The Communal Fiction We All Agree To
Everyday we are convinced to invest our hard earned green slips of paper, we call money into a bank account. After hearing about the concept of Stone Money, I thought the idea of people using anything other than paper slips as money is obviously senseless. However, as I began to read The Island of Stone Money by Milton Friedman and articles published by the NPR broadcast, I became very attentive in analyzing the Yap’s unique monetary system and the similarities it has with America’s monetary system.
The first similarity I found between Yap’s currency and America’s is in Milton Friedman’s essay, The Island of Stone Money. When the German government took ownership of the Yap island, they demanded that the people of Yap fix the pathways that they considered to be in bad condition. As a fine for disobedience, the Germans marked the most valuable Fei as a way to claim what is now theirs. This is very similar to what had happened in 1932, when the Federal Bank Reserve of New York converted U.S. dollars in gold to avoid shipping money across the ocean. The same way the French marked the U.S. gold as theirs, the Germans marked an X on Fei money.
The idea of knowing that it isn’t necessary for the people of Yap to carry the stones as form of proving their possession gave me mixed feelings at first. However, after listening to the interview from the NPR broadcast, they mentioned how money is fiction because no one knows where money goes when it is deposited into a bank account. This made me think where does my hard earned money go when I deposit it in my checking and savings account? How do I know my money isn’t transferred around or played with? Also why did I allow a bank teller to trick me into opening an account not knowing exactly where my money will go? The idea of Americans putting money into a bank account is no different than the people of Yap leaving their coins, undisturbed on another owner’s property.
When the NPR broadcast said that money is fiction, it reminded me of the article How Fake Money Saved Brazil and how people view the concept of money. In this article, the people of Brazil were tricked by four economists into saving the country from inflation by slowing down the creation of the cruzeiros by developing a fake currency called the “real”. The comparison to the real and the people of Yap stones as well as Americans with bank accounts is that money always isn’t physical. Instead the real was virtual money that convinced the people of Brazil that the prices weren’t always going up in order to save the country. This expresses the idea of money being fictional and how the people control the real value behind it.
After reading about the concept of Stone Money and various articles on money, they all reiterated that money is nonetheless a communal fiction that we all agree to. From the people of Yap using stones as their currency, to the citizens of America depositing green slips of flimsy paper into intangible accounts and to the people of Brazil allowing virtual money trick them into thinking prices won’t go up demonstrates that there a lot of similarities within our economic system.
Friedman, Milton. “The Island of Stone Money.” The Island of Stone Money (1991): 1-5. Print.
Joffe-Walt, C. (2010, October 4). How Fake Money Saved Brazil. Retrieved fromhttp://www.npr.org/sections/money/2010/10/04/130329523/how-fake-money-saved-brazil
“The Invention of Money.” This American Life. N.p., 7 Jan. 2011. Web. 7 Sept. 2015. <http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money>