Category: A02: Stone Money

Stone money—paTRicKStar

As I listened to the story of the people of yap, I tried to compare their curriency with ours.  The people the yap use form of currency that involves limestones.  These limestones are very heavy and are and abnormally large for currency. The way these limestones were acquired  was athe people of the yap would travel to a nearby island full of them. Upon arriving, they basically pick up the limestone put it on their raft sell back to their island and gain this form of currency. Now people wouldn’t just trade this limestone currency for just anything. They were mostly used for big purchases. Now compared to modern day society, our societies curriency is paper money. The paper money we have is back by gold. In the past we used to trade with gold and silver. For us hearing people are trading giant stones as currency sounds absurd. But to the people of yap these stones are worth it. Money is a human invention that  had a set value which killed off trading. Before money we would trade goods and commodities for other goods and services.

The invention of money just makes sense to me. It makes it portable, equal and universal. What I mean by this is we no longer have to barter good everyone knows the set amount. They understand the value of it and it could be used internationally. While listening to the podcast I was intrigued yet confused because with the people of yap you can have the value of the curriency without having the currency present. This idea blows my mind.

Now I’m our society we have banks to prove our curriency and show how much money we have. Although our curriencys are different and the way we handle our money is odd to the people of yap. Our main concepts are similar. Money, stone, checks and all forms of curriency are worth nothing without us giving value to these items. In our society today money controls everything ;money is power. The amount of money you have determines which class you are in our society. So essentially money does have a bigger role than just paper and a way to barter. Your net worth and the amount money you have does matter.

The reason  money has power is because we give it it’s worth. Think of it like the people of the yap they gave an in adamant object just like we did to paper money , value. Therefore setting a standard for people to except this idea.   The only difference between us and the people of the app is we made our money portable, tangible, and international. Our money can be used in exchange worldwide., Have a set value, NV easy to transport.  With the people you have the only problem with their ideas of currency was that you didn’t need to lose the currency to lose your value I could handle that I’m out of value of the asset without having the ass it with me which is a little hard to understand but it seems very absurd how can you be rich but have no money this is what we said fourth ofthe change

After listening  to the  podcast called how fake funny Siri Brazil. I was mostly confused with the concept. The narrator talked about how inflation was high and in reality kept increasing daily. What confused me was when they tried to get people to spend money to boost the economy by  lying to them to think that their money did have value when in fact inflation was so high it was worth less. I understand that people were scared to buy since they though maybe keeping their money would be safer but that would make the economy worse. How they tried to lie to people confused me.

Recently I’ve heard a lot of discussion on the news involving cryptocurrency called bitcoin. With this interesting topic of stone money. I am eager to learn more about our newest form of currency and see how it does.

Stone Money-Dohertyk9

Upon first hearing of the concept of the Yap’s stone money, I had no idea what to think. How could money be paid to someone without the currency actually changing possession between the two people? After the idea had been explained to me in detail, the claim made by the Planet Money team at NPR that, “money is fiction”, suddenly made a lot of sense. The Yap’s money did not need to change possession, because the entire population recognized which person the money belonged to. Therefore, the insane notion that a rock at the bottom of the sea that only a select group of people had actually seen could be recognized as money was actually sensible. To the Yap, money was abstract, only in existence because they believed it existed. The moment that the Yap no longer believe in the value of their stone money, the moment it no longer has any value at all.

This same concept was used to fix the inflation crisis in Brazil; a group of economic experts solved the crisis by renewing Brazilians’ belief in their own money. Brazilians adopted many ways to handle the inflation crisis. Some people raced those that changed the daily price tags, trying to reach shops before the price officially rose for the day. Others removed the price tags and paid the original price. However, some people gave in to hopelessness and despair, so suicide was common. The irony of it all was the fact that it was the entire population’s lack of belief in their money that allowed the crisis to continue. To solve the crisis, the economic experts proposed that the entire country use a fake but standardized form of currency called URVs. Suddenly, the price of products did not change everyday; for example, one loaf of bread was valued at one URV every day. The economists made this work by changing the exchange value of cruzeros to URVs. One day, the loaf of bread worth one URV equaled fifteen cruzeros; the next it equaled twenty cruzeros, and so on. The end result was that Brazilians recognized URVs as currency for everything, and so it became the actual currency. Brazilians that experienced the change from cruzeros to URVs were astonished and considered it to be magical.

The United States Federal Reserve is fascinatingly similar to the Yap’s system. Instead of stones, we have banks. Money that seems to disappear from our banks in reality never existed in the first place as anything other than a number. The number has value because when a person checks his bank account, he considers that number to be representative of his wealth. The treasury of the U.S. does not treat its power with any manner of grandeur; instead, the people that work for the Federal Reserve downplay their powers to the extent of boredom. Pumping enormous sums of new money into the system is done with a few simple clicks on a computer. Click! A million dollars added to the economy.

The views of the French bank towards gold in 1932-33 actually mirror the Yap’s perception of their money. Because the Federal Reserve bank separated gold and labeled it as belonging to the French, the U.S. believed that it had lost that money. In reality, the money had never left the vault, yet both France and America recognized that there had been an exchange in currency. France considered itself to be financially superior, while the United States considered itself to be financially inferior. Many people feared for the economy over the loss of so much gold; so much gold that had never truly left the United States, but had left its economy.

Nothing clarifies the idea that “money is fiction” more than when the German government abruptly shut down the Yap’s monetary system with a few black X’s on their stones. Something about the marks on the stones caused the Yap to lose faith in their system, and because of that loss in faith, the stones became worthless. The Yaps readily complied with the German government’s wishes for better roads despite their previous hesitation. The roads were improved, and the X’s were erased. Just as suddenly as the Yaps’ system had frozen, it returned to its former state.

The Yaps believed that money could exist without physical or written proof. This differs only slightly from our own government’s idea of money; in the United States, our money is defined by a number. A statement displaying that number is proof of our monetary value. The Yaps’ concept of money was only more abstract because there was no document of their money, only a societal understanding of how much money belonged to who. In the United States, money is somewhat fluid; it does not usually vary much from day to day, but inflation can change its value significantly over time.

The article, “The Bubble Bursts on E-Currency Bitcoin” by Anne Renaut reaffirms the same concept that has been echoed in history across different monetary systems. Bitcoin, a type of electronic money, is similar both to the Yap’s money and to the currency of the United States. It is similar in that there is no visible, concrete substance to represent Bitcoin. Bitcoin is entirely electronic and thus can be electronically created, exchanged, and stored. None of the owners of Bitcoin will ever see their money, yet their belief in the system allows Bitcoin to exist as a legitimate form of currency, just like the Yap’s monetary system.

Although this concept that money is fake initially shocked me, it no longer surprises me. Time and again, it has been proven that money only has the value that we attach to it. For example, if an alien race seized Earth and imposed its rule on us, they may deem our money to be worthless. This would have the same effect as the X’s on the Yap’s money had; the entire global economy would freeze. If the rest of the solar system does not use U.S. dollars, than those dollars could suddenly become useless.

 

Works Cited

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

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

Renaut, A. (2013, April 13). The bubble bursts on e-currency Bitcoin. Retrieved February 07, 2018, from https://phys.org/news/2013-04-e-currency-bitcoin.html

 

 

Stone Money- Ugandan Knuckles

When I first started the reading and listening processes of this writing piece, I had always known that money was a man-made thing that didn’t really mean much. What I didn’t realize was that so much of how much money is worth is based on how much the people who use it believe in its worth.

When the faith that people have in their currency comes into question, that’s where problems arise. Whether it’s because there’s no longer anything backing up the currency, or because it’s so inflated that it’s worth nothing, a lack of belief in a currency can lead to an economic crash similar to the one that happened in Brazil between 1950 and 2000. The economic crash in Brazil was the main focus of the NPR broadcast that we listened to as source material. The main reason for the crash in Brazil was inflation. The government wanted to shift it’s capital to the middle of the jungle, but that costs a lot of money. Money that the country didn’t have. Their solution was to just print the money they needed to pay for it, which ended up being a short-sighted idea that created a snowballing issue for the next 50 years. Multiple elected officials tried their best to fix the issue (one was so bad that they were impeached), but no one could seem to find the answer. That is until one group men figured out a way to abuse the idea of money.

They had the idea to make everyone pay for things and get paid in URVs. Milk would cost one URV everyday, but the each URV would equal a different amount of reis, or the currency that Brazil had the time. If a person was payed say, 500 URV each week, the amount they received would stay stagnant, but the amount they were paid in the original currency would fluctuate. It gave people a currency to believe in, and so they were more likely to spend their money and keep the economy moving. The policy began on March 27, 1993, and was over by July the next year. Just over a year of having a fake currency did the trick, and the original currency of “reis” was replaced, funnily enough, by the currency called “real.” Looking back on the situation, an interviewed person from Brazil laughed and said “It was a fantasy, haha, not real!”

Milton Friedman wrote an interesting essay in February of 1991 on the stone money of people Yap. Said stone money was called “fei” and it was made from huge chunks of limestone from an island very far away from where the Yap lived. They took their stone money just as seriously as people do nowadays. When the Germans wanted the Yaps to repair their roads that become poor in condition, they put big black crosses on the stones to symbolize that they controlled them until the roads were repaired. Needless to say the roads were quickly repaired, although Friedman summed it up well when he wrote “Presto! The fine was paid, the happy Failus (citizens of the island) resumed possession of their capital stock, and rolled in wealth.”

Wealth is kind of a made up of made up ideas. Money is a made up concept, so being wealthy, or having a substantial amount of that made up concept means nothing. Chances are, the money is located in a bank account where it remains a number in a system until you wish to take it out. Similar to the giant stones of Yap, the size of the fei (rock) and the size of the number in the bank are just symbols of how much you have. What you have means nothing until you try to spend it. Then, some of your number, or your fei, gets transmitted to someone else. No questions asked, and everyone knows that it belongs to that new person.

The last source topic I read was on financial situation in Japan. Japan had been the poster child for way a good economy should look like for several decades following the recovery post World War II, but by the late 1990s and early 2000s, that was starting to change. “Perhaps the pendulum was destined to swing back.” are the very first words of the article, and they’re fitting of how economics work; a series of ups and downs. Shinzo Abe, Japans latest prime minister (at the time), has promised to start to fix the situation by having the Bank of Japan create 12 trillion yen, or $134 billion. So far, Shinzo’s efforts have been effective, and Japan has already begun reaping the benefits. The main opposition that people have to creating so much new yen is that the money could go to dead companies or just wind up being more money into the pockets of industries that don’t need any more money. Another issue is that people could become dependent on the government constantly creating increasing amounts of new money. That will create a debatably worse issue in having uncontrollable inflation. Everything is going well right now, but if the prices of goods increase faster than the increases in wages, there could be issues. Not just for the Japanese people, but for Shinzo Abe, who had to resign from a previous term due to a stress-induced intestinal illness.

The listening that I did and the reading taught me a lot about money that I didn’t know before. Mostly that it’s all fake and just a representation of something that really doesn’t exist. The worth of a currency is all based on where you go and when you go. Milk from one person can be worth $2 while from another it’s worth $4, it’s all up to the seller. I also learned that the money we have now may be annoying, but it’s nowhere near as annoying as having to sail out and chisel huge pieces of limestone the next time I want to buy something. The last thing I learned was that Japan had a failing economy in the 1990’s and 2000’s despite the increasing worldwide popularity of anime during that time.

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

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

Tabuchi, Hiroko. “Back in Power, Abe Aims to Spend Japan Back to Economic Vitality.” The New York Times, The New York Times, 22 Jan. 2013, dealbook.nytimes.com/2013/01/22/back-in-power-abe-aims-to-spend-japan-back-to-economic-vitality/.

Stone Money- DudeInTheBack

P1. To list all of the effects money has on our world would be impossible simply because money is what keeps the world working. It’s true, without some form of monetized systems for trading, who would want to work, and why would they do it? Because of moneys value, and the way we (as a society) view currency, we work almost purposefully for the money. The motivation for “gettin’ the money” can fully be credited to what we can do with the money. A piece of papper, coin, or rock (currency) acts like a sort of value placeholder. Through these past classes, and extending work outside the classroom learning about different histories of moneys worth has been fascinating to me just because of its knottiness.

P2. Money is the most basic, yet convoluted unit of measurement to determine the degree of what someone, or something is worth. I say measurement now, (and probably would not have even thought of money being a measurement a couple weeks ago) because it really is a measurement. money measures things like wealth, or any asset with substantial value. For example, if you have a big cow, somehow you acquired this big cow. Two likely scenarios predating this acquisition could potentially be: You were granted through time and breeding this big cow, and now you want to sell it. The other being you just bartered something else with what the previous cow owner thought was of equal value. Without this rudimentary measurement of worth, how would one be able to justify what one owns? This value, in todays society, is expressed through currency. having money backing everything gives everything a tradable value.

P3. These questions of why money has value, or how we assigned the job of having value to an object, can only be answered by examples of how monetary value has been used/how it is used today. Thorough my somewhat extensive research on all of the unfathomable ways money has been used. After all of it, I have come to the conclusion that money is not a real thing. What! how could this be? Relax. It’s a real tangible thing if you consider object currency, but money is a concept. A sort of placeholder for an imaginary unit. After reading about the Island of Yap, located in the Pacific ocean, my thoughts on how abstract money can get began to develop. Picture this, huge limestone carved disks with holes in the middle of them weighing in at about seven or eight metric tons. In the island, these stones, or “Fei” was used as a currency. Massive stone coins that sat where everyone could see them, and everyone just knew who they belonged to. In an essay by Friedman on the concept of stone money, he explains, “… it is not necessary for its owner to reduce it to possession.” The owners of the stone, and the wealth of having the stone did not even need to have possession of this stone. If it was “there” it was recognized as being there. A very abstract concept, but surprisingly effective and efficient for the island. A parallel to this currency of Fei, is our modern day checks, and even bank accounts in general. How much money in your bank account are you actually physically touching? None. Its just some digital number that gives you some sort of worth. Its the same thing as having the stone. People just recognize your wealth by having a big stone, or a big number in your bank account.

P4. My new view on money and how I have come to the realization that it is fake also comes from a story in Brazil. After listening to the NPR broadcast “How Fake Money Saved Brazil”  I have gained a deeper confusion on how the money system works. Chana Joffe-Walt, the narrator of the podcast in act one says that, “in 1990 inflation in Brazil was 80 percent a month…” Having such high inflation rates, the Government was at a loss for solutions. A group of colleagues were called in to find a solution, coming up with a virtual currency named, “Unit of Real Value” (URV’s). The government along with the four heroic alumni called in made the decision to lie to the citizens. One of the people on the podcast saying, “… they wanted to change people themselves… people had to be tricked into thinking money had value.” (Joffe-Walt). Persuading them that their money actually had value was the only way to save the economy, and the value of their currency. “The idea was that people would start thinking in URVs – and stop expecting prices to always go up.” (Joffe-Walt). Brazil lived with high inflation rates for decades, if this problem could be solved so easily by making up what seemed like a lie to get them out seems counterintuitive. Who would think that would work? Well, It did, and that’s what saved Brazils economy.

P5. Today, we have a new complicated currency called Bitcoin. In 2009, Bitcoin software was made available to the public for the first time. Although Bitcoin was the first established cryptocurrency, there were others… but they did not blow up like Bitcoin.  Bernard Marr, said in his article called, ”A Short History Of Bitcoin And Crypto Currency Everyone Should Read” said ”As it had never been traded, only mined, it was impossible to assign a monetary value to the units of the emerging cryptocurrency.” (Bernard Marr) Mining was a long process where your bitcoin could grow, but still, no real monetary value. Supply and demand began to grow for bitcoin. Where in 2010 bitcoin was practically worth nothing, to skyrocketing into being worth millions.

P6. I have learned a lot about money these past couple weeks, and I find all of this information very interesting. currency has gone through so many stages, and adaptations to new society’s. Not a lot of people are familiar with things liken the island of stone money, and I certainly was never taught it. History has presented us with many crazy currencies… which brings me to the question, “whats next”? What new currency, or value of something will go up/down? We will never know until we get there.

Work Cited

Stone Money–Lbirch141

Growing up, I always had the thought money was a little piece of green paper that can just be printed up to someone’s need. Being an Economics major, I’ve learned it’s more than just that piece of paper. It holds a value that’s always changing and can be held physically or digitally; a form you will never actually have in your hand. Americans are fascinated by this amount, such as an amount in a bank account or the number of dollars in your wallet. Americans revolve their life around making this number for the purpose of living and buying goods. But what makes a dollar bill equal one dollar? How can Americans not revolve their lives around this value we give a piece of paper? So what really is money?

Is it really that green piece of paper in your pocket, or a large limestone that is outside on the beach? Currency and the value of these certain items all vary based on location and culture. My dollar bill might equal one banana on an island somewhere but may be worthless on another island. After hearing the lecture about Stone Money, I read the article “Island of Stone Money” by Milton Friedman. Friedman writes how the Yaps, a small island in the Pacific Ocean made of five to six thousand people whose wealth is valued by the large limestone rocks they have. This stone currency is know as fei. Although a large limestone would have little to no value to an American, it holds great importance to the Yaps. That limestone is their dollar bill, or even a hundred dollar bill. These stones were quarried and sent to the Yaps from an island about 400 miles away in large boats. One story states that there was once a large storm that sunk a large ship carrying an enormous fei for a wealthy village, which was never seen again. That lost stone was still counted as currency, which can be related to the United States currency; large sums of money in a bank that we never actually see. This money is just something we need to trust our bank has.

“The Invention of Money”, broadcast by Planet Money describes how money can sometimes just disappear and still be used. The thought of money just disappearing and still being used is different and strange. When the market crashed in 2008, millions and trillions of dollars just seemed to vanish, and many people question how this was even possible. The answer to this is that it never existed in the first place. Money is fictional; it is not a solid and can disappear and change value at any time. It is easy to say that I have one thousand dollars today, but tomorrow that could change value to something higher or lower.

We could ask the question of how much money is there in dollars out there, but the question is a lot harder than you’d expect. “The Invention of Money” also says you can count the physical money you have and give that amount, then go into your bank account and give that amount. But the amount in the bank may not even be in there. The bank can loan your money out to someone else, making your money theirs too. So it seems impossible to count everyone’s money without double counting it. With this being said, there cannot be a set number of dollars in the United States economy because it is all passed around from person to person in the form of loans.

A main example of money being fake and basically made up is when the Brazilian people needed to be tricked into believing money had value. In “The Invention of Money”, we learn that people had no hope in the value of currency because of inflation. Brazil printed extreme amounts of money in hope of being able to pay for massive projects, such as building their capital Brasilia. They did not have the money, so the only way to solve the problem was to print more of it. Inflation was raising so rapidly, people had to race to buy things at a lower price. One day, a pair of sunglasses would be valued at 10 dollars. In a month it would be valued 80% higher at 18 dollars. This problem was solved by four young economists who created virtual money for Brazil, giving people the belief money had value again. This fake, virtual money became real when people started to believe in it. It is truly unbelievable that when people started to believe in this new form of currency, the plan began to work.

How can one currency have a set translation to a different form of currency if one number can continuously change? In the article “The Bubble bursts on e-currency bitcoin”, the author Anne Renaut states how Bitcoin is erratically changing and is very volatile. Bitcoin is an online currency that is not physical and is used for online purchases. Bitcoin was made to have no connections to any banks or financial institutions in case of another market collapse. This article shows how much the value of this virtual object can change in the matter of a day, making people very skeptical to invest in this e-currency. It is dazzling how a Bitcoin can even be sound and makes me believe even stronger how money can be fake. A Bitcoin can be found in any computer and is accessed by a process called “mining”. What I do not understand is how a form of currency like this can be valued by someone. How these ones and zeros from computer coding can be used as a type of currency to buy things like I would be able to with that paper in my wallet.

A piece of paper, a large stone, or bits of computer code can all have value to someone, depending on where you are. Americans use paper, Yaps use stone wheels and countries with advanced technology can use Bitcoin. These can all be traded for food or other material, but only when people believe in their value. Currency is an interesting topic, considering everyone, no matter where they live, revolves their lives around that one thing that is said to have value.

 

Works Cited

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

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

Renaut, Anne. “The bubble bursts on e-currency Bitcoin.” AFP News. 13 Apr 2013. https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html. Accessed 6 Feb 2018.

Stone Money-jdormann

The thought of using stones as money is absurd to people today. Modern day society is uses paper money or credit to purchase items. Before there was paper money, most societies used coins like gold and silver, or they would barter items of similar value. A standard currency that was accepted by everyone, was portable, and could be broken down into smaller amounts was eventually created so people could purchase any item. Money brought an end to most trading and increased the market for goods people could acquire. Money is only valuable because we trust that it will be considered valuable to someone else in the future when we trade it for a product or service.

To me it is strange that a society about one-hundred years ago would use stones as money. After listening to “The Invention of Money” by the Planet Money team, I understand stone money and I have doubts about the real value of money. Brazil began printing money in the 1960’s to fund projects that the government wanted to complete, and ended up causing over inflation. After the massive amount of printing money, prices in Brazil increased absurdly. There was a job that consisted of an employee walking around the store all day to increase prices on items to compensate for inflation. In the podcast, a Brazilian native states, “The government explained to the nation that all the money will be taken from the people to end inflation”. People were left with worthless paper and many committed suicide because they had no way to support their families. There was a group of college students that were able to come up with a plan to restore economic stability and were seen as heroes by the Brazilian people once inflation was ceased. The Brazilian people were tricked by a fake currency that was “virtual” and only had value because the people believed in it.

Modern society has given money an insurmountable amount of power. Our lives revolve around it, people are constantly receiving or using money. The American dollar used to be a representation of the amount of gold the Federal reserve had. Eventually the federal reserve stopped backing money with gold and money became represented by the American  people’s belief in the dollar. In the podcast, the Planet Money team states, “The Federal reserve created over 1 trillion dollars to lend out to failing companies in 2008”. How did this 1 trillion have any value? How did this not cause extreme inflation? The federal reserve does not work with the government or have any structured rules and regulations. There are certain plans they go about, but the money they create and how they influx the economy with the dollar. The American people continue to have faith and believe in the dollar. Without believing the dollar is a legitimate currency, the United States economy would collapse.

In 1933, the United States stopped backing the dollar with gold. This was because the Bank of France purchased gold from the United States in order to back their own currency. In The Island of Stone Money, Milton Friedman states, “The result was headlines in the financial newspapers about ‘The loss of Gold’, the threat to the American financial system, and the like”(4). When the Bank of France took this gold from America, the people did not know how to react. The dollar was no longer backed by gold, and society knew it meant nothing. The Great Depression was hitting families all around the country and the federal reserve was at a loss about what to do. It took years of trust and effort to stabilize the economy and bring back value to the dollar.

A new form of currency used is called Bitcoin. Bitcoin is an online currency that can be sent to anyone and stored in an online wallet or that person. This currency is not backed by any real world items or a nations current currency. Bitcoin can be used for purchase of everyday items to black market goods like drugs and illegal firearms. Investors bought Bitcoin in hopes that it could stabilize and become recognized as a legitimate international form of currency. For a while it seemed like Bitcoin had the footing to become an international currency contender. Anne Renaut with AFP News wrote the article, “The Bubble bursts on e-currency bitcoin”. In this article, she states, “Many saw it coming, but that didn’t stop the Bitcoin bubble from bursting: after rising to dizzying heights, the digital currency suffered its first true crash this week”. Just like currencies controlled by governments or private corporations, the online currency system can suffer from value fluctuations and cause people to lose their investment.

After reading how money has changed around the world and finding out all the different forms of it, I am not convinced that the American dollar is valuable. Money controls many peoples lives and is an integral part of modern society, but it is not valuable outside of us making it valuable. Money is a fictitious thing that we give value to, so that we can buy and sell items. All the dollar consists of is green cotton fiber paper and a mutual agreement that we will accept it for products or services because we will be able to use it again for something else. Without the American peoples’ trust and belief in the dollar, its just a piece of paper.

Works Cited

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

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.

Stone Money-Morty39

Currency is around the world, and has been since the beginning of time. Whether it was trading one thing for another, it is still a type of currency. The trading slowly changed from rocks to gold to paper money. Nowadays there is not a lot of money, most of it is electronic and not physical. That is where the question comes in what is money? There is no money, there is the idea of money and currency. In Yap they used giant livestock rocks from an island about 400 miles away. They could not physically move the giant rocks, so the people of Yam would keep them in the same place, but everybody knew whos rock was whose. When somebody would sell one of the rocks or trade them for something else, the rock would stay in the same place and the people would just know that the ownership of the rock changed. This all is very shocking to what most people are used to nowadays, how do the people trust other people not to say that the rock is actually theirs and lie. Even more so there is a story of a rock falling into the ocean and still being used as currency (Friedman). How do the people even know it is actually there? That is where the idea of money comes in, in all of this the people of Yam do not actually have their money in their possession physically, it is just an idea that they have a certain amount. Just like how nowadays we do not physically hold most of our money, it is in the banks electronically, it is the same idea with the rocks, except now it is a bank. Money is a crazy concept that is hard to wrap the mind around.
Another amazing idea about the idea of money is inflation, and how that changes the value of money, today’s dollar is not the same as the dollar from the 1930s in the way of value. In Brazil they had a huge issue with inflation, literally everyday inflation went up, every month inflation went up eighty percent. Literally everyday the prices changed and went up, they even had a job where all you did was change the prices each day. The way that the Brazilian government fixed this major issue of inflation, was to trick their whole country into thinking their money was real, and that it had value again and change the way it is used. Whether their money actually had value again or not the people of Brazil will probably never figure it out, but it did help the problem. They changed the way people buy things and how their money works. Now instead of going into the mall and buying a pair of sunglasses in one payment, you would have six installments, or six payments every month. Now the United States already does this, on big expensive things, not five dollar sunglasses. So why do this, why make these payments that span over months? Wouldn’t the business owners want their cash immediately? This was the only thing that worked for the Brazilian economy. They have tried everything, they put a hold on raising prices, that failed. They then tried putting a hold on everybodys money, if you had money in the bank you could not use it during that time period. That of course did not go over well, it would never go over well in any place, people started committing suicide. The president that put that into place was soon impeached and the rule was gone. Now when nothing else worked they put the trust of their government into four guys, who would gossip around bars and came up with this idea. The idea that they came up with is still being used today (ThisAmericanLife).
It is crazy how the world views money and how fast it can change, it can change from limestone to gold to physical cash to invisible cash that are just numbers. In 1933 there was a banking panic and all of the money and gold was worth almost nothing, the U.S. gold reserves were extremely down. The issue that came with this other than our economic situation being bad is that we had some of France’s gold in our banks. Our cost of gold was down but theirs was going up. So the question came into play of whether the gold from France on United States soil was worth what the United States gold cost or what France’s gold was worth. France was extremely worried that the United States would change the cost down to what their costs were, which makes sense, because why would they pay more for the something that costs a less amount in their country (Friedman). That is another crazy way how the idea of money works, and it boggles minds.
Investing and putting money into nothing sounds strange right? But that is exactly what people are doing with bitcoin. Bitcoin is a new way of transactions on the computer, also known as digital transactions. Bitcoin is nothing, it is not a physical thing you could hold or touch, like gold or rocks or papercash. It is a new type of currency in a way, you buy it with U.S. dollars and sell it for U.S. dollars. It is a weird and still very new concept, it only came out in 2013, and is like the stock market but at the same time very different. In the stock market you are investing into different companies and when they do good you make money, when they do bad you lose money. Easy system to understand and makes sense. Bitcoin you are investing into nothing, no companies, just a digital website. Bitcoin is very confusing on how it works and how the money can go up and down, one day it could be one hundred seventy-six dollars and the next day it is worth only a hundred. But what makes it change? It brings in a whole new idea about the money concept, that boggles my mind (Reeves).

 

Work Cited

Friedman, M. (1991, February). The Island of Stone Money. Retrieved February 6, 2018, from https://counterintuitive2015.files.wordpress.com/2015/01/stonemoneyessay.pdf

Reeves, J. (2015, January 31). Bitcoin has no place in your – or any – portfolio. Retrieved February 06, 2018, from https://www.marketwatch.com/story/bitcoin-has-no-place-in-any-portfolio-2015-01-28

The Invention of Money. (2018, January 31). Retrieved February 06, 2018, from https://www.thisamericanlife.org/423/the-invention-of-money

 

 

Stone Money—SummerGirl

Money Rules the World

Money is one of the most important factors of the world. Money holds value, currency, and status. Money can have the power to make human beings do crazy things, and can often lead humans to think a certain way. Why is money one of the most influential factors on Earth? What is money really? Prior to reading and listening to these articles I thought of money as power.

When our class first learned about idea of Stone Money, I was shocked. While first hearing about it, the idea of a middle ages children’s story glimpsed into my head. It was interesting learning that on the island of Yap currency was measured in large stone. After reading Milton Friedman’s “The Island of Stone Money”, I realized that although the island of Yap and the U.S currency doesn’t look the same it generally the same motive. I feel as though authoritative figures manipulate the people with the concept of money. The Island of Yap, the people deciphered the more value fei with a black painted cross. I compared the fei to the U.S dollar. The U.S dollar has numbers written on them for Americans to decipher the value of the dollar.

Money can have the effect of empowering people. In Friedman’s essay, he mentions that the wealthy people of Yap did not need proof of their fei that they were wealthy and it was not questioned. The United States and the Island of Yap’s currency are very different. A feature of our monetary system that the Yap might consider bizarre are banks. Banks track how much money a person has, it costs money to keep money in banks, it is also a trusted place where people keep their money. The people of the island of the Yaps would probably think of the idea of a “bank” to be bizarre because they see and hold money. Friedman’s essay explains that wealthy people in Yam remain wealthy by family tradition. “There was in the village near-by a family whose wealth was unquestioned, — acknowledged by everyone – and yet no one, not even the family itself, had ever laid eye or hand on this wealth.” (Friedman.)  Wealthy people of Yam are wealthy because families claimed having many or large fei. In the United States of America, a person is not wealthy without record of their money, people can also go bankrupt when they do not have enough money and banks can track that. It is interesting that different places have their ways to value currency. It makes me think, money rules most of the world, and is a huge aspect of life but is it even real?

After listening to the NPR broadcast “How Fake Money Saved Brazil” I am very aware of the concept “one man can change the world”. But in this case a group of friends. It was very nice to read how intrigued this group of friends were about the economy, enough to help the inflation of Brazil’s economy. It was very interesting hearing about college students saving their counties economy from major inflammation, especially with a virtual currency. It made me think, if money is such a stable factor in our world how could students come up with a fake currency to help their fix Brazil’s economy? It was insane to see the examples of how the inflation could have affected prices. “At that rate, if eggs cost $1one day, they’ll cost $2 a month later. If it keeps up for a year, they’ll cost $1000.” (Joffe-Walt). The group of friends made a “fake” virtual currency, with no bills or coins. They named the virtual currency “Unit of Real Value” (URV’s).  I was amazed how much of an impact a group of economists could make, a big enough impact that even their taxes use URVs. “The idea was that people would start thinking in URVs – and stop expecting prices to always go up.” (Joffe-Walt). With a new currency, the people of Brazil were probably confused and relieved. One of the most confusing factors of this probably was the technology aspect. The NPR broadcast “How Fake Money Saved Brazil”, states that people called it a fantasy and many of people did not understand what the new Brazilian currency was. What made Brazilians trust the new virtual currency? What I think made the people of Brazil trust the new currency (URVs) was a couple things. One being that people still had the “real” currency, but just about everything was listed in URV’s so it probably made people more familiar. Also, another thing that could have helped make the people trust the virtual currency, was realizing that it was for the people and the economies benefit. The economist’s idea to fix the economy with their virtual currency “Unit if Real Value”, was beneficial. The new currency (URVs), became the real currency, the inflammation in Brazil ended. This broadcast made me realize that people impact and influence money and currency.

For a couple of years now something that has been interesting me is Bitcoin. This really relates and is relevant to the topic “Money Rules the World”. Bitcoin is a virtual decentralized currency that is trying to take over all other currencies. Bitcoin cannot be tracked so the United States government does not have the ability to control it like the U.S dollar. Bitcoin is now treated like a commodity and people are making fortunes from it. Two years ago, Bitcoin was estimated around two hundred and fifty dollars per coin. In December of 2017, Bitcoin reached its high of nineteen thousand five hundred dollars. I can relate this to the NPR broadcast, because just like the economists made the virtual currency (URVs) from being a fake to real currency in Brazil to help the economy from inflation. Bitcoin is also a virtual currency trying to become a major currency, except trading Bitcoin is helping people make money or perhaps lose money in some cases.

Work Cited