Stone Money Rewrite–rainbow987

                                                      “Money is Worthless”

As defined by the widely used and accepted dictionary Merriam-Webster, money is “something generally accepted as a medium of exchange, a measure of value, or a means of payment.” However, this textbook interpretation does not explain the abstract question as to why society accepts a flimsy piece of paper or a transfer of virtual numbers on a computer screen as a sign of growth. As a small child I can recall asking my father a very similar question. I frequently asked “Why is money worth anything? It is only paper. Why do people care how much paper they own?” My father struggled to provide an explanation that I found sufficient. I decided, with my decision being recently confirmed in a podcast entitled “The Invention of Money,” that the only thing that you need for money to work is for people to believe in it. If people believe that it is valuable, then it is valuable. As soon as trust is lost, the value is also lost. It is similar to a car. When a new model is released, everyone wants to get their hands on it. However, one year later, people no longer want the old car. Therefore, its value is reduced significantly. This analogy shows that the value of money can fluctuate, just as the value of commodities can fluctuate. This simple yet complex theory has been proven true in a variety of ways among many different societies.

It is difficult to comprehend the simplicity of a currency system. The island of Yap, a small island located in the Pacific Ocean, has a monetary system comprised of large stones called fei. In the United States, small paper bills called dollars are exchanged regularly. Although being physically extremely different, the fei and the dollar are one in the same. The only source of security that either provide is their respective society’s trust in the object’s worth. The trust that a society has in its currency can fluctuate over time, which would change the overall value of said currency as well. In Yap, if ownership of a fei is transferred from one person to another, the fei is not physically transported to the new owner. Everyone in the community simply accepts that ownership has changed from one person to another. Milton Friedman’s essay entitled “The Island of Stone Money” chronicles this concept even further. In the 1800’s, Yap was a German colony. Upon inspection of the island, the German government insisted that the citizens of Yap work to fix the roads. The people refused, so the Germans used black paint to draw crosses on many of the fei. The black cross represented German ownership. In a different society, in which possession of a commodity is required to represent ownership, the Germans would have seized the stones. However, the Yap society does not require one to physically possess an object to own it and share in its wealth. Therefore, the black crosses proved as a sufficient form of symbolic “seizing.” It was done to motivate the people of Yap to abide by the German’s wishes. This small action caused the citizens of Yap to quickly agree to fix the roads, since the German interference created doubt in the value of the stones. Once the task was completed, the paint was washed away and the fei once again belonged to the original owner. It is strange to think that a small action such as painting an object can cause an entire group to believe that they are losing wealth. The fei was never moved from its location, yet to the people of Yap, the fei was no longer theirs to own.

This idea has been displayed throughout history many times. An example of this occurred during the span of time when the United States backed their money by gold. France did not want to depend on the pieces of paper that represented the gold, in fear that the American dollars would be worthless. In other words, the French were worried that the latest car model would be released, causing the older models to lose their worth. Instead, the country asked the US Federal Reserve Bank for their supply of gold upfront. They requested a commodity that everyone would value equally, which is gold, rather than the dollar bills. Instead of physically sending France their gold, the Bank chose to move the gold to a separate part of their office and essentially, label it as “France’s Gold.” No objects were physically traded. Although the gold was still in the United States, it was considered to belong to France because people believed that it belonged to France. In comparison, an article written by Anne Renaut for Yahoo! News discusses a virtual currency system called Bitcoin. The entirety of exchanges conducted through this resource are done on the internet. Physical objects are never traded. The only representation that ownership of funds changes is a number change on a computer screen. Although seeming trivial, the significance of this change is confirmed by the trust that people put into it. It is as significant as the label being changed in the Federal Reserve Bank, which redirected ownership from the United States to France. In every case discussed, the exchange of money is considered important and valuable because people believe that it is so. Without this faith, money would not succeed as a system of exchange.

In the late 1900s, Brazil struggled with extremely high rates of inflation. At its highest, the inflation rate was eighty percent per month. It was the norm for people to spend their paycheck as soon as it was received because the money was losing its value. In comparison, it was as though someone was handed the equivalent of a US one hundred dollar bill on Friday night, and it would be worth significantly less on Saturday morning. Brazil’s problem with inflation originated in the 1950s when money was created to fund the building of a new capital to be called Brasilia. Due to the mass production of cruzeiros, Brazil’s former currency, in a short time period, all money lost significant value. This issue worsened for the remainder of the century until several economists implanted an entirely new form of currency, the real. People had lost faith in the old system. Therefore, it was no longer functioning properly. By creating an entirely new currency that was not already considered valuable, people gradually began to depend and rely on it as its value remained constant while the cruzeiro’s declined. As the citizens of Brazil adapted to the new currency, inflation rates quickly returned to a reasonable level. This event further emphasizes on the point that trust and belief are the primary reasons that money is considered valuable.

It has been proven in a multitude of settings and cultures that a successful economy is formed and maintained by trust. In order for money to be valuable, people have to believe in its value. Without trust, a dollar bill would be nothing more than a piece of paper, and a fei would be nothing more than a large stone. It is important to realize how powerful the idea of trust truly is. Without it, a functioning currency system would not exist, along with many other concepts. Belief in an idea is what gives it its power and influence over a group. In its truest form, money is completely worthless. Nobody wants money, as in, nobody wants flimsy paper bills. However, almost everybody desires power, and power is garnered through the paper bills that we call money. Because we as a society believe that money represents wealth and influence, we consider it valuable. Therefore, it is valuable. The newer car model will always be more valuable than the older model because the majority of people value the newer model more. In this way, money itself is only valuable because the majority of people believe it to be valuable. My perspective on this topic has not changed drastically since reading more about it, though I do appreciate the acquired knowledge. As a child, I often thought about topics of the like, and I still believe that if were people not to believe in the value of the dollar, the fei, the real, or any other form of currency, that it would not exist as it does today.

                                                                Works Cited
Friedman, Milton. “The Island of Stone Money.” n.d. Diss. Hoover Institution, Stanford    University, 1991.
“The Invention of Money.” This American Life. N.p., n.d. Web.
“Money.” Merriam-Webster. Merriam-Webster, n.d. Web.
Renaut, Anne. “The Bubble Bursts on E-currency Bitcoin.” Yahoo! News. Yahoo!, 13 Apr. 2013. Web.

A04: Stone Money Rewrite- alaska

Money, money, and more money.

To me money is so important. We as a society need it to get by in life but money has so much power over everything we do. From the earliest humans, we have always thought about ways to trade or pay people back. I have listened to the broadcast “The Invention of Money” and read the article “The Island of Stone Money” by Milton Friedman. Friedman says that The Island of Stone Money had no metal so they had to use stones. I thought that having a big stone to pay a person is kind of a ridiculous thing to do since you don’t move the stone if it’s too heavy. Everyone around you would know that you don’t have that stone anymore and it was someone else’s.

In the broadcast “The Invention of Money” the five reporters say that in the 1950’s a big limestone meant you can buy back a member that someone else has captive and trade that person for a stone. Saying you would get your member back while everyone knew the stone was not yours anymore. While a bank account is just numbers and the bank saying how much you have when the actual money isn’t there. A bank account means so much to people when its just numbers on a screen. To think a big limestone and a bank account are to mean the same thing but are so different from each other is crazy.

In The “The Invention Of ‘The Economy’” by Jacob Goldstein. Goldstein says that the GDP (Gross Domestic Product) is not a thing; it’s an idea. Also, That the U.S made the economy $500 billion dollars bigger just last year. The economy to me is just a big confusing thing.  The economy is huge and so many factors affect it. Whether it makes the economy better or worse. The Yap concept of money was way easier than it is today. They just had stones and you could trade them. The limestones were such a huge part of the Yap way of life. If it could not be moved it would stay where it is all the time, just with a different owner.

So, what is money? To society today it is just a number in your bank account and not actually in your pocket. Money is part of everyone’s life today. To all of us there are many different definition of what money is. Money is just used to purchase certain items and pay our bills. Money is a staple of life today.

Works Cited

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

Goldstein, Jacob. “The Invention Of ‘The Economy’.” Npr.org, 28 Feb. 2014.

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

Stone Money Rewrite—Flyerfan1974

Abstract Money

I approached an ice cream stand one day while walking with friends and I decided to buy a cone. After receiving my cone, I pulled out my wallet to pay $2.88. A thought abruptly popped into my head: what is money? I pondered this idea for many days until I discovered the true definition. Money is an abstract concept that may hold a monetary and cultural value, however, not a physical one. Money is not one physical item, but it takes a multitude of different forms including checks, cash, and cards. When I bought my ice cream cone, I paid by debit card. I gave him a swipe of a piece of plastic and he game me a physical item that I could eat. The debit card withdraws money from my account into the ice cream company’s system, which in turn raises its account balance. Currency is not a physical item, but an idea that influences our society. 

When I head over to a gas station or convenience store, and use the ATM, you receive a slip of paper confirming your transaction, it gives you the balance of your account. If the balance of the account is for example $5,000 dollars, then that $5 grand isn’t right there in your hands on the slip of paper, and there is not a little compartment in the ATM that holds your 5 grand. The banks physically do not hold all of your money in a little room, your money is circulated all over the world. Here is a physical example to help you understand, say I get paid a 100 dollar bill. Holding this germ covered, green piece of paper with 100 written all over it, you see Ben Franklin looking at you with pride. Say I take this green piece of paper, draw a red X on it and deposit it in the bank, a week later I go and withdraw 100 dollars. Will I get my red X 100 dollar bill back, no I will not. When I deposited that 100 dollars the only thing that changed was a number on a computer system. That number can be viewed by the bank, by an ATM machine, and by me on a banking app. Our red X 100 dollar bill has now been taken into the banks safe where it is put into circulation. What does this mean, this means that if another person comes by to withdraw 100 dollars they may wind up getting my red X bill. Then they deposit it, and the cycle continues. If you think about it, money is just an abstract concept.

A long time ago in the early stages gold was the only currency of our country. To buy food, or water you would actually have to hand the clerk a piece of metal. Then the abstract concept of paper money was born. Due to the unfavorable test of lugging gold around, you could go to the bank and exchange cash for gold. You could get 1 dollars worth, or 1000 dollars worth, just as long as you had the cash. The money was just an abstract concept because it represented the gold sitting in the bank. If all the gold suddenly disappeared one day, then all the cash would be worthless. For example if I went to the bank and exchanged a little bit of gold for cash, but suddenly the gold disappeared, my cash wouldn’t be worth anything, the cash was just a convenience. It was almost like a title on a car, you can give another man the title, and yes he may own it, however if there is no car then he is just holding a piece of paper with a name of a car.

Today our transactions are documented to the last detail; time of transaction, amount, and type of currency used. We use receipts, bank statements, and ATM slips to show that we have made the transaction of money. If someone asked me if who owns this dollar bill I can show my paycheck. However, in the late 19th century there was a civilization of people who did not record the transaction of money. Everyone knew who’s currency was who’s. In the late 1800s and early 1900s there was an island near Germany called Yap. The people of Yap used fei as their currency. However, fei is very special because it is a large wheel like stone. The fei is made from limestone which can only be reached on another island. Milton Friedman talks about how these people on the island of Yap, use fei as their currency. “Their medium of exchange they call fei, and it consists of a large, solid, thick, stone wheels, ranging from a foot to twelve feet,” says Friedman. The people on Yap’s currency is enormous, it cannot fit in any wallet I own. The people on Yap had to go to another island which was 400 miles away, and had to carve the fei from limestone. Limestone was not found on Yap. The people used canoes and rafts to make the treacherous journey. With extremely heavy stones and flimsy canoes and rafts, something is eventually going to happen. When talking about the people of Yap and their currency the NPR broadcast states that,”You don’t actually have to have the stone to own the stone. The stone is sitting on a path or something, and everybody knows that I own it.” You physically do not have it, but in everyone’s mind you do. One day while sailing back to Yap, the canoes sank, sending all the fei to the bottom of the ocean. “They came back and told the people of Yap what happened, the people of Yap said that’s fine, thats no problem,” “the stones at the bottom of the ocean are still owned.(said in NPR broadcast)” So the people of Yap physically did not have the fei in their possession. They just had the possession of the idea of the fei. For example, say I’m on Yap and have 3 fei, ones in the ocean, ones on a path somewhere, and one is in front of my house. A random stranger from the US comes by and sees my house he would assume I have 1 fei, but my neighbors on Yap would know I have 3 fei.

While searching around about fake, abstract money I noticed an interesting article titled, “How Fake Money saved Brazil.” In the article, Channa Joffe-Walt talks about “how an economist and his buddies tricked the people of Brazil into saving the country from rampant inflation.” Joffe-Walt talks about the crippling inflation that had hit Brazil.” In Brazil, inflation was killing the economy. Milk, and eggs would be priced at a dollar one day, the two dollars the very next day. People would have to run faster than the clerk who would mark up the prices to get the lower prices from the previous day. With many factors like inflation, who knows what can happen? The stock market crash, and the housing market crash are all reminders how are economy can be crippled just like that.

What is money? This question has been asked forever, and is still being though about today. My definition is that money is fake, it is an illusion of our society today, it is a status symbol, a tool, and sometimes a savior. It does not accomplish anything physically, just metaphorically. You cannot build a house out of money, but you can pay for one. There may be physical items paper money, gold, coins, and fei, however money is just fake.

Work Cited

Work CitedFriedman, 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. 9 Sept. 2017. <http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil>;.

Stone Money Rewrite—Killroy513

Money is one of the most important things in this world.  It makes the world go round. There is many different forms of money used around the world, its value is recognized by its significance. In Europe, the currency for one and two euro are coins while in the United States of America, the one dollar is paper. Many nations use different forms of currency, and the internet is no exception. The bit coin is used for trading and purchasing goods.

In economics, money is refer to as capital. This capital is spent by consumers and business and creates an economy. The economy fluctuates by how much capital is put into it, and by how much imported products are brought into the economy. The Yap simplified this economic system.

The Yap people’s currency is made up of lime stone rocks carved into cylinders. These rocks would be decorated and customized for whoever had them made. These stones, being huge in size, would not move from its final placement. The Yap people relied on word of mouth for financial records. This is almost like today’s modern credit system. Our credit system is based on invisible money that appears electronically.

Currency can be anything, as long as it has value to whomever wants it. In the past money was made of rare metals. Gold was the most saute after currency since it does not really loose its value. Most countries used gold to back their paper currency. The United States of America used gold to back the currency all the way up to the 1930’s. During the Great Depression, America suffered. Its economic growth dived to the pits. The once great economic power lost its way. Foreign countries became scared. They did not want to risk the money they had tied up. Many countries wanted to insure their assets would be secured. France being the first of them, wanted to secure its credit in gold. The United States dived the French shares. Eventually this would change. The gold would not be used to back the currency’s value, instead the government regulated the value based on the economy. Essentially this would start the modern day system of credit.

Inflation is good and bad for an economy.  To much inflation is bad because it discredits the moneys worth. Prices for everyday goods would jump. An example of this is Brazil. It had to much inflation and no one had money to buy the things they need. People would live paycheck to paycheck.  Basic items would cost a tremendous amount of money because of the lack of value in the currency. A new currency was introduced. Eventually the currency was changed and the economy leveled out. Products and services would then have normal prices. This made it better for the Brazilian people because they could live in a society that was “on their side” and made the way of life better.

Another example of how to much inflation destroys an economy is Germany after World War 1. The German nation after one of the most horrific wars of the twentieth century suffered economically and their reputation disappeared. Germany was blamed for the start of the war and many countries sought after reprisals because of it. At the time Germany was forced to pay large amounts of money to all the countries involved in the conflict. This shocked their economy and inflation began. The German people thought that printing more money would solve the problem. This is what caused their economy to collapse and sent the nation into a depression. Eventually Germany would fix their economy but in the end create another world war.

It is sad to say, but war either leads to a booming economy or a crumbling one. It is not good either way because of the events that lead up to it. The United States benefited from Word War 2, because of the booming economic growth but after the war most jobs were not needed and the economy shrank significantly. Germany again was crippled from the war just like the previous one, BUT, since the nation was split the western allies helped.

In the end money is truly one of the most important things to have. It can be anything as long as it retains its value. People ever since the existence of man, traded and used items as money. Money does not have to be a specific paper or coin, but anything with value. In the end it is truly whatever is found to be needed.

Work(s) 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;.

 

Stone Money Rewrite- Theadmiral

The Ambiguity of Money

Presently at any mall, convenience store, or place of business, one will rarely witness paper money transactions. Instead, credit and debit card transactions are the new norm as a swipe of a plastic is the trendy method to transfer funds. In fact, technology advanced so far that a customer just needs a smart phone to carry out a retail transaction. Similarly, the economic structures about one hundred years ago on the small island called Yap depicted in the essay by Milton Freidman entitled “The Island of Stone Money” exhibits similar habits. The main difference between today’s American society and Yap lies in the method of payment; instead of swiping cards as use of currency, the people of Yap used large pieces of limestone, shaped and brought over by small bamboo boats hundreds of miles away. These large pieces of limestone changed hands maybe two or three times in a person’s life, because the people of Yap would not use these for everyday essentials like buying groceries; however, the they spent their limestones on wedding dowries for their daughters, and purchasing plots of land for construction of domestic dwellings. After building a dwelling or securing the dowry, the wealth was exchanged from person to person without moving a single stone. Like the swipe of a plastic card that lacks an actual physical transfer of money for goods or services, the people of Yap transferred wealth from one individual to another. After reviewing all the concepts from the article on the Yap society as well as the information on modern American society, one can conclude that the exchange of paper dollars is rather obsolete as compared to the “old days” when “cash was king.”

To understand the transition of paper money from something that previously had intrinsic value to something that has no value at all, one should understand the history of how paper dollars got their worth. Many years ago, when the United States had enough gold to back up the paper money, one could bring a dollar to the bank and get a dollar’s worth of gold. As the United States government continued to print paper money, the amount of gold one could get with that dollar declined because there were more bills in circulation than the gold that backed them. This concept is what we know as inflation. The island of Yap does not have this problem. As stated in Friedman’s essay, Yap does not have precious metals like gold and silver on their island, so there is no perceived value in material things like metals or even a piece of paper. What Yap sees value in is arduous task of making the Fei, the actual word for the stone money, and the long, dangerous journey involved with traveling to the limestone quarries hundreds of miles away.

The transition to a worthless dollar from the paper dollar that once had worth to people is truly fascinating. Talking to small business owners, Chuck and Maria Nucci, on the matter, they explained things from their point of view. The Nucci have prior business experience with money as they owned a retail establishment for over twenty years. The Nuccis were in the jewelry business for quite some time, so they witnessed firsthand the relationship between gold and paper money. Chuck Nucci explained to inner workings of the gold market and the relationship between the paper dollar and pure gold as a trading commodity. Nucci explained there was a time when gold was not regulated, one purchased gold bullion for about two hundred dollars an ounce. Once it started trading as a popular commodity and became a regulated market, the price of gold sky rocketed and its value doubled, bringing the price to about four hundred dollars an ounce in 1989 according to charts from onlygold.com. Accordingly, when the price of gold goes up, the price of the dollar goes down which makes money which had perceived value to just a piece pf paper.

After again speaking with the Nuccis about this assignment, Chuck Nucci posed an important question, “what exactly gives this big rock so much worth”?  The information in the articles are thought provoking; realistically, the fei and the dollar bill in today’s society are exactly the same. If one has a one-dollar bill and a one-hundred-dollar bill, and puts them side-by-side, there is not much of a difference between the two except for a watermark, a picture, and a number. Today, there is not nearly enough gold in depositories like Fort Knox to back up the actual worth of American bills, so paper money is now essentially a piece of paper, just as Fei is a large piece of limestone.  Both Fei and paper money rely on word of mouth and have the perception that an ordinary object such as a piece of paper or a rock have value. In contrast, they are both ordinary items that have no value at all. In conclusion, the Fei, and the dollar bill are very similar; both have value because of how they are used in their given societies.

 

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

Nucci, Charles. Personal interview. 10 September 2017

Nucci Maria. Personal interview. 10 September 2017

“Historical Gold Prices Annual high and low Gold prices since 1972.” Historical spot gold prices, onlygold.com/Info/Gold-Price-History-Since-1972.asp. Accessed 10 Sept. 2017.

Stone Money Rewrite- Yoshi

Money is Not Real

In the little Island of Yap, the wealthy people would get onto a boat, and travel 400 miles to get these large, uneven limestone discs. These discs were so big and heavy, it was an uncomfortable trip for the people of Yap. The limestone discs were called fei, they were used as currency. The shaping of the stone requires intense labor; that is why they’re so valuable. There are big holes in the middle of the discs, in order for them to be transported around the small island of Yap. Ironically, the holes are used for them to be moved to their first location; after that, they do not move!

They will usually trade the fei for big purchases according to NPR’s Broadcast of “The Story of the Stone Money.” The thought of a huge, hole-drilled stone from an island quarry could make the people of Yap rich is very peculiar. It sounds less reasonable that the stones aren’t actually in the possession of their owner. As I started listening to NPR’s Broadcast of “The Story of the Stone Money” and reading Milton Friedman’s “Island of Stone Money” I began to realize our economy and our visual of money is not too far off from those that live in Yap. Both, the Yap and us Americans, believe we can be wealthy and gain wealth by not actually physically moving anything. Someone in Yap claims a stone that fell to the bottom of the ocean. But just the same, we do not need cash, all we need is a magnetic stripe to move wealth around. If that does not seem strange to us, then neither should the Yap claiming a stone they have never seen.

In Milton Friedman’s story, “Island of Stone Money” Friedman explains how the French didn’t think the USA would stick to their gold standard of $20.67 an ounce. Therefore, according to Friedman, they asked the NY Federal Reserve to convert their dollar assets into gold, and set it aside for them instead of shipping it overseas. The Federal Reserve then put aside gold for the french. They separated the gold, and put it in drawers so it wasn’t touched. This way everyone knew that belonged to them.  After reading that I realized money is just knowing what you have, it is nothing physical. For example, you do not need the physical cash in your hand to determine your wealth. In Yap they determined their wealth by others knowing how many fei they owned, and not much different us in the USA determine how wealthy we are by digital numbers raising in our accounts.

After reading, “Island of Stone Money” I began to questions why do so many people have the faith in others to determine their own wealth. For example, how is it that I deposit money into my bank account, and a digital number, a machine gives me, determines my wealth. How does money from my account get taken out, and put into the car companies account. But nothing physically is exchanged? That flimsy green piece of linen is rarely used anymore, it is all about the plastic card with a chip in it. How is it that France has the faith in us to put aside gold for them that they bought, but they never physically saw? How is it that there is a fei at the bottom of the ocean near Yap that no one has seen for years, but yet it is still being used as if it was physically there.

I continued my research on how people put their faith into other with their money, and I came across an article by NPR’s Broadcast called “How Fake Money Saved Brazil”. Just twenty years ago inflation in Brazil reached 80% a month according to NPR. Brazil’s inflation began when Brazil’s government printed money in order to build Brasilia, Brazil’s capital. They created a new currency and it improved their economy rapidly! People would still have cruceros, but everything was listed in a URV, Unite of Real Value. One URV would equal 7 cruceros, and the next week one URV would equal 14 cruceros. According to NPR broadcast this idea was created so people would stop thinking prices would go up. After a few months the prices began to equal out, and that’s when they decided the URV was the new real currency. After this change 20,000 people got out of poverty!

Money is different everywhere you go, but the way it is used is very similar. The people of Yap would just mark their fei with a painted ‘X’ to claim it, and correspondingly the Federal Reserve put gold aside for the French and labeled it, so everyone knew it was for the French. The same thing happens here in the United States; almost everyone keeps their money in banks, and the only way they know who owns it is through an account number. If you think about it money is almost never actually exchanged physically in person. Transferring money from one person to another can be done from the comfort of your own home, using online banking. Almost everyone has moved to online banking, because it is so much more convenient. Most of the world has moved on from physically money, and developed a way to claim it without having it with them.

After reading these articles I came to think, what actually is money? To the people in Yap money is a big rigid limestone that doesn’t have to be in their possession. To us money is fake, it isn’t that green rectangle linen with pictures on it. It is numbers we see in our accounts, and we use plastic cards to make purchases. To Brazilians money was virtual, it didn’t exist it was just a unit of measurement to control their inflation.  Throughout the years money has developed many different values. Now a days it is hard to survive without money, even though we might not even physically see it. I believe money is what makes the world go around. Even if no one actually has a definition of what money is.  Money all around the world is physically different, but the actual use of it is all the same. What connects everyone’s money value to all others are their concept of money. The concept of money is just the trust you have in each other. Whether you live in the US and put your trust in a bank. Or whether you live in Yap, and put your trust into other people knowing what is yours, or even trusting 4 men you have never met before to create a new currency and help inflation. Money is different everywhere, it is the trust that makes it the same.

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. 9 Sept. 2017. <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.

A04: Stone Money Rewrite- LifeisSublime

Money is a Concept

Money is a concept. It’s a concept created by human beings in order to simplify trade and distribute power. Whether is be with paper, plastic, stones or some made up currency, the thought of money was utilized to make it easier to buy things and to produce a name for someone in a town where they are know for their financial standing. With all that being said it’s time that people look at money, not as how much they personally have in the bank, but as something that exists but doesn’t, something that’s important but isn’t, and something that was made on the grounds of trade, nothing more, nothing less.

In order to understand that money is nothing more than an organizational tactic for trade, you must understand what money is for the people of the Yap islands. The island of Yap is a very small island located in the Pacific Ocean. This tiny island wouldn’t even be something to talk about if it wasn’t for their currency and how they perceive the values of it. On this island people use huge stoned carved into circles to represent money. The family with the biggest and nicest stone was to be consider the most wealthy. These stones where carved on a certain island within this island chain and brought to the island of Yaps once they were finished. One family ordered a stone so beautiful and big that it would hold their financial standing up among everyone else. On the boat ride back, with the giant stone aboard, the working men claimed that the stone fell out of the boat and sank to the bottom of the ocean floor. Coming back to shore empty handed would have made most people extremely upset that their prize possession now a wonderful addition to the coral reef, but not for the people on this island. The family didn’t fret at all because they still, in a way, owned the stone and everyone also knew that. The philosophy that these people have regarding their currency is that if the town knows you have it, then it’s yours. So no matter whether or not the stone is present for trade or becoming a wonderful home for the fishes, the value of the stone still stands and it stands for the family that is know for having it. That is a very interesting take on money. These people use stone circles, compared to the dollar bills in our wallets, but don’t even need to have it on them to be considered “good for it”. Their currency is based upon trust and community, the actual thing that “holds value” doesn’t even need to be present to stand the value. That’s pretty incredible and proves that money is a concept, especially to these people.

Over in Brazil, in the 1980’s, their economy was facing a major downfall. This problem had been brewing since the 1950’s and it stemmed from overproduction of money. Brazil was looking at an 80% inflation rate per month. Meaning that if something cause $1 this month, it would cost $2 the next month. In order to fix this problem the president pulled in a couple of guys straight out of college and put their plan to save the economy in place. They needed to slow the production of money while installing the people’s faith back into the currency since everyone bought in bulk out of fear of the inflation. They created URV’s, Unit of Real Value, which, despite the name, wasn’t real at all; it was virtual. The URV’s were given to the people and instructed them to use it just like money. The catch was the value that they held; the inflation was still climbing but instead of paying $1 you payed 1 URV, and next month instead of paying that $2 you payed 1 URV. URV’s held value for everything purchasable in Brazil but the prices never changed. Eventual the currency balanced out and Brazil actually started using the URV’s as their permanent use of money. So for Brazil the people were using money that wasn’t real, and like the people of the Yap islands, the value wasn’t there. The people didn’t know how much each URV was valued at, but it didn’t stop them from spending and circulation the wealth which fixed their problem in the end. Money is a concept in Brazil because the value isn’t always there and it doesn’t matter.

To make this more relatable I looked up the economy that America has been facing for the past decade and tried to compare it to both Yap and Brazil. In America we pass around paper bills that supposably are worth, or were worth gold (gold being the most valuable thing on the Earth at one point). Paper versus gold. Then it occurred to me that not everyone gets paper dollars, physical, but paper checks that claim that money is known as yours, non-physical. That is the same as having a URV that is claiming to be something when you never actually see the physical worth of it, it’s just numbers on a piece of paper, or more recently, digits that change when you check your bank accounts. Having money “known as yours” sounds very similar to having that rock in the water but still knowing that the worth of it is yours. Comparing what I know from the island of Yap and Brazil, this isn’t an uncommon thing. Even in todays day in age and in America is money still concept. Its a circulation of paper that isn’t even present at the time of exchange. Money is a concept here as well.

Money, or should I say currency,  has lots of power on a lot of things, but when you boil it all down does it really hold value to it? After analyzing Yap, Brazil, and America on their currencies and how they use them I have come to the conclusion that although currency and money is a very useful system of trade, it has become more of a concept than a physical action. Money is a concept, and the proof is in your wallet.

 

Works Cited

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

“The Invention of Money.” This American Life. N.p., n.d. Web

Thomas, M. (2014, October 13). What a stronger dollar means for the economy. Retrieved September 10, 2017, from https://www.cbsnews.com/news/how-will-a-strengthening-dollar-affect-the-us-economy/

 

Stone Money Rewrite–todayistheday

P1. Currency is a crinkled piece of paper and a hefty limestone rock. Currency is whatever we want it to be. The definition of currency depends on an individual’s belief and culture. As Americans, we are raised around the mindset that the paper in your wallet and the number on a ATM slip make your worth. While others across the globe could hold the standard of wealth to the greatness of your limestone. Our currency is controlled by people who decide on the importance of said currency. Increase, decrease, demand and value are all set in place.

P2. As we learn in, “Island of Stone Money” by Milton Friedman, a small island made of five to six thousand people base their wealth on a large limestone rock in their possession.  Yaps are pre-industrial people who used massive stone sculptures as currency, known as fei. They collected this limestone from an island several hundreds of miles away.  Fleets of boats were sent to travel the distance, across dangerous water, just to seek the limestone. Once found, they began to work on shaping the large stone.  After this task was completed they heaved the heavy stones into the boats to bring back to their homeland. The ownership and possession of the stone was known amongst the people even though the stone never moved from its resting place outside. These giant stones were never exchanged between hands; simple acknowledgement of ownership was all that was warranted. The Yaps knew which families were in possession of which stones. Although, one wealthy family had no stone in sight the Yaps were sure of its existence. While the men were bringing back stones, there was a storm in which the stone went overboard and sank to the bottom of the ocean.  When the men told the people back home of the lost stone they were unwavering in their trust that the stone was out there. The stone in the ocean was possessed by a family who had never seen the stone along with all the other villagers. The importance was unquestioned. The men who ventured on this journey to bring back the stone determined the source of currency.  Just like the Yaps the American system has certain men who determine our currency.

P3.  The Federal Reserve is not a part of the government, although federal is in its title, and they do not look to the government for any decisions.  “Invention of Money” discusses in detail, how the Federal Reserve can create currency out of nothing. It can whip up pieces of paper and small coins within moments.  These items make the world go around. Paper and chips of metal are what people spend their whole lives working for; yet the Federal Reserve can produce it in seconds.  They decide every six weeks if there should be more or less money in the US. More money which can mean more jobs and opportunities but also can mean high inflation.  Less money can slow down the economy too much.  This is a balancing act that if not done right can devastate.  Federal Reserve gives money to banks in return for treasury bonds. Button pressing, that’s what it comes down too. Our money system relies upon this magic trick. If the determination of our currency was left in the hands of the people madness would ensue. Citizens would print more money every day. This is problematic because the more money in circulation the higher the inflation.

P4. Money is not only the paper in our pocket but it is also something we can’t see. Digital money is easier to manage and easier to lose. From our phone screens, we can move money to one account into another. But people hundreds of miles away can move that money into their possession just as easy. My debit card account was recently tampered with and it feels as if someone walked into your home and broke into your piggy bank.  Whether the paper is in your pocket or a number on an ATM screen it doesn’t make it any less personable when someone steals from you. Someone taking your money makes you feel unsafe in all aspects of money handling.

P5. Its bewildering to look at a stock market or housing market crash; we wonder how did the value just plummeted. We ask where did those millions and trillions of dollars go? The answer: it doesn’t go anywhere because it never existed. In “Invention of Money”, the Planet Money team questioned the idea of disappearing money. As logical people who understand million and trillion is a very large number the enormous loss confuses us. The Plant Money team explains that money is only a concept and not tangible thing.  Money doesn’t exist as a thing but rather an idea.  Money isn’t solid and its value could disappear at any given moment. So, one day your house could be worth three hundred thousand and a week later be reduced to two hundred fifty thousand.  Your house didn’t change but the market did.  Nothing made your house worth fifty thousand less, expect the fact that perspective buyers changed.

P6. There isn’t much difference between a stone at the bottom of the ocean and a number from the ATM. Both we cannot see; we simply trust they’re present.  We depend on the rock at the bottom of the sea and the printed numbers from the bank.  We never hold or even lay our eyes on such measurements of wealth yet we believe in them.  The power of money is only registered and fueled by our unyielding belief.

P7. In “Invention of Money” we learn the Brazilian people had to be tricked into believing that their money was more valuable than it currently was. In the 1950’s Brazil’s president wanted to build Brasilia, a beautiful new city.  In order to get the money for such a pricey expansion. He printed more money which raised inflation dramatically.  From this point on, Brazil was on a downward spiral.  The price of milk one day could be one dollar and over the next few weeks it would double. The changing prices were sky rocketing and grocery stores were always adjusting prices. Four underdog economists working with the Brazilian government, created virtual currency in hopes that this would fix the economy. Virtual currency was created which is synonymous with imaginary money.   People trusted this new currency after they saw prices steady. For milk, the price was one URV (Unit of Real Value), but the one URV might be worth 10-20 cruzerios (Planet Money). Fake money became real money when the people believed in it. They used their virtual currency to purchase items that would normally take several months to pay off. With virtual currency the price was attainable and would be paid off at a later date. People began spending. This brought Brazil into the eighth largest economic country.  From nothing to everything; all in the belief of this new money. This idea relied on the publics belief.

P8. Americans, Yaps and Brazilians are all on the same page. Americans believe in paper, Yaps believe in stones, and Brazilians in virtual currency.  These do not become currency without belief.  We give meaning to our own currency’s.  A dollar bill means nothing to the Yaps while the same goes for a large stone in America.  And virtual currency would mean nothing without the Brazilians belief.  Money is what we make it.  Money is both our rise and our fall.

Works Cited

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

Goldstein, Jacob. “The Invention Of ‘The Economy’.” NPR, NPR, 28 Feb. 2014, http://www.npr.org/sections/money/2014/02/28/283477546/the-invention-of-the-economy. Accessed 19 Sept. 2017.

Stoney Money Rewrite–Splash

Value of Money

When I was listening to the story of about the island of Yap in class I thought to myself my teacher was making this story up. My teacher told us about how people would make huge limestones and ship the 400 miles away by boat to some island so far away. Even when people would use them for a purchase they wouldn’t have to be moved anywhere to change ownership. Why would people take the time to make such large limestone coins to be their representation of money? It seemed absurd because you couldn’t even move them easily or use them for little things like food for the house, it had to be spent on something big like building a new house or as said in the Planet Money Prologue if one of your warriors died in war we could use that stone to buy back the warriors body. It was also interesting to know that only if we had one of these stones it would mean we are considered as wealthy, which was different because we could have tons of gold and other forms of money but we weren’t ever considered to be as wealthy as someone who owned one of these stones as stated in the story of stone money. Also, something else I read was that there was no form of documentation on this island of Yap, they have such a strong faith in each other’s word. Someone could say they wanted a house built, a contractor would come out build a house with no upfront pay but know that the fei was his once the house was completed. Even while reading Friedman’s essay the thing that stood out the most to me was when he talked about the magnificent fei that was being delivered over sea. A big storm aroused and the fei sank to the bottom of the ocean, and the people on the island of Yap were perfectly fine with that. They said that even though it is at the bottom of the ocean it still has its value, just as if it were leaning against the owner’s house. To me this is ridiculous because if that were my fei that sank I wouldn’t be as calm about it as they are and it wouldn’t seem valuable to me anymore.

Then that has me go into thinking why is money so important to people, and what is the point of money in the first place? The NPR broadcast I was listening to talks about all the stages of money and how it has changed over the years. It first started as the stone fei, then to gold, and bills, off to checks, and now it is as simple as just a number appearing in our bank account. It was enjoyable how they were talking about the differences in how payments work now a days, they said that when they pay their phone bill it’s not like someone goes and delivers a hundred dollars to their phone company. It is almost as if they are just sending numbers back and forth to one another and it is a game that doesn’t even feel real. They even said in the NPR brodcast that most of the money that exists is just the idea of money.

Which then brings me to the Lie That Saved Brazil, and what they had to go through.  Listening to the story was just so awful for the people of Brazil. It’s not understandable why people had to be living the way they did when there was so much money in the world to be shared.  This is because there was apparently no money for the people in Brazil and they were really struggling to get by. Chana Joffe-Walt talked about what the stores were like and how the prices of things would go up or change every single day. How there would be a sticker guy that would go up and down the aisles changing the prices each day, people would even try to get in front of the sticker guy so they could pay the old price. It was devastating when she told us that even when people would get paid, they’d have to spend their money before it wasn’t worth anything anymore. She said you could put your money in a drawer and each day that went by the clock would be ticking on the value of your money. There was even a point when the government threatened to take everyone’s money, people went into panic and some she said even committed suicide. But then one day four men came along to help Brazil’s situation so they wouldn’t have to live like this anymore. Hero’s was what she described them as, they proposed a way to make people think their money had value again. Not long after things started to change because this new idea seemed to make such a difference in the way people just “lied to themselves” so to speak. Even though there was no physical money, all they needed was for people to believe there was and that made all the difference.

This story just easily helps me flow right into Weekend at Bernanke’s, listening to this story just gets me thinking about all the different ways the Federal Reserve could have helped Brazil for example, because in the brodcast they said the Fed can create money at and given time. Why they wouldn’t think to give some to Brazil during that crisis, I don’t exactly know. They were saying that the fed can just make money out of nothing and just lend it out and if they should do this. The process is so easy as they explained, all you do is add a few numbers, click a mouse and alas money is created. Also on top of that they even exclaimed that banks don’t just like to sit on load of money they like to lend it out, so why not use all of this money to help countries in dire need of it? It is interesting to think if the Fed screws up then the people stop believing in the dollar and the dollar loses value as they explained.

Thinking about all these different ways money is transferred and the money people have and how much they have can put them in the category of being wealthy, but why?  Some things these days don’t really have a good representaion of money. What is the point or meaning of money? Money is just something that holds value, but there are so many different things that hold value to different people and if you really think about the dollar and how it is just a piece of paper with a guys face on it, it doesn’t make sense why people go so crazy over it. Money is just another materialistic thing that people think they need to be successful in life when there are far greater things, like knowledge for example. Now a days with how high tech money as gotten it’s just a game of sending numbers and not physical money, so it’s as if the money isn’t even real to begin with.

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;.

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

Stone Money Rewrite – theintern

Specs of Money

Learning about Stone Money has opened my eyes to see how it correlates to “valuable” paper money we use today. My professor began class with Stone Money and I wondered to myself what he was going to talk about. He began to explain the background of money and how it wasn’t how we see money today in our century; he said many years back there was an island called the Yap Island where many natives lived but the currency they used were big limestones and it would usually be located right outside your house, many of you might be thinking how could a big limestone be used as payment?; he gave us an example of how this currency was used. So when someone wanted to buy a land or a house from the person selling it they would pay them with the limestone (the bigger the more money it was worth). However, this limestone was never moved, it would remain in the same spot where it was first put even though it was yours and everyone in the village knew it was yours there was nothing you could do about it. It sounds awful to have my money in stone be at someone else’s house and not mine but with little to no technology there was no way to move it. In this era 2017 there are no more stones considered as money; times have changed and it will keep changing. Before we used to have dollar coins now we barely do, then paper money became more existent, and now it’s cards from swiping to chipping.

Still wondering the same questions you might have about stone money I searched up the topic and all what my professor said in class was true. I could not believe the information I was absorbing while reading the article. Me wanting more information I opened up the story The Island of Stone Money by Milton Friedman, explaining how stone money became to be and how the natives would transport the stones from a mountain on a small raft across 400 miles to another island. I said to myself this is physically impossible especially with the little to no technology. Friedman explained in his article how impossible it is to move stones from one small island to another. Especially for the people living on the island to move those big rocks without any advanced technology. From reading what Friedman wrote, I analyzed that it had to be some kind of miracle for the natives to transport the stones onto the raft and unmount and roll it into town. There is still not enough data to know exactly how this brilliant or fake men did it.

Friedman tells us that once the German government bought the Caroline Islands from Spain they came to visit the natives. The Germans saw an opportunity and an advantage they could easily have upon these natives. First of all they saw that the natives idolized their stones because that was their currency and second of all the advantage was that the Germans could just easily say that the stones were theirs and make the natives work for them. The job that the German government gave the Chiefs of the natives were for the roads to be improved because most of the island was rundown. The Germans marked a big X with paint on the stones showing the natives that they were in debit and that they must complete the job if they didn’t, the Germans wouldn’t give back the stones. The natives agreed to the deal and worked until it was finished, in return the Germans rubbed off the paint and gave it back to the natives. My thoughts of reading the German’s experience was funny because in our generation stones are stones not money. However if you think about money, before money was credit/debit cards or paper slips there were stones. It is odd to think of how different our “money” was back then but we will probably say the same thing in the future.

Reading the last article with two stories involving the stones and the compromises I now have an understanding of what was used as a replacement for paper money.  I began to read How Fake Money Saved Brazil the next article about the Brazil real. It said that in the 1950’s Brazil was in a deep economic crisis and inflation moving up higher than eighty percent. Brazil’s presidents were no help to the economy they just made matters worse. Each of the presidents had plans of freezing the prices so that it would not be so expensive for customers to get their items, it never worked. The downside was that store owners were not willing to sell their merchandise at a low cost because that meant they were losing so they hid everything until the prices were to unfreeze and go up again. As Chana Joffe-Walt explains how the economy turned around because of these four graduates who figured out a way to bring the economy out of inflation. The four friends pitched the idea that they came up with which was making a virtual currency that would be called Unit of real value (URV) this would let people know that this new “fake” currency was dependable and safe to use.  The new currency helped inflation drop and everything became more affordable. After six months the inflation that was around eighty percent dropped to being even and equaling to a dollar. Once the economy was running smoothly Brazil made the real the official currency.

Money is a mirage, you think you know what is it and it looks so real but at the same time it’s fake and your eyes are just fooling you. Money in my opinion is considered as a substitute for trade of some goods and I have always questioned myself about money like why do we have it? Why can’t anything just be free? From payment many creations are made for example, money made the world turn to a more advanced technology era where we have touch screen cell phones, high speed computers, machines to determine if you have a certain disease and specialized fields like doctors. Now if you think about money, sure it is real and money is somewhat fake but it’s a lie that moved the world forward. First it was rocks, then papers and maybe later it will be scissors.

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 Sept. 2017. <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.