Stone Money – twofoursixohtwo

Money is, to this day, primitive. While the monetary system has certain adapted over time through different cultures and time periods, the basic principles that rule our wealth have never shifted from its concrete foundation. Whether a strip of paper, a hunk of metal, or a towering, chiseled stone, money’s value has never resided in the physical form, but rather in the abstract concept of trust. Trust in one’s community or in a higher power has, since the invention of a monetary system, dictated the value of an area’s currency. In times of crisis. asking ”Where did the money go?” is a fruitless effort, because we will never hold the value of a lost dollar, a lost hundred dollars, or especially not a lost trillion. This concept that has ruled our civilization is no more than an abstract thought, accepted as fact.

As mentioned before, money has taken on many forms throughout our history. Let us begin with the island of Yap, a society that has based their monetary system on gargantuan chunks of stone. These stones hold tremendous value to the people, yet, while occupying a physical form, the ownership of these stones are imaginary. Large transactions would have no effect on the physical world, as some stones of larger value would be too heavy to move. The people were content with the knowledge that the ownership of the stone was traded, and that trade was honored and respected, without the stone moving so much as an inch out of place. While many may think this practice is ridiculous, idiotic even, I beg to differ, as the U.S. followed a system very similar to that of the Yap people. It could even be argued that we made this system more complicated. Our system began with chunks of metal rather than stone; blocks of gold ruled our idea of wealth. This gold, becoming too much to carry at one time, began to be deposited into banks. With the gold stored away, our version of ownership were dollars, a paper token that proved one person owned so many pieces of gold. When this got to be to much, the value was shifted from the gold to the dollar, the piece of paper that rules our system today. Over the course of however many years, the U.S. collectively agreed and honored the idea that the dollar now held value, and made this idea fact. The Yap don’t seem so crazy now, and at the very least were decisive enough to keep their money in one physical form.

This idea that monetary value comes from trust is evident in several instances. The Yap had an event where a ridiculously valuable piece of stone fell overboard on a trip back to the island. When those on the ship shared their story that could have very well been faked, the people of the island had the power to deem whether or not this family would have possession of this money, even though the physical evidence of it was at the bottom of the ocean. By the power of trust, the people made that family rich, without so much as a blink. On the flip side of this, Brazil was recently in a bit of turmoil in their economy. Inflation was rising to ridiculous percentages, and the people were losing faith in the value of their hard earned cash. Every day priced rose, but thanks to four friends, crisis was averted. They had created a new unit of money which they referred to as Unit of Real Value, or URV, which, in my opinion is hilarious due to the fact this money was as fake as fake can get. This system worked as follow: URV’s were a constant value that did not change, as opposed to the current in place currency. Because the URV prices did not rise, the people were much more comfortable in spending their money, and the value of their URV would skyrocket over time due to the sheer confidence and trust that this money was real. Then, in some weird otherworldly way, the overpowering idea that URV was real actually made URV real, viable currency in Brazil. In a way, when the imaginary is pleasing, we make it real.

The U.S. has recently been facing a new style of currency as well, referred to as a bitcoin. Bitcoins are strictly virtual and are a potential small scale version of the U.S. dollar, blown ridiculously out of proportion. Its value is placed solely in the people who exchange them, as there is no central bank to regulate how much everything balances out to. This measure of currency follows the same rules as all others around the world, with a few changes. The transactions have no service fee or protection from banks. While transfers of bitcoins are easy and instant, they are also dangerously drastic and shows how powerful trust in an idea can be. In just two years, the value of a bitcoin went from $13 in January 2013 to $1,150 in November 2013 to $178 at the end of December 2014 (Reeves, 2015).

The power of trust in an idea is truly remarkable, especially when viewed through such a short window as is with the bitcoin. Perhaps, this is where the future of money is headed, a high-paced, instant transfer of terrible unstable currency. The bitcoin, in this case, is the perfect example of how feeble our monetary system is. After all, the value is simply imaginary, and universally accepted without much debate by those who use it. By a simple shift of the mind, a society can flip its economy right side up. An island can give a fortune to a family without actually handing them anything. A country can put itself itself on the edge of crashing all because we have collectively decided to tack a number to a worthless piece of paper. Money, while based on this idea of trust, truly is intangible, dangerous, and a spectacular display in the power of a community.

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.” (1991): 1-5. Feb. 1991. Web.
Glass, Ira, and Chana Joffe-Walt.

“The Invention of Money | This American Life.” This American Life. Planet Money, 17 Jan. 2011. Web. 07 Sept. 2015. <http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money&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;.

Reeves, Jeff. “Bitcoin has no place in your—or any—portfolio.” Market Watch. N.p., 31 Jan. 2015. Web. 4 Sept. 2015. <http://www.marketwatch.com/story/bitcoin-has-no-place-in-any-portfolio-2015-01-28;.

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4 Responses to Stone Money – twofoursixohtwo

  1. twofoursixohtwo says:

    Feedback was requested.

    Feedback provided.
    —DSH

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  2. davidbdale says:

    My method for providing feedback, twofoursixohtwo, is to respond as I read rather than first reading all the way through. I do so to provide you with a paragraph-by-paragraph reaction to your writing the same as any reader would respond. I hope you find this method helpful.
    P.S. I am very critical of all writing; harsh comments are common. I will praise your work only when I find something truly commendable. If you prefer gentler guidance, you only have to ask. I can be kind.

    P1. This sounds authoritative, but I don’t understand the thesis.
    —Money is primitive.
    —It has a concrete foundation.
    —BUT its value is not physical . . .
    —its value resides in trust (and abstraction), more precisely the concept of trust (two abstractions), make that the abstract concept of trust (three abstractions).
    —trust is placed in the community, or the government (if that’s what you mean by higher power) that issues the currency?

    That’s confusing, but the rest of the paragraph is really opaque. If the money is just trust, then the answer to the question “Where did the money go?” would seem straightforward. We stopped believing in it. Maybe you could say that.

    P2. Consider the following edit:
    [As mentioned before, money has taken on many forms throughout our history. Let us begin with the island of] THE Yap ISLANDERS [a society that has] based their monetary system on gargantuan chunks of stone OF tremendous value to their OWNERS. THE STONES WERE PHYSICAL; OWNERSHIP WAS IMAGINARY.

    Ask yourself the question, twofoursixohtwo, When is ownership physical? Except for what we carry in our pockets, can we claim to physically own anything? Our homes? Our cars in the long-term parking lot while we’re away? What’s different about Yap customs is that transactions weren’t documented and everyone was agreeable.

    Be sure you’re comparing similar concepts. Is your Yap point about ownership, physical possession, or transaction documentation? Is the US version about gold/stone, or gold/paper? Isn’t the dollar just a way to indicate ownership of fei? In other words, we use dollars to document that something of value has been transferred, instead of just remembering the transactions and trusting everyone. Would the Yap have been able to stick with big stones if their island and population grew to the size of the US?

    P3. These are good narrations of two complex strories, twofoursixohtwo, but they don’t belong in the same paragraph. Consider breaking out both and then comparing the concepts contained in each to our contemporary use of American money. Unless you continue to make the US comparison, your essay amounts to a series of unrelated anecdotes about how wacky money is for too many different reasons without a common theme.

    P4. Bitcoin is not a US phenomenon. A “small scale version of the US dollar” is extremely confusing. Central banks don’t ever “regulate how much everything balances out to.” It’s unclear whether the transaction fees and bank protections are “the same rules” as other currencies or some of “the few changes.” What’s the point of your paragraph, twofoursixohtwo? That Bitcoin is volatile? That other currencies base their value on something other than trust? Hasn’t your premise been that all currencies operate so? Would being attached to a country make Bitcoin values more stable?

    P5. This is interesting: “The bitcoin, in this case, is the perfect example of how feeble our monetary system is. After all, the value is simply imaginary, and universally accepted without much debate by those who use it.” To what degree do we accept your term “universally,” by which you don’t mean “universally”? It’s accepted by those who accept it, but there are millions of places I can’t spend it.

    Your list that begins with “By a simple shift of mind” is very impressive, twofoursixohtwo. I would ask you to rethink the logic of “crashing” because of the numbers on paper. It’s loss of faith in endless prosperity, not money, that crashes economies (in 1918 and in 1998).

    Did you find this feedback helpful, twofoursixohtwo? Overwhelming? Overly critical? I can afford to spend the time on extensive feedback only for students who respond well to it. If you need less, or don’t revise extensively, I’ll adapt. Please reply.

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  3. twofoursixohtwo says:

    They had created a new unit of money which they referred to as Unit of Real Value, or URV, which is ironic due to the fact this money was as fake as fake can get. The URV’s value would never change, but would reflect the current value of the country’s currency for that particular day. The system worked as follows: Say, for instance, you see a cow on the side of the road. This cow has been placed for sale by it’s owner at 1 URV, which would be equivalent to however much brazilian money. The next day you pass the same cow. The URV price has not changed, but the brazilian value has. Several days have gone by the next time you see this cow, and the price has changed yet again, however the URV has stayed at a constant. This stability leads people to buy more than one cow, perhaps several, reinvigorating their economy through buyer confidence. Because the URV prices did not rise, the people were much more comfortable in spending their money.

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