Going to class on the first day, I was paying close attention and I heard something be told about the concept of money.  Trying to get a clear grasp around the the ideas and questions being brought aloud in class, i started to put two and two together and realize that it all makes sense and was quite tricky yet very clear.

Because of the assignment told to read about in class which was “Stone Money”, i came across a bunch of ways that the strategy they had for using giant stones was actually quite similar to how we use money today in our world.  Some people don’t  understand the true value of money.  What is money?  To some people, its the reason why they get up every morning to go about starting their daily grinds.  To some people, this piece of paper runs the world.

In the article “How Fake Money Saved Brazil”, they say,”you have to slow down the creation of money, they explained.  But, just as important, you have to stabilize peoples faith in money itself.  People have to be tricked into thinking money will hold its value.”  This was fake money that everyone believed to be real after time.  This is a stone money story because you can question what money really is besides a piece of paper or just metal. Could money be anything?

A term GDP was created along with the economy after the great depression to try to save the country.  This term means Gross Domestic Product.  This was created to stand for the value of all the goods and services produced in the country in a years time.  A problem shortly arose from this says the article, “The Invention of the Economy.”  In this article, they state,”rather than a limited measure of the economy, it becomes this Cold War gauge of who’s doing better, who is winning.”  This could obviously cause wide problems throughout the world if everyone is trying to compete.  There is something else told from this article that you would not know at first glance.  They state, “GDP isn’t a thing, its an idea in which keeps changing.  Just last year, the US tweaked the way its calculated and instantly, it was $500 billion bigger.

This all has something to do with how we as people together can not see certain things.  To answer questions brought up earlier, we don’t really know what money is.  To be completely honest, numbers are made up, money is made up.  They’re just things that someone had created and got everyone to believe.  People don’t realize that about money.  It is not the key to life.  To bring my argument back to our class discussion, id like to bring up something said about how money and work actually works.  You as a human go to work, you get paid through and online account in which someone made up and got people to believe in.  The irony of it is that the person or people together paying have an account that just shows a lower amount of money and the person who is being paid has an account that went up some numbers.  Then from there, you just swipe a plastic card somewhere to get something of value out of it.  So money started from being a stone, to paper and coins, and then to being in an online account and using a piece of plastic.  So again to bring it back, what really is money?

WORK CITED

Goldstein, Jacob. “The Invention Of ‘The Economy'” NPR. NPR, n.d. Web. 13 Sept. 2016.

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR. NPR, n.d. Web. 13 Sept. 2016

Goldstein, Jacob. “The Island Of Stone Money.” NPR. NPR, n.d. Web. 13 Sept. 2016.

One would say money has no intrinsic value at all. According to some of these sources money doesn’t even have to be seen and people still believe that it is valuable. Literally someone can tell a person that this piece of paper has this amount of significant value and as long as the person that told them has someone to vouch for them one would believe them. It’s amazing to me how unbelievably true some of these articles are. The people in America and all around the world actually just believe what people of higher power say about this piece of paper and we just go with it. The Yap would not be able to believe how this small piece of paper could be so valuable and easily moved around the world. When in their time they just left the piece of stone where it was and told everyone in the community who the owner was. The Yap wouldn’t believe how we have several banks all around the country and we can deposit and withdraw money so easily. A step that may have seemed impossible back in their time. The Brazilians trusted the currency because it was actually a stable, trustworthy, and dependable method. The prices of things were very clear to them and eventually turned out to work in their favor. The Japanese’s plan to invigorate the economy was a failure and actually made the currency drop eleven percent.

Stone Money

What is money actually worth? Seems like a ridiculously stupid question, but the concept of money is a tricky one when you actually attempt to wrap your head around it, because in our everyday lives (at least here in America,) we just view tangible money as exactly that…money. If you had asked me what a dollar is worth when the class first met, the answer you would have received is “A dollar.” Just like $10, $25, $120,384, and so on, the answer would be whatever the “number value” is. Not a value other than the quantifiable units we make them out to be. In the This Is American Life podcast, The Invention of Money, the concept is thrown out that money is FICTION, by pointing out the housing crisis of 2008 when the stock market crashed, and billions were “lost” from the banks. But, where’d did the dollars actually go? That threw me off at first, but reading the other articles, I honestly thought about it. I thought about the pay I get direct deposited in my bank account. It isn’t like physical dollar bills are actually IN my bank account….only numbers.  But, what about the $10, $25, or $120,384 bank statement that’s in your checking or savings account? It’s “supposedly” worth whatever the bank statement says, but do we know that that’s what it’s actually worth? Whenever you make a transaction or a deposit with a credit/debit card, no physical, tangible dollars get moved around…only numbers do, so how is that the same thing as having physical money in your wallet? Where is the money in your bank account even going, or coming from? The same goes for a physical check. The paper and ink that the physical check is only costs a minuscule amount of money, but we determine the WORTH by whatever amount is written on it. There’s nothing PHYSICALLY different about a blank check and a check with the order a certain number of dollars to be transferred…other than the number of dollars that are ordered to be transferred, so what makes that check worth more physical money than the blank one if they’re pretty much physically the exact same thing?

The Southern Pacific Island of Yap had an unorthodox method of exchanging currency in the first few decades of the 20^th Century. According to Milton Friedman’s essay “The Island of Stone money,” the Yap realized that they needed a form of currency to be used there, which is essential in most (if not all) societies in the world. Their currency was different, because they imported and used limestone discs as money. Not limestone discs that you could fit in your pocket or easily move, but large discs, some of which couldn’t be easily moved due to the lack of machinery and automobiles on their small island. They used these to make large purchases, like buying a house from someone for example. They couldn’t physically take possession of the huge limestone disc from the buyer because of its size and weight, but wherever the disc lay, they had total possession of that particular disc. Then if the new owner of that disc decides to “sell” it for something else, they then would give the rights to the limestone disc to the person they’re purchasing their item from. And the cycle would keep going and going, and the same stone was being traded as currency without ever physically “changing hands.” And they were used, not necessarily for being imported from a far off island, but almost off of the strength of the fact that they owned the huge discs despite them never leaving its original physical spot. You or I would consider the limestone to be a nonsensical form of currency and WORTHLESS since it can’t be moved. But, that sounds very similar to how bank accounts work when you make a transaction. So if we’d deem their currency “worthless,” when aspects of the way we exchange money are strikingly similar…would that then deem our currency worthless also?

Another striking situation that gives the hint that money is a fictional concept of itself is Brazil’s economic crisis in the 1990s. They had a major problem where their unit of currency, the cruzeiro, which was consistently losing value and led to massive inflation of 80% a month. According to the NPR’s Planet Money article, How Fake Money Saved Brazil, stores had to change their prices literally every day. Their example: “The guy in the grocery store would walk the aisles putting new price stickers on the food. Shoppers would run ahead of him, so they could buy their food at the previous day’s price.” There would be no way to keep up with the daily rise of prices on everyday necessities, so the new prime minister of Brazil enlisted the help of four students studying in Rio. Tasked with saving the country’s economy, they developed a currency that wasn’t even real. They created the URV (Units of Real Value) to be a stable form of currency that didn’t inflate. Brazil would continue to use the cruzeiro, but everything would be listed in URVs, which gave the illusion of stable prices, thus restoring faith in Brazil’s economy, establishing a physical URV currency called the real, and bringing its citizens out of poverty.

So with those two examples, and the other articles that were posted, it seems to me that all types of currency holds no true, solid value…just the value of being BACKED by other people’s belief that the currency holds some type of worth as a means of trading in exchange of goods and services. It’s almost like saying, “Here’s $5. It’s worth $5 because the government says that it’s worth $5, and the people believe in the worth of the dollar” and not because there is an actual quantifiable value in that $5…but simply because they said that it was worth 5 dollar units. Just like the bank account example used earlier, it’s a backing by whatever particular bank that your money is “in.” That’s why you can buy things with a credit/debit card, not because your account is tangible, but the money in the account is backed by the bank, and whoever you received your purchase from has the faith in your bank that they will be paid the money that’s routed from your account when your purchase is made. There’s nothing PHYSICALLY in your account, and it only contains a number, and companies are willing to accept what isn’t even there because of the faith in the number of invisible dollars belonging to it. In my opinion after this assignment, money is a subjective item/concept that only exists so people can’t physically (or virtually) receive something for nothing. So the real question is, is the worth of the dollar ITSELF actually powerful…or is it the ECONOMY’S FAITH in the dollar’s, or whatever currency’s value, what makes it powerful even when it isn’t physically there?

Works Cited

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

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

Friedman, Milton. “The Island of Stone Money.” N.p., Feb. 1991. Web.

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

Money, money, money. The extremely complex and arguably fictional foundation of our economy. I always wondered growing up how did a piece of paper with some inscriptions and fancy images become the social fabric of our world? When you put a U.S dollar bill side by side to monopoly money you understand that one is worth something and the other isn’t. Although, monopoly money like “real” money is simply paper from our trees. Therefore, we must question, why is money valuable? Pre Colonial era we traded among each other valuables in which each person needed. We valued precious and rare metals or jewels such as diamond, gold and silver. We valued goods as currency and only cared about items which every colony needed. If a man had a pig but needed a cow he would search for that person that needed a pig and had a cow. This exchange of goods made perfect sense and never involved a paper bill and a complex system of valuing that bill. Money in its self has no real value to it, it isn’t rare and its not pretty. We the people make money valuable, we make the value “real”, but should we?

When i came across the article by Milton Friedman named The Island of Stone Money I was intrigued. The island of Yap is extremely underdeveloped with barely any valuable items. When they discovered what seemed to them a precious rock called Limestone on a neighboring island they began using it as their form of “currency.” Although, they went about system in a very odd way. According to Friedman these men and women could trade these large pieces of stone for other valuables they needed or important services such as the retrieval of a fallen soldier. Here was the catch; technically you never had to physically have the rock or even have it in your possession. You didn’t have to even see it, it was all based on the idea of the rock and a trust system that everyone knew who the real owner of it was. This was relevant when Friedman mentioned that the wealthiest man on the island never even had his Limestone he just saw it and was vouged for by his crew. (Friedman, pg 2) Reading this made a light bulb shine bright inside my head. I soon realized that this ridiculous form of “currency” is a lot like other more civilized countries. The point is not the physical aspect of money that gives it value, its simply the idea of money and what it represents that makes it valuable. And that raised the question, is this the right way to run an economy?

Friedman also discussed an instance where the french technically owned some portion of gold. However, they never physically retrieved the gold, instead a deal was made with the U.S and was stored in a drawer on our homeland.(Friedman) This is another perfect example of how nothing but an idea satisfied a whole nation and was understood by others. Although, when you put it in perspective was that valuable metal doing any good for people just sitting around? The answer is no. The best two examples I can present you with is that of the Bitcoin and URV. Online banking is a complete joke and makes no sense. When we use bitcoin we are essentially transferring images and codes over to our bank. In no way, shape or form is this real money. But, we except it as real money wit real value! How is something intangible in an exchange of goods essentially, valuable? We aren’t physically handing anything over to the bank but they still accept it. My favorite example however is that of URV, which I read bout in the article How Fake Money Saved Brazil. As proposed by the title URV is exactly what it says, it is fake money. Brazil was in a state of high inflation rate which in turn practically made the price of items go up either everyday or week.(Chana Joffe-Walt) The country was in turmoil so a couple of guys came up with the idea of replacing cruzeiro with a virtual “fake” currency and they called it URV. The worst part is this idea was accepted, used and succeeded. It had no real value therefore it was literally fake. These two examples prove my point that money just seems to be an idea. It seems crazy to me that much of peoples happiness and status in this world is based off of solely an idea with no true value.

Recessions or economic depressions effect everyone. The way the economy is set up values this idea of money over true goods and resources. After reading these articles my perception on money has changed tremendously. It raised the question, is this the right way to go about it? Was the old way of trading goods and food and resources more useful? This isn’t just for me to decide.  Although, it is sad to see people lose their happiness and parts of their lives struggling over the obtainment of technically a pure intangible idea.

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.

Talking Money

P1. Money is what makes the world go ’round. We all recognize the importance of money in our capitalist society. After all, we spend over 20 years of our lives receiving an education for what? To earn money.

P2. In 1991, anthropologist Milton Friedman visited an island over 8,000 miles away in the subregion of Micronesia called Yap.  The official currency of the island is fei. The currency is made up of large sandstone donuts ranging from one foot in diameter to twelve feet. These “coins” are typically taller than a man, and weigh more than a car. As a result of the size of these stones, you are not required to obtain the coins in order to possess them. After a transaction, the new owner of the stone is recognized which disposed the need to carry it around and hold it. As a result of this, there are situations in which rich families of Yap have never even seen their wealth.

P3. Years ago, relatives of this family were hunting for fei. After the discovery of a massive fei stone, the family captured it and tied it to their boat in an attempt to bring the money home. Disastrously, there was a violent storm the night of their voyage back to the village. As a result, the family had no other choice but to save their lives and drop the fei overboard. Once back at the village, they had to testify for their money that was dropped. They explained its massive size, the wealth it held, and declared that it was lost through no fault of their own. The family was then allowed to keep the stone as their own with absolutely no loss of value. Now, it is accepted in their village that there is a stone in the ocean that has never been seen yet holds massive wealth.

P4. Does the idea of not actually having your money on-hand sounds trivial? Well the Fei is very similar to the American currency system.

P5. Before 1933, American currency was backed by gold. This meant that the trade of dollar bills were promises of gold which was held in banks. After 1933, the decision was made that we may no longer trade money for gold at our banks. The American dollar was officially unbacked.

P6. As of today, our money is still unbacked and the only true value of the dollar is what one can buy with that dollar. Further, is now optionally paperless. The money that is held in the bank is utilized to give loans. The money that resides in the bank is essentially fictional numbers with no actual cost, the actual money may not even be in the client’s account at the moment. At this point in our society, we are trading virtually useless pieces of paper for goods and services. The only reason these pieces of paper have value is because we want it to, we believe it has wealth.

P7. Growing up, I never understood money. However, after my new education on the topic, I recognize that the fictional value we place on money is a necessity. Without money, contrary to popular belief, the world would be chaos. What is the incentive provide services or create and trade goods? We would not have teachers, doctors, lawyers, or even public officials. The blind faith that we hold in our currency, although dangerous, is currently essential.

Works Cited

The Planet Money Team. “The Invention of Money.” Audio blog post. This American Life, 7          Jan. 2011. Web. 23 Oct. 2016.

Forms of currency come in all different shapes and sizes.  No matter what country it is from or where you got it one thing money has in common is that it is an illusion.  Money is used to buy, trade or even rent all types of different goods.  As I got older I started to question the actual value of money.  In my opinion American currency makes more sense than the bitcoin which is used by the Island of Yap.  Money is a man made fallacy but it is important because it allows us to obtain things others do not.  As malicious as this sounds it is true. You either have it or you don’t but I’ve never spent a dollar that I did not want back.  It gives worth to just about everything and anything.

When comparing the gigantic boulders to a dollar bill at first this assignment did not make much sense to me.  This enormous piece of limestone is actually worth something?  Not only that but how civilized are these people compared to us.  The more I read and researched I started to realize they are so different but they have the same primary function.  Yes, bitcoins can not be carried around in a wallet like a bill or in your pocket like change.  From my knowledge the people from the Island of Yap did not wheel barrow their boulders around and chip pieces off of it to negotiate for goods but that is what made sense to them.  Trading a house for the boulder made complete sense to them.  They gave these boulders value just as Brazil did with their form of made up money.

America replicated Brazil and made a new form of currency.  America did this using Brazil as it’s prime example.  A country that once was looked at as one of the most stable economies.  America fell victim to the idea and before you knew it Gold was a thing of the past.  Yes, Gold is still worth money but no one is walking into the grocery store with Gold bricks exchanging for their groceries.  The need to go mining for Gold or Limestone was a thing of the past.  People began to move away from Gold and started adding more focus towards the much more easily acquired dollar bills.

Maybe it’s because I grew up in a much more different time and culture but bitcoins do not make as much sense to me as the dollar bill.  Maybe to the people of Yap the idea of knowing you have money when you need it made sense to them but I would not be able to go out with my friends or on vacation knowing my money is sitting outside of my house and able to be stolen at any minute.  That to me is the same as leaving your wallet at home with your doors unlocked in a bad neighborhood.  Maybe the people of Yap had more respect for each other than we do as Americans but I can not go anywhere without knowing I have money on me.

Money is an illusion.  We gave money its value just as we made the dollar the new Gold.  It is in a better sense a figment of our imaginations.  Money made trading for goods easier.  Instead of having to barter an item you maybe did not want too for something you needed money gave you the opportunity to exchange without having to do that.  Money is important because people want they don’t have.  Some blame the bible but I just believe when people don’t have something or are told they can’t the greed and jealousy begins to eat away and people begin to find ways  to obtain it.  Money in any culture is the reason for violence and evil.

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 Money.” 423: The Invention of Stone Money. This Is American Life,                     WBEZ. Chicago. 7 Jan. 2011. Web. 13 Sept. 2016.

Novus, Stella. “The Megalithic Money of Yap.” Ancient Origins. Ancient Origins, 04 Jan.                   2013. Web. 12 Sept. 2016.

The value of money for a german colonized island called Yaps, this island value of money was based off a large stone which was never moved or was touched just left there and had different owners. Based off exchanges and trades made the stone would have a different owner. “They often talk about the stones themselves not changing hands at all, “Fitzpatrick says. “In fact, most of the time they wouldn’t.” No matter where the money lied on the island it was yours. They even had an occasion where the stone had fallen off a man boat and laid at the bottom of the ocean, and the people of the island still agreed the stone had value to it. The Yaps never had a different system of money and they believed that their system worked they knew what stone they owned and how much it was worth during and exchange and never saw a problem so they kept with their logic. While in the U.S they used money as a monetary value for gold. France felt as if the value of money would fade and that France wanted there money in gold. U.S bank if New York just placed the gold aside and had it labeled for France. As time went on Frances banks increased while U.S banks collapsed which cause a major problem in the economy. Frances power of money increased while U.S drops even though France didn’t have physical possession of the gold or no where near them, meanwhile the gold is just sitting in a U.S vault while the U.S suffers but they can’t use the gold because it technically not theirs.    

For me I believe I should have possession of my money, if I wanted to make an exchange for a product I would want to be able to hold my side up which would be providing the money,  and be given the necessity I need to complete the transaction. I wouldn’t want to be like my money is down the street it is yours now. I would want to be able to show the money to make the deal. As well as the other way around, if someone is trying to buy a product off me such as milk I would want the money while the exchange is happening. In today’s world people don’t even carry money on them, they just have a digital showing of how much money they have in the bank by an app on there phone or a bank statement. Most people don’t care too much about having the hard cash on them as long as they look into there bank account and see the money rise they are satisfied which is something I don’t like. People today are paying in checks and credit cards and the seller could have no idea if the person really even has the money to make an exchange but they could care less as long as they see something in exchange that could help validate that the person may or may not have the money.

 While in Brazil they were having problems with inflation of money and keeping a stabilized economy. No one was able to figure out what was causing this inflation but it caused the people of Brazil to spend money instead of saving it due to the prices raising everyday. Then four economists, and they went on and had to create fake currency called URV. They believed people of Brazil needed to regain hope in the faith of a stable cruzeiro, and believed the URV was the thing to trigger a more stable economy. “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.” They went on to change all cruzeiro into URV, such as wages, taxes and food. By doing so whatever the inflation rate of a given item was the URV would stabilize it so that there was no inflation. The people in Brazil were using fake money that really meant nothing to them. Since it brought down the inflation of the economy no one cared and just brought happiness back to the people of Brazil.

I thought this would be a good idea in this type of need happiness to me comes from money because there are so many things you can do with it such as travel and buy nice and fancy stuff and just be able to enjoy some aspects of life that many aren’t able to do. But when you have to worry about spending your money because prices will increase I due in fact believe they should figure a way to find stability. Even though it was fake and means nothing me, I guess in a time of need every little aspect that can benefit you is worth a shot.

Work cited

Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford                         University, Feb. 1991. Web. 13 Sept. 2016.

Country Studies. “Brazil- The Real Plan.” Brazil- The Real Plan. U.S. Library of Congress,         2012. Web. 13 Sept. 2016.

Novus, Stella. “The Megalithic Money of Yap.” Ancient Origins. Ancient Origins, 04 Jan.                   2013. Web. 12 Sept. 2016.

Money is a funny subject. The concept of money is even funnier. When I say funny I mean that there are a lot of questions dealing with the monetary system we use as Americans today. Most of us have bank accounts that we can just see a number on an account statement on our phone, computer, or a physical piece of paper and know we have that much money. The question concerning money is, Where is that money that the bank says we have? We can use it at our own will and we know its there, but we can’t actually see the currency in front of us. Before reading and listening about Stone Money, the Brazilian real, and the other articles about other currency I understood how banks worked but never really took my time to try to figure out why we use the system we use today.

To understand the monetary system in use today we have to look at the history of money. The first upbringing of a monetary system dated back all the way to the start of civilization and it was the bartering system. Whether people traded food for clothes or cattle for water, people used items as currency and everyone knew for example how many chickens you need for a cow. NOVA, the most watched science television program in America, published a timeline of money. On their timeline the first monetary system that resembled our current one has been dated all the way back to 1200 BC. The Ancient Chinese used cowrie shells as currency. Cowrie shells is the oldest currency in human history. The Planet Money Team for NPR did a report on the islanders of Yap, a Caroline Island in Micronesia. The report talks about the people of the island Yap and their currency known as “fei”. Their currency was made out of huge limestones, nicked named Stone Money, and brought from islands hundreds of miles away. These pieces were so big that once they were brought back to the island it was put in the middle of the village or on a path and left there. On Yap the islanders did not have to physically posses the fei for it to be theirs. It was common to have engraving on said stone to show who owned it at this time. There is even a legend regarding the largest fei sculpted. Friedman explains this legend in her essay, “The Island of Stone Money”. It is believed that a boat load of islanders set sale to an island some humdred miles away. Once at this island they sculpted the fei and loaded it on a raft and headed back to Yap. On their return they ran into a bad storm and had to let the fei go and it sank to the bottom of the sea. When the sculptors returned to Yap they recalled their experiences and the islanders were okay with the fei being at the bottom of the sea because they knew its worth and everyone knew who it belonged to. So that means generations after the sculpting of the original fei people have never seen it but at the same time know that the family is the wealthiest family of Yap.

In 2016 technology changes every day. One can buy something on Tuesday and by Friday there is a better model that is faster or has more storage than the previous, Technology is growing at a exponential rate. There is now an app called Venmo that is very popular in the college atmosphere. This app is a social network where people can pay and request money to and from their friends. Venmo was created through PayPal, Inc. and now has well over one million downloads. A lot of college students use Venmo to split bills with friends and roommates. You do not have to put a single penny into the app but you can receive any amount of money from friends. From their you have a balance in which you can pay bills or send others money. You never have to physically posses the money but you know its there and you can use it however you see fit. This is exactly how the Islanders of Yap used their fei and it is very interesting how things can be the same after a hundred years.

After it is all said and done my opinion on money has broadened. It didn’t change because I knew how electronic money works along with banks, and I also had a brief knowledge of the history of money beforehand. I say broadened because after reading about the fei and the island of Yap I started to think more and more about the monetary system we use today. As Ira Glass explains in her broadcast you can put money in a bank, that money then gets loaned out to a person starting a business. So now, this person has your money but you can still buy things with it. Even after this person purchases something with your money, your money did not go anywhere. I never stepped back and looked at this scenario like that before and reading about money and the issues money caused in different countries, such as France, Brazil and Germany, allowed my opinion to broaden and learn how to accept how “funny” the concept of money really is.

Works Cited

http://www.pbs.org/wgbh/nova/ancient/history-money.html

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

https://counterintuitive2015.files.wordpress.com/2015/01/stonemoneyessay.pdf

https://play.google.com/store/apps/details?id=com.venmo&hl=en

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. It was bizarre to even consider at first, but I quickly realized 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.

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.

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

“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.

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;.

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;.

P1. Up until this point in my life, I saw money just as everyone else in the world. Money is what makes the world go round. This idea was never challenged until reading  the various articles pertaining to this subject. I knew at one point gold was considered a precious gold that backed money. It’s value was created by humans in our minds, but the money still represented it. Now that it has been brought to my attention money is not backed by gold, my whole view has changed. Our money is not significantly different than the Yaps, Bitcoin, or Brazil’s made up currency.

P2. The gargantuan limestone boulders used as money in Yap sounded completely ludicrous to me. Money in my mind should always be able to be carried with you. The fact that there are gigantic pieces of money in their society baffled me, but once compared to our money in the U.S., my mindset began to skew from left to right. Our money can be represented through paper checks, plastic cards, and a special material we call bills. None of these are backed by gold. To make a comparison, Limestone is to Yaps as gold is to Americans. With this being the case, their idea of money is not too different from ours. They leave large pieces of limestone at different locations and use them as a bartering tool just as we use paper, plastic, and bills.

P3. America took the idea to make currency backed on nothing from Brazil. The way used to correct the inflation issue was in fact genius. Using the legitimacy of the country to back the currency was clever, because the government did not need to worry about finding gold or limestone, but rather just focus on amount of money being exchanged. This showed me that money can be backed by anything as long as that anything had value. A country is a great example such a thing of great value.

P4. Bitcoins still to this day do not make sense to me. It’s a made up currency not connected to any government or backed by gold. It is literally just a form of currency people agreed upon to barter created by an individual. For Places like Brazil or America to back their currency by their country made enough sense to not question it too much, but the thought that a legitimate form of currency could come from nothing with but an idea is insane. This simple fact helped me better understand that money does not have value due to the amount of it in the world, but rather what we believe it as.

P5. Money is for lack of a better phrase, a figment of our imaginations. It only has value because everyone wants it. If no one wanted money, everyone would barter using another item or items. Due to this fact, the concept of currency having value only because people want it, is very unsettling. Any boat that can be tipped that easily is not a good one and should be replaced.

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.

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;.