Invention of Money – Jesse Samaritano

Posted on January 18, 2012 by jessesamaritano

The idea of the fei seems irrational to most people who are told the story of the Island of Stone Money and Yap’s form of currency because it is. But to compare this to currency of more developed countries and say that it is the same concept is not right. US currency in itself, the paper dollar we use to purchase different things, holds little physical value, but represent the value that the government has assigned for it. The Yap’s fei money is only stones brought to the island to represent the cost of cattle. When the Yap would purchase something from one another, they would be content with an unmarked portion of the owners fei that would not be in there possession. This is much different than the concept of banks and bank accounts. When somebody writes a check to you, you are now in possession of the currency represented on the check, therefore, you are in control of the currency and the person who wrote the check can no longer use that money. Currency of more developed countries is more sophisticated in the sense that people know that the money is only a representation of what it stands for, and we only use it for the sake of convenience. These currencies act as an I.O.U. note from the government who are in charge of the real worth of the money. The fei is more of a social status showing that you own more if you you have the bigger rock.

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1 Response to Invention of Money – Jesse Samaritano

  1. davidbdale's avatar davidbdale says:
    January 18, 2012 at 3:48 pm

    Thanks, Jesse. I appreciate having a chance to see your work early and interact with you about it. You may elect to post a revision before the deadline in either of two ways, or you may elect not to. The choice is entirely yours. I would like to ask you a few questions about your claims to help you make your decision.

    1. You claim that the fei is irrational but without saying why. It certainly sounds odd and amusing on first hearing, but does that make it irrational?
    2. Why US currency is different is unclear: either because the bills themselves have little value or because government assigns them a value. But which of these is different from the fei? Do the big stones have intrinsic value? Don’t the Yap “assign” them a value?
    3. The fei, you say, are only stones that represent cattle. When I sell you cattle for dollars, don’t those dollars represent the cost of the cattle?
    4. You say the Yap are content despite not having possession of the stones, but in what way do you own the dollars in your bank account, dollars you’ve never seen and can spend without seeing?
    5. You say that when someone writes me a check I’m in possession of the currency. In what way am I in possession of it? Because I could demand currency in return for the check? But couldn’t the Yap take physical possession of the stones if they insisted? And for smaller stones, don’t they likely do exactly that?
    6. And certainly, once the fei changed hands, they could not be used again by the spender, since everyone knew they had changed hands, right?
    7. You say that in more sophisticated countries people know money is mere representation, but how is that different from the Yap understanding? Surely they don’t think the big stones are cattle?
    8. Your final claim that our currencies are IOUs from the government is very intriguing and worthwhile. Even though our dollars serve nicely to keep track of transactions between citizens (and non-citizens from other countries), ultimately, their value is based on faith that the issuing government can and will repay its debts. This is an interesting and substantive claim that I’d like to hear more about.

    I appreciate your posting early, Jesse, and hope you find my questions helpful. If you do elect to revise your assignment before class tomorrow, you may either use the Edit function to make revisions directly to this post, or you may publish a new post with a different title (Invention of Money Revised, for example). The second choice preserves the interaction between us and makes it easier to compare your two versions, but it’s your call.

    See Money Revised for Revisions.

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