes the world even having currency. Everything could essentially be free and it could be a first come first serve basis.
Obviously, that couldn’t work but wouldn’t it be pretty interesting? The Federal Reserve just puts out a certain amount of money and they can just say how much a dollar is worth. But what really is the amount of money with inflation and all the other factors. We don’t even know anymore. Think about a bank and how they give loans how does that money even exist it goes from computer system to computer system and it just has a numerical value on a screen.
When I read Friedman’s essay it amazed me how people could just use a stone as a way of currency and they don’t even move it. They literally just pass ownership on and on through the memory of others but everyone on the island knows whose stone is whos. In his article Friedman talked about how the Germans “seized” their stones from them until they made roads. Automatically, even though it is a mediocre thought it made me think of the fact that your parents will take things away from you until they are done. It seems dumb to put it into that perspective but think about how a parent will take away your phone for not doing your homework. The phone is the currency everyone has a phone but when you take away the phone the person instantly does their work to get it back. ONce you get all the work done that you were supposed to and get your grade up you will get your phone back.
nother thing that caught me off guard was that even the people of Yap didn’t have the stone present they still counted it as a form of currency. The article went on to tell a story about how a limestone was brought back from a nearby island. The limestone was the biggest and the prettiest they have recovered. Unfortunately, a storm hit and they lost the limestone in the Pacific Ocean. Now the crazy part is that the people of Yap still considered that stone tradeable. Even though it was at the bottom of the ocean they considered it for trade. It reminds me giving someone something for a check. You have the money but you don’t have it on you at the moment. It’s almost like you’re trusting the person to have the money in their bank account and hope that their check doesn’t bounce. They have to trust that their money is in their account and that they will get the money someway somehow.
The NPR broadcast also caught me off guard too when they mentioned the online banking. They mentioned the fact that the money is just out there online but is it really there. It makes me think about the fact that you request for a parent plus loan for your kid to get a loan for college. The bank gives you the loan by transferring money into your checking account which then you can transfer that online money into the bank account of the University your kid is attending. Now really is there really a physical money present? No, there is not. You literally transferred an online amount of money from the bank to the Univeristy and you have to trust the bank to pay the Univeristy. Banks essentially themselves don’t even have real money. Yes they have money on hand but if you went and tried to withdrawal all 10,000 dollars out of your bank account they most likely wouldn’t front you all that money right away because then what if all they have figuratively in their safe is 10,000 dollars they wouldn’t have anymore money to give out for withdrawals. Banks rely on the constant flow of money from hand to hand in order to get their money to give out. Banks make all of their money from interest on the loans they give out and imagine if they didn’t approve some people’s loans they would have no money to give out because it is all accounted for and they would not make any profit.
After reading and listening to all of this it made me think of an article I read earlier this semester on Bitcoin. Bitcoin is essentially a cryptocurrency. It has a face value and can be bought but it has little to no value in the real world. You can buy stocks but they are essentially worth nothing because it is fake online money. Bitcoin is basically a currency for the black market to trade around. Bitcoin was brought here to become a new currency maybe for the US and the price of one Bitcoin rose tremendously very fast. Now that people know and figured out what it is and that it has no value people are selling their shares for very cheap and getting rid of their Bitcoins . It is basically an illegal form of currency because it is traded on the black market which we all know is illegal.
After reading all of these articles it really has opened my mind on this whole currency thing. What exactly is the currency we use? Yes it is dollars but do these dollars even have a worth? We all know they do to us but we honestly could live our lives with stones and just trade stones like the people of Yap. I will never know what money is now after reading these articles. As a finance major my eyes were opened widely to the fact that people could trade stones and not even care that much about ownership. It must be the most peaceful island in the world and I would like to research the role of currency even more now that I have the knowledge of the people of Yap.