Stone Money- Palal24

There is one thing, and maybe the most important thing, that I have learned from my extensive research of currency from the past and from the present: money is not real. Money is this fictional idea that we have been told to follow by the people who we are told to follow. The only way currency really works is if the people have faith in it and decide to use it. I will admit to not being the most knowledgeable person on money, currency, and the way our banking systems are run. Before this essay, I had no interest in the reason our economy is the way it is. However, after reading and researching and comprehending, I found that this is an important debate in every day politics. The economy shapes the entire nation. One more time, the economy shapes the entire nation! In the United States, pieces of paper are the difference between riches and poverty. But money is not real, and although it is not real, it is something we all strive for. We strive to gather as much of these pieces of paper as possible. We believe that if we have an abundance of money, then we have an abundance of happiness. And this did not start in the United States. This has been happening for centuries.

In Milton Friedman’s essay, Island of Stone Money, he tells of a small, German controlled island called Yap. Vast wheel like stones were used as currency. They were often saved for big purchases. For example, they might be used to buy a house or to bring back a soldier who died on enemy territory. However, unlike money, these stones were hardly moved. They would sit in one place and only the owner would change. If it was purchased, the people would know who it belonged to and respect it. When the Germans took over the island, they noticed that the footpaths were in horrid conditions. They recruited the people of Yap to fix them. Yet, the people of Yap were unwilling to do so. The Germans decided to mark a symbolic black X over the stones and this would make the people of Yap poor. At this point I asked myself, why would one painted black X would stop the people of Yap from using the stone? But it would be like the United States government taking away our money. If they told us we did not have any more money to use, we would stop using it, right? To reverse this, the people of Yap worked hard on the footpaths until they looked like new, so the Germans went around and erased the black X’s and everything returned to normal. This is eerily similar to the time when the United States put gold in a marked box just to make France happy. France was anxious that the United States would cease to follow the gold money standards, so to ease their nerves, the U.S. stored the gold and never used it. Because the United States did this, France was considered rich while the U.S. was considered poor. Until the United States realized their mistake, they negatively affected themselves. The Yaps and the U.S. have parallel stories only the Yaps had stone and the U.S.  had paper but nothing was really different.

The first place I heard “money is fiction” was in the NPR broadcast, The Invention of Money. Money is unpredictable so if I spend my life, like many people do, trying to foresee how money will change next, life will go by and then I’ll be the richest woman in the grave. Why does being wealthy mean so much to people and did this ideal cause the great depression? We all revolve around the concept of money and the value of it. But do we really understand it? Money is one huge lie. Money is relative in value. It changes, when it needs to, to fit the needs of our economy. So maybe a better way of thinking is not that money is fictional; however, its value is. Think about it like this, when we pay our bills, does the bank walk over the money to the company which our money is meant to go to? It is a virtual game. A few numbers are typed into a computer and the companies are “paid”. Money does not change hands, just numbers in computers. Our banks are not made to sit on our money. Money is meant to be spent and cycled around the economy. It is a never ending cycle of the banks’ lending out money and the people repaying them back. But one thing we may never know is how much money is in the world. If I have three hundred dollars in my bank account and the bank loans the three hundred dollars to a business owner, then when you’re counting the money, who has it? This is called double counting. In this case there is only three hundred dollars circulating. But this money belongs to the business owner and me. When counting, is the money mine because it was originally from my bank account or is it his because it is currently in his possession? Does the money really exist at all?

In case I haven’t stated enough, money is not real. This was emphasized to me in the NPR broadcast, The Lie That Saved Brazil. In the 1990’s, inflation was at a staggering 80% per month. 80% is a large increase in one year, let alone one month. The people of Brazil stopped believing in the currency, stopped believing in their government, and this caused the economy to crash. The problem started in the 1950’s when the government started printing money to compensate for the trillions spent on a new city. The problem is that every dollar is worth half as much as it was when new money is made. Inflation became the number one political issue in Brazil. President after president tried to fix the problem. In 1985, the president made raising prices illegal. This did not work because businesses just held out until the price freeze went away. In 1990, the president said that the people could not take money out of the bank. When the government messes with their people’s money, the people lose respect. It was chaos. But four men knew the answer. They said to stop creating money and to stabilize people’s faith in money. These men made an imaginary currency called the URV. The URV prices never went up or down, never increased every month, and most importantly, renewed the people’s faith in money. Eventually the inflation went down to almost 40% per year. This reiterates my claim that the people need to believe in the money system for it to be real.

In accordance to money, we use it as we are told to do and do not often question it. Maybe a few more questions we need to ask a few more questions. Maybe if we do, our eyes will be opened to a whole new world.

Works Cited

“The Invention of Money | This American Life.” This American Life. N.p., 7 Jan. 2011. Web. 07 Sept. 2015.

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR, 4 Oct. 2010. Web. 7 Sept. 2015

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

Phillips, John. “Bitcoin: What to Expect in 2015.” CNBC. N.p., 15 Dec. 2014. Web. 07 Sept. 2015.

Reeves, Jeff. “Bitcoin Has No Place in Your- or Any-portfolio.” Market Watch. N.p., 31 Jan. 2015. Web. 7 Sept. 2015.

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2 Responses to Stone Money- Palal24

  1. palal24 says:

    Feedback was requested

    Feedback provided.


  2. davidbdale says:

    Here we go, palal24. I comment as I read, instead of reading through all the way first, so you’ll know how an interested and engaged reader reacts to your arguments as you make them. I hope you find this sort of feedback helpful. It can be harsh, but I hope not cruel. If you need less blunt critique, just ask. I can be kind.

    P1. In kindness, I will say you have a pleasant, informal writing style that makes friends with readers. Critically I will counter that it wastes far too many words to convey too few ideas and shares several that are irrelevant to the argument. Your casual language masks indecision. We can be both precise and natural, simple and accurate. Your claim that money is a “fictional idea that we have been told to follow by the people who we are told to follow” sounds like it means something, but is impossible to pin down, and is probably irrelevant. If I have a dollar and you have Doritos, I don’t care whose “idea I’m following,” as long as you trade me the deliciousness for my faded paper.

    The rest of your paragraph advances the obvious argument that we all want money. You can say it’s “not real,” but the fact that I can gather a warehouse full of Doritos if I have enough money is very real. My buying power is real even if the paper I hold to demonstrate it is not worth anything intrinsically. Look below the surface of the artificiality of the paper documents and you’ll find what “money” is. It’s not the paper.

    P2. As we discussed Wednesday, palal24, your summaries must be purposeful. You do a fine job of relating the anecdote of the black crosses, but throughout the story we are permitted to draw our own conclusions. You fail to take charge of that material. Then, when it’s probably too late to change our minds about the meaning of the story, you offer us this interpretation: “At this point I asked myself, why would one painted black X would stop the people of Yap from using the stone? But it would be like the United States government taking away our money. If they told us we did not have any more money to use, we would stop using it, right?” We do not understand your analogy; therefore we cannot accept your interpretation. Do you mean the government would steal the funds from our accounts? Would they freeze them? Would they seize them for back taxes? What would this look like that would be analogous to the black crosses? Why would the Yap, who had never needed to mark their fei to indicate ownership suddenly respect the crosses as indicative of a change of hands? Here your language needs to be clearer so we’ll understand your argument.

    P3. This series of unrelated questions is entertaining, but it doesn’t advance a thesis, palal. For the most part, you’re failing to distinguish between money and credit or receivables. When the bank lends me money and I buy a car for cash and the dealer buys asphalt for the parking lot for cash and the asphalt company buys a new building for cash, the money changes hands several times; however, all of those transactions can be financed over time without cash changing hands at the settlement table. A little bit transfers every month without “double counting.”

    P4. If you could find a technique for “making that claim” in every sentence instead of waiting until the end of the long paragraph to tell us what you meant by it all (after we’ve already decided for ourselves what it means), you could be a strong writer, palal. So far, you have a way of phrasing that is pleasant and sometimes concise and accurate, but you haven’t figured out how to make each sentence a little argument of its own, incrementally advancing your thesis. In part, that’s because your thesis isn’t clear in your own mind. In part, it’s because you think we need all the background of the story before you can tell us what idea the background supports. That’s backwards. We need to know first what you want to prove.

    Is this feedback helpful, palal? Too little? Too much? Too critical? I gladly provide detailed feedback for students who appreciate it and respond with substantive rewrites. For those who don’t respond to so much attention, I provide less. Reply, please.


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