The fictional aspects of Money

Money is something that is involved in all aspects of life around the world. Even though each country uses a different type of currency, they all still use a form of money to be able to live their everyday life in society. What really makes each type of currency different though is how exactly each economy values the money they have and in what way they use this currency to trade.

The island of Yap is a great example of how there is an economy based on money but they do not value physically holding their money yet still having possession. Yap does not value direct ownership of money in their hand to know that they are wealthy, yet they value the idea of ownership even when it is not their direct possession. For some that may seem very odd, the idea that I own this stone that is worth so much but I may never actually have it in my hands or may not even see it. While this seems very far fetch to some it is not much different from what we do here in America or Brazil does when it comes to URVs.

As they talked about in the NPR broadcast this is really not much different from what we do here in the United States. When we get paid from our jobs and it is deposited directly into our accounts. We see that we have this money digitally but we never actually physically possess this money. Then we pay a bill from our account and now that company has that money yet no one has ever physically held this money. This just proves that what we do here in the United States is not all that much different from what the people of Yap did, just theirs was not done electronically.

This is also similar to the Brazilian currency of URVs. URVs was a fake currency designed to help the economy grow and the value of something be consistent. All of this was done virtually creating a sense that there was money even when nothing physically was being traded, it was all just numbers on a screen. This also helped the Brazilian economy realized the worth of certain things and helped their economy flourish instead of becoming more and more in debt.

The way people trade and value their money is something that is all very abstract and obscure, in a sense that the way one person views a stone can be the same way another values a dollar, which is simply just paper, or the way someone else values gold locked in a box three thousand miles away. Money is really just fictional and is only worth whatever the person viewing it perceives it.

Work 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;.

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

The Illusion of Money

Money. One word with countless definitions. To understand the concept of money, I searched the internet and came upon the article by Adriene Hill, “Money: The Myth We All Believe in.” In the article, I found one quote that truly embodied my definition and explanation of money – “Money is a shared illusion.” Money is not a physical paper or metal, but a pure and dedicated belief in an object with no real value other than the value of what others believe it to be. If every citizen in the United States thought buttons or sea shells had monetary value, then the use those objects would become our currency. To a seven year old, the colorful Monopoly game hundred dollar bill could have the same value as a real hundred dollar bill if that was what their parents made them think. In reality, that child couldn’t use the Monopoly money to buy their favorite candy from the dollar store because Monopoly currency isn’t excepted as “real” money to the cashier ringing up the treats. Literally anything can be money if everyone thinks it has monetary value (Adrienne Hill).

Take for instance, the natives of the island Yap mentioned in Friedman’s essay “The Island of Stone Money.” While here in the United States we make our deals and purchases with paper money and copper pennies, the Yaps use large, carved limestone wheels called fei as their physical money. The fei was an immovable stone where its owner can change with only an agreement between two people where one basically states, “It’s yours now” and the other responds with, “I own it.” Am I exaggerating? In the essay, Friedman mentioned how a family’s wealth is “acknowledged by every one” despite the fact that no has seen the fei which makes the family as wealthy as it is. How can anyone, let alone everyone, believe that the family owns some stone only seen by the family’s ancestor and his expedition crew? It is only because they believe that the stone exists that the stone has value. The “illusion” that a carved piece of stone, seen or not seen, has value because everyone says it does is baffling, but they’re not the only ones in the world with this view on money (Friedman).

Similar to the Yaps, the United States relies on the customers of banks and business to believe in what we call credit. Today, many U.S. citizens use credit to purchase items despite the only evidence of one having “money” is a plastic card, maybe containing a chip, that according to the bank has a value of so-and-so dollars.  We neither see the money that is acknowledged as ours by the bank and the establishments we use the credit to buy merchandise from nor move the money physically because we trust that the credit will move from the bank to our account to the establishment through virtual means. The only difference to the Yaps is that we have a third party involved, a.k.a. the bank, during agreements of “I own this, now you own this.”

As I mentioned previously, the value of money is due to the pure and dedicated belief that the currency used is real. My point is further proven by NPR’s article about Brazil’s currency change from cruzeiros to reals. In the beginning, Brazil suffered from inflation that made the cost of items in cruzeiros increase day after day. Brazilians lost faith in the cruzeiro’s value. The government then introduced a virtual price, URV, that had the price f items remain at a constant price unlike the ever-changing prices in cruzeiro. Overtime, the URV was trusted and believed in more than the cruzeiros, thus leading to the end of the cruzeiro and the beginning of the Brazilian real. The real was only able to be made the new currency because of the collective thought that this currency was better than the old cruzeiro currency. Money is valued only by how much everyone believes in the currency as seen by how the Brazilian cruzeiro became obsolete when a better looking, new currency was introduced (“How Fake Money Saved Brazil”).

The German government, as mentioned in “Bitcoin Recognized by Germany as ‘private money'” on CNBC, planned to have Bitcoin potentially become the new currency if the faith in the euro decreases like it did for the Brazilian cruzeiro. Bitcoin is more similar to the Yap islanders’ money exchange because of the lack of the middle man, the bank, and how the lack of physical evidence does not affect the value of the Bitcoin, since it is purely an electronic currency. This raises the questions, Is this real money? Is there any value? All I can say, is that the value of the Bitcoin will be what the people of Germany and the world will believe it to be (Clinch).

Physical money can be paper, metal, or stone, but the true value of money depends on the thoughts and beliefs of the people who use it.

Works Cited 

• Clinch, Matt. “Bitcoin Recognized by Germany as ‘private money'” CNBC. CNBC, 21 Aug. 2013. Web. 13 Sept. 2016.
• Friedman, Milton. “The Island of Stone Money.” (n.d.): n. pag. The Hoover Institution, Feb. 1991. Web. 13 Sept. 2016.
• Hill, Adriene. “Money: The Myth We All Believe in.” Money: The Myth We All Believe in. Marketplace, 12 July 2013. Web. 13 Sept. 2016.
• “How Fake Money Saved Brazil.” NPR. NPR, 4 Oct. 2010. Web. 14 Sept. 2016.

The idea that money has any value, is a myth.  Money is simply the physical representation of a person’s wealth. No matter the object used as currency, it will always be a placeholder for something imaginary. It’s important to remember that there’s a difference between value and worth. As Americans, we use dollar bills as our form of money. The literal dollar bill is nothing but a piece of paper, yet we measure our worth using it. The idea that we are either rich or poor based on how many pieces of paper we have, is quite odd on the surface, but it works. Our idea of money is similar to that of the people of Yap, as well as Brazil. Money is given power by people, and can only exist when a person believes it has value.

The exchange of goods from person to person has existed from the beginning of time. The only thing that has changed, is the object various people use as currency. On the island of Yap, large stones are used as money. A person in possession of a stone, would hand over their stone, in exchange for other goods. In many cases, these stones were too large to actually be exchanged, and transactions were essentially made on “good faith”. An example of this is a family who lost their stone before ever receiving it. The people of Yap acted as if the stone was never lost, and treated the family accordingly. This practice was accepted as a logical means of trade for the people of Yap, regardless of physical possession of stone. To the modern person, the people of Yap, probably seem like fools. I myself even questioned their logic, until I compared their stones to our bills. Our methods of trading are very similar to those of the Yap. We trade pieces of paper for other goods, given that another person believes our paper is worth the exchange. With the use of banks and credit cards, we don’t necessarily see the money we give or receive, but we accept it as gospel. Our monetary system may be more modernized, but at its core, is just as “crazy” as trading stones for actual goods.

In the 1990’s, Brazil faced one of their worst economic problems, inflation. The president at the time printed an excess of money, which resulted in the downfall of the cruzeiro. In the blink of an eye, the price of an item would change. Stores changed prices daily, sometimes hourly, leading people to believe nothing could be done to control inflation. This trend continued, until four men introduced a fake currency. Unlike the cruzeiro, this fake currency, URV’s, would stay stable. The only thing that changed was how many cruzeiros a single URV was worth. When people noticed the stability of URV’s, Brazil’s economy also stabilized. Like the people of Yap, Brazilians had to believe in their currency for it to flourish. The price in URV’s gave people the idea that priced had stopped steadily rising, when really they rose and fell like any other currency.

Prior to my research, I thought my $1 was actually worth $1. In reality, that $1 could be worth more or less than the value printed on the bill. I never realized how we operate on a system of good faith, especially in our modern lives. If my bank failed tomorrow, I have no physical item to prove that I’m worth something. We’re simply trading pieces of paper, given value by the government, as representations of worth. Don’t get me wrong, this system is needed in order to make transactions, but if we as a society stopped believing in the dollar, are we really worth anything?

Works Cited

Friedman, Milton. “The Island of Stone Money.” The Island of Stone Money(1991): 3-7. Web. 10 Sept. 2016.

http://www.npr.org/sections/money/2011/02/15/131934618/the-island-of-stone-money

http://www.npr.org/sections/money/2010/10/04/130329523/how-fake-money-saved-brazil

http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money

Whether its Stone Money, Dollars, Euros or any other form of regional currency, these are all just placeholders. A place holder for what you may ask? It is a placeholder for energy or a right of passage that humans seek throughout their lives. What makes this concept tricky to understand is the abstract concept of money. To start, one needs to travel to the island of Uap in the South Pacific to understand how the abstract concept of money has been around for decades, and how not much has changed since. On the island of Uap this pre industrial population in 1910 used a currency that relied on the trade of large round stone sculptures, which were larger than the size of an average male and three times the weight of a grown male. The islanders would trade these humongous stone sculptures for large or important trade deals. So how exactly would they transport these stones? There was simply no need to. If a person wanted to trade their large stone for a product from someone in another village they would simply just give up ownership of that stone. The stone would not have to move, people would eventually figure out who the true owner of that stone is. The similarities of this system compared to that of today is shocking.

So what makes these pieces of paper we call dollars have value? well because people in society decided to make it have value. This method of currency was created to make the trade of goods easier and faster to manage. After learning and reading about “The Island Of Stone Money” one can notice that the inhabitants of Uap had a very similar system to the one we use today. back then, technologically, they did not have the means to obtain “valuable” materials like gold. In the U.S, gold used to be a placeholder, a placeholder for dollars. The gold would be stored in banks and if one wanted the gold they owned they would trade paper gold swaps. Today technology has advanced so much that we can now digitally manage, distribute and view our money through mobile apps and online websites. whether one prefers using credit cards, Pay Pal or bank apps that digital number is a place holder for that dollar on any of those digital outlets. We people in society are expected to trust that digital number we see on our computer screens. Essentially modern day trade is no different from what we saw on Uap, those inhabitants were expected to trust the fact that

The physical dollar is evaporating the more and more technology advances. It is increasing so much that eventually we may see a dollar-less future where society goes full digital. Currency is what controls our societies, pixels on a screen or worthless pieces of fabric in our wallets will always hold value to people, because money is what gives us control over our lives. It is how governments control their nations. it’s what motivates people to apply for jobs and work. it is not about the material the currency is made of it is about how one obtains the money is what makes it valuable.

works cited

Calmes, Jackie. “Demystifying the Fiscal Impasse That Is Vexing Washington.” The New York Times. The New York Times, 15 Nov. 2012. Web. 10 Sept. 2016.

Friedman, Milton. “The Island of Stone Money.” The Island of Stone Money(1991): 3-7. Web. 10 Sept. 2016.

Glass, Ira, Chana Joffe-Walt, Alex Blumberg, and Dave Kestenbaum. “423: The Invention of Money.” This American Life. Prod. Planet Money. 7 Jan. 2011. This American Life. Web. 11 Sept. 2016.

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR. NPR, 4 Oct. 2010. Web. 13 Sept. 2016.

Reeves, Jeff. “Bitcoin Has No Place in Your – or Any – Portfolio.” MarketWatch. MarketWatch, 31 Jan. 2015. Web. 10 Sept. 2016.

The idea of money has always confused me as money is not a constant entity. The exchange of money for things such as food or goods with only a piece of paper does not confuse people as it was established that that piece of paper has worth that is backed by gold which equivalent to the goods that the person was purchasing. However, the worth that people give money is somewhat confusing as the wealth is determined by something as arbitrary and finite as gold. That piece of paper worth one U.S dollar can be worth even more or even less just for being in another country; where the wealth of the dollar and currency of another country, such as the European Pound is determined by something as “economic state of the country”. The concept of having the fabric of how society functions, from purchasing common goods for the everyday man to differences in power in intercontinental affairs, determined by something that isn’t constant sounds absurd. Yet the use of the abstract idea that is money miraculously makes the world turn round.

The faith in money is something that is only backed up with the faith humans put in it, which is absurd. Most societies happened to decide that money would be based on the rare and valuable material that is gold, but the material itself is arbitrary. Money just had to be something that a certain group, whether it be a city or an empire, backed up with any material they wished to. In the intriguing case of the island of Yap, the people of the island decided that gigantic limestone boulders that they held in such high regards would be what represented value. However, instead of making the money that was based off limestone something easily accessible such as the paper money that most people are familiar with, they habitants of Yap decided that they would use huge circular slabs of the material, ranging from a diameter of a foot to twelve feet, with a “convenient” hole in the middle as their currency. This Fei, which is what the island of Yap called the currency, tended to be so large and heavy that moving the Fei was too difficult; so the inhabitants nominally claim the large slabs and everyone collectively understands that the claimed stone is their worth and can be shifted to another person in just name alone. The concept of Fei initially sounds absurd, but the concept is still the same as the US dollar albeit less convenient. Both forms of currency utilize a representation of material where everyone agrees is valuable where they can exchange for other goods based off of the value of the currency. This money which the person doesn’t even have to physically have with them can then be exchanged to another person. What the inhabitants of the island of Yap consider a common exchange can just simply be compared to exchanging things digitally, as both money is essentially just claimed.In fact, a currency that is more current could be considered to be just as bad if not worse than the Fei, the digital Bitcoin. The idea of the digital currency free from the bank seems to be a legitimate idea, but the downfall is that the online currency’s worth is only worth what other people want it to be. This means that the Bitcoin which could sell for the equivalent of $266 on one day could become as little as $54 for essentially no reason.

Yet while Fei still backs up the money with material and Bitcoin’s worth remains changing forever, the handling of the economic crisis of Brazil shows that money doesn’t even have to be backed up by material but by the faith that the money was worth something. During the 1990’s, the constant inflation for forty years made the inflation rate rise to 80% per month, which would eventually make the costs of everyday items insurmountable for the people of Brazil. This caused sporadic changes in the costs of goods that made the Brazilian currency, the cruzeiro, have a sense of inevitable doom for the people. In order to solve this economic downfall, Edmar Bacha and his three friends devised a new currency that eventually replaced the cruzeiro and stabilized the entire countries economy, the URV. This virtual currency was technically based off of the erratic cruziero but everything of society from the wages of the workers to the goods that they would purchase was based on the stable URV that stayed static throughout the increasing costs of the cruzeiro. As the URV became more integrated into Brazil, Brazil simply swapped the failing currency with the URV and the inflation was gone. This completely overturns the very idea of money as something that was backed by another varying currency which was based on the common idea of money

The very idea of money was and will always be an integral part of society. Yet the true complexity and absurdity of what money is truly worth, which can apparently change given different circumstances, leads to show the true faith that people assume about something they deem to be an absolute truth when it is not. Yet people still believe in the worth that a collective whole believes have worth, so money will always have a place to keep the world going.

Works Cited

Friedman, Milton. “The Island of Stone Money.” Working Papers in Economics (1991): 1-7. The Hoover Institution Standford University. Web. 13 Sept. 2016.

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR. NPR, 4 Oct. 2010. Web. 13 Sept. 2016.

Reeves, Jeff. “Bitcoin Has No Place in Your – or Any – Portfolio.” MarketWatch. MarketWatch, 31 Jan. 2015. Web. 13 Sept. 2016.

Anne Renaut, Anne. “The Bubble Bursts on E-currency Bitcoin.” Yahoo! News. Yahoo!, n.d. Web. 13 Sept. 2016.

To illustrate how worthless a dollar truly is, first we must envision the impact the dollar has on an economy. The economy can be affected greatly by the value of the dollar, for example the Great Depression and Brazil. These two examples display that the dollar itself only holds as much value as the people within that region claims it does. During both situations the dollar lost its value and as a result the people in that culture suffered greatly because the economy plummeted. The dollar value changes constantly in actuality the dollar or paper money is not worth much the reason it holds value is because the culture states the value of the money.

Within the essay “The Island of Stone Money,”  by Milton Friedman, he emphasizes a method used for transactions within his story about a cultured known as the Yaps. The Yaps transactions where similar to what the France bank and the United States bank did when the France wanted gold from the U.S. The Yaps transactions never moved however the ownership did. Their currency was in stones and the stone took the place of the limestone that was on a different island. This is relatable to what the France Bank and The United States went through because the bank of France noticed the value of the U.S. dollar was depleting. As a result of the bank of France taking note of this they asked for gold in exchange for their previous transactions with the U.S. dollar. Similar to the Yaps and their transactions the U.S. put a certain amount of gold aside for the French and labeled that the property of France. The French approved of this transaction and likewise to the Yaps transactions the stone never moved, however the owner of the stone changed.

Similarly with the French and U.S. banking situation it reveals how the value of money doesn’t remain the same. Within the Yaps society, the use stones as their currency and the value of their stones can change depending on who is involved in the transaction. The stones held this value due to their society accepting it. However not every person within the society accepted the same amount of stones or accepted what we can get with our stones. Some residents of the society accepted one stone for one cow, while if we walk to another part of the island another person may offer us 2 coconuts for our one stone. Our neighbor may offer us 4 bags of rice for 2 stones, but the person who lives across the river may accept 4 bags of rice for 4 stones. From these different transactions reveals that the value of the stone within the Yap society will vary based on our consumer.

Traditionally people advise us in order to obtain money, we must save our money. However within the article “Back in Power, Abe Aims to Spend Japan Back to Economic Vitality,” by Hiroko Tabuchi, it suggests in order to make money you are required to spend money. This supports within the article when it was stated that those who support Abe’s concept claim his policy will defeat deflation and generate growth. The Japan government has decided they will spend a large amount of money in order to generate a stable economy, while other governments go with a more traditional approach and save their money in order to obtain money. This shows how the value of money constantly changes because Japan is trying to spend more money in order to become stable, however they were put in this situation because they spent too much money in the first place.

Spending too much money doesn’t always produce the same results for each economy. In the article, “How Fake Money Saved Brazil” by Chana Joffe-Walt, she went in depth about how Brazil’s economy was plagued by inflation and each time they tried to spend money the prices of merchandise would rise. Their structure became stable by using a “fake” money system. They used a different currency to take the place of the previous one, however the the new currency the price remained the same. However since no one had euros they used their old currency and used it in place of the new one. For instance, if one bag of chips was one euro last week, it would be one euro this week. Due to no one having any euros that one euro would convert into 7 pounds, however the next week it would remain one euro but it would convert into 14 pounds instead of 7 pounds. This system was able to provide Brazil with the solution to their economic struggle despite the fact it contradicts the concept of the value of money. It is doing so because inflation still was occurring within the economy the only difference was the fact that they attached a physical label to make it appear as if inflation was not occurring. Inflation continued because each week the customers still had to pay more and more, nonetheless from their perspective the price remained the same.

When I think of coins I imagine of pennies, nickel, dimes, and quarters that can fit into my pant pocket. That’s a different story for the people of Yap who have coins that are taller, bigger, and stronger then themselves. They call it fei another name for it could be stone money. Their stone money is a type of rock called limestone. Yap is a tiny island that is in the Pacific Ocean. When I first heard this story I thought it was really silly because they cant move the coin when they claim it. Later when I read the article “The Island of Stone Money” it gave me a better understanding of it. David Kestenbaum and a couple of other people broadcasted about stone money. They were a little astounded about the size of the money. they also understood the value of money. Money is worth whatever we an get for it. It doesn’t really have a real value of it.

Planet Money team did a broadcast of Brazil’s fight against money. In the broadcast called “How Fake Money Saved Brazil” it talks about how inflation in Brazil reached 80% a month just because the government decided to use printed money to build a new capital. Luckily, 4 former graduate students helped save their country’s economy with “fake money”. Everyday grocery store prices went from cheap to expensive. For example, a bag of chips may cost $1, however, after a month it may cost $10 for one bag. People were tricked into thinking that money had value when that wasn’t true. They used something called “virtual currency”. It tricked them into thinking that their new currency was in URV’s (unit of real value), but in actuality it wasn’t. It was a good way to help the economy from heading towards bankruptcy.

My concept for money has change because all my life I always heard people say that money is valuable. However, after reading the essay, listening to the broadcast,and discussing it in class. I have more of an understanding of money. That money could be fiction because it’s what you can get from it. When I heard the story about the United States put gold in a drawer and labeling it “France” it reminded me of the stone money in Yap because they don’t have physical possession of it but we still left it in the drawer for nobody to touch and just put a label on it. Later, we could have used it towards the Great Depression it would have helped us get out of the hard thing this nation went through. If the people of Yap came to the United States and saw our currency and how we spend it I believe they would be shocked because we pay for everything with a swipe of a card.

In the essay, “The Island of Stone Money” by Milton Friedman. He talks about how an ancestor and a group of people went out to found stone money. They were on their way back to the island but there was a strong storm and they group of people had to let go of stone money to save their saves. It sunk to the bottom of the ocean and they came back telling story about their journey. The people of the island decided that the coin at the bottom of the ocean was the ancestors’. Even though it’s not physically in their possession it’s still labeled as theirs. In Caroline Lafargue article,” Yap’s Stone Money” she stated that  “And it could be easy to assume that the biggest stones would be considered the most valuable. But in reality the value can depend on each stone’s individual story.” Each person has a story to tell bout how they adventure to get this big piece of stone.

In the broadcast by NPR, they learned about the stone money at Yap and they figured out that the value of money isn’t really real. For example, when you get paid you don’t get money handed to you nowadays, instead it’s sent to your bank account the only thing that changes it the number you see when you go into your bank account. In my class discussion I found out that the more money I have the less the dollar is worth. For example, If I get paid $288 one week and go to the store to buy something that’s a dollar it doesn’t seems expensive to me because I have $287 left.

Work Cited

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

Goldstein, Jacob. “The Island Of Stone Money.” NPR. Planet Money, 10 Dec. 2010. Web. 13 Sept. 2016.

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR. NPR, 4 Oct. 210. Web. 13 Sept. 2016.

Koning, JP. “Yap Stones and the Myth of Fiat Money.” Moneyness:. N.p., 4 Jan. 2013. Web. 13 Sept. 2016.

Lafargue, Caroline. “Yap’s Stone Money: The Largest and Heaviest Currency in the World.” ABC Radio Australia. ABC Radio Australia, 11 May 2016. Web. 13 Sept. 2016.

Money, it’s something most people use everyday. Why is its existence so perplexing? The factor that it is a mere representation of something of a greater value can be a cause. How could a dirty sheet of green paper come to represent a trust of gold or other wealth? How, is hard to explain, but why is a simpler question; it all falls into the hands of the people who are going to use the currency. Users have to have faith and trust in the economic system in order for it to work. If one takes a look at “Stone Money” written by Milton Friedman, they could see this idea, but in a purified state. On the island of Yap, the natives have taken up, what some may call, a strange monetary system. For large purchases, such as a dowry or buying land, they can pay for them with large stones known as Fei  (Friedman). This is not to say that someone is rolling a huge boulder to their neighbors yard when they want to buy their cow, the transaction can happen without even moving the stone. It is basically the same thing as buying something in store with a credit card, the shopper gets what they want and all they have to do is make an agreement with what was once their money. This fundamental theory is used in Yap, “One person gives it to another person. But the stone doesn’t move. It’s just that everybody in the village knows the stone now has a new owner.” (Goldstein). Buying a cute pair of pumps with a visa card, is essentially the same as buying a farm with a large boulder. Neither the islander’s “fei” or the shoe buyer’s money actually gets moved, just a change of title, and they can get what they want. A more specific example, can be found in 1932-33, between the French Bank and the Federal Reserve Bank of New York (Friedman). France wanted their dollar assets changed to gold, and to save the trouble of shipping it across the ocean, they settled for simply putting the French gold aside in the same United States Bank (Friedman). This mirrors the situation when one islander has a rock on their property that actually belongs to someone else. The idea of non-literal possession, that is so stupefying, is agreeing that the gold belongs to the French because they claimed. The French government felt comfortable knowing their gold was safe, simply because everyone else knew it was theirs. It is kind of like a game of “playing pretend” because nothing is actually happening, the rules are made up as they go. The trick here is the public’s trust in the system. If one Yap islander decided to physically take someone’s stone and claim it as theirs, chaos would ensue. The islanders would then have to fight over the stones instead of the peaceful transition of ownership they had been enjoying. When Brazil began to become desperate in their economic situation, their government too relied on the faith and good intention of the people. Edmar Bacha, a Brazilian economist, came up with a solution for the inflation crisis in Brazil (Joffe-Walt). The important factor in his solution was trust from the people “But, just as important, you have to stabilize people’s faith in money itself.  People have to be tricked into thinking money will hold its value.” (Joffe-Walt). Bacha is counting on the positive response of the Brazilian people for this idea to work. It eventually was successful, causing the people to believe in the Unit of Real Value (or URV). Money, or Fei, or French gold, is worthless if its value is not respected by the people meant to utilize it. The moral of the story here is that this aspect of society is charged by the people. Like parts to a machine, the economy would fall apart without the cooperation from the very people that use it.

Money truly is a crazy concept when you break it down. In its most common form, it is simply just a piece of paper. Yet, these pieces of paper run the world and all of those who inhabit it. They can make or break the quality of my life. All of the power around the world is derived from it. It is such a simple thing that serves a far more versatile and important purpose.

In the past couple of days my viewpoint on this concept has been swayed. I never really looked into it or broke down the whole idea of money prior to last week. Now, I understand that a dollar is only worth what you can receive in exchange for it. It is a simple way of breaking down what seems to be such a complex thing, but it is true.

Large stones quarried and shaped on a distant island were used as money on the island of Yap (Friedman 2). In relation to their giant stone currency, I found an interesting quote to be “You don’t need to have the stone, to own the stone” (NPR). It is funny to think about because it just seems like a more barbaric, yet identical, way of banking. My money can be loaned out to others from a bank, but if I ever had to withdraw everything, it would all be available to me. It is the same concept as not having to be in possession of the stone, for it to still be my property.

Seeing as how Brazil’s inflation came to an end with fake money (Joffe-Walt), I do not see how the public can have faith in the value of currency. It also leads me to think the same thing about our government here in America. Money can be printed out to easily on a daily basis, so how much is a dollar really worth? Public faith in the value of money is so important for many different reasons. A main reason would be that order in society is ensured by the fact that the cost and value of money is understood by everyone. So if that understanding and trusting of the government is taken away then the value of money can be interpreted as anything. Order would be lost if a society could not maintain that faith.

Now, a concept like Bitcoin shows how far we have truly come. It is a completely digital currency that certain places of business accept as a form of payment (Reeves). This brings me back around to the idea of the stone, because just like stone currency, I don’t need to be in physical possession of these Bitcoins to own them. Yet another way of the same thing taking different form.

Between cash, coins, credit cards, checks, or any other type of electronic currency, money comes in many different forms. Whether it is a hundred dollar bill or a penny, it all has worth. And no matter how significant the worth, it should never be taken for granted, because I know that money makes the world go round.
Friedman, Milton. “The Island of Stone Money”. Hoover Institution. February 1991. Web.

Planet Money, By. “The Invention of Money.” This American Life. NPR., 7 Jan. 11.

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR, 10 Oct. 2010. Web. 13 Sept. 2016.

Reeves, Jeff. “Bitcoin Has No Place in Your – or Any – Portfolio.” MarketWatch. MarketWatch, 31 Jan. 2015. Web. 10 Sept. 2016.

P1. What is wealth? To some, wealth may mean money or possessions but to others it may mean power. Prior to reading about Stone Money I viewed wealth as money. Now I am having mixed feelings toward the idea of money. I always used to think of money as a physical object. I also believed that the more money you had, the wealthier you are. In reality money is not even a factor in being wealthy. Money is just what we use to trade for goods. If you think about it, money doesn’t even have to be an object. If somebody really liked cheerios, you could trade them a box of cheerios for something in return and it would have the same effect as a dollar bill.

P2. The fact that there is a giant ball of limestone sitting in the middle of the ocean somewhere still being claimed by someone who is deceased is unsettling to me (NPR). that is like me having 500 dollars and throwing it in the ocean. When the money washes up onto shore and someone picks it up, it would now be theirs. Nobody can just go pick up the giant ball of limestone and claim it.

P3. Brazil’s idea of money was that it literally grew on trees. They figured if you just print more money, there will be more wealth in the country. If it weren’t for the four brothers, they would still be using that form of economics and their country would eventually fold. Money needs to have some sort of value. If you just print out more, it would not be worth anything. It would be the same thing as picking leaves off of a tree and buying a car with them. Money needs to have value. You then would have to convince the people that the money is now worth much more than it did before and they need to value it more.

P4. Once a country is in debt they will do anything to try and get back on track. For Japan, this means an increase on inflation (NYTIMES). As if the people are not paying enough already, they are about to get hit with an increase on everything they buy just to pay off the country’s debt. The Japanese government will announce around 12 trillion yen ($136 billion) in fiscal stimulus measures to boost the nation’s shrinking economy (Bloomberg)

P5. Every country has their own various methods to regulate their economy. One thing that is common between them all is the use of a made up object of value called money. Every economy is based on money and every person believes that the more money they have, the wealthier they are. If the money has no value to it, then there is no wealth associated with the green paper. Look at it like this; lets say for example you sell your car in exchange for 10,000 dollars. That 10,000 dollars has value. Where if you just printed out 10,000 dollars with nothing in exchange, it would have no value. Luckily here in America we have a pretty good sense of value when it comes to money. We just have too big of a problem with spending more than what we have.

Works Cited