Stone Money- doorknob9

Money Is What You Make It

In the NPR broadcast “The Invention Of Money” reported by the Planet Money team and in Milton Friedman’s essay “The Island Of Stone Money”, they go on to explain the story of the island of Yap and their currency. On this island in the south pacific, people used literal stone ‘coins’ as their currency called fei. The large chunks of limestone were cut into wheel shapes on an island however many miles away and brought to Yap on small wooden boats. They used stone because there was no metal on the island that they could use as a form of currency. These stones weighed thousands of pounds and were hard to move, so if you did a job for me, I would tell you that the stone is yours without actually handing it to you. The bigger the stone was, the more it was worth. Owning a large amount of these stones was also seen as having wealth. While shipping one of the large stone wheels to the island of Yap during a storm, an islander dropped it into the ocean. Since it wasn’t the owner of the wheels fault, the people of the island decided to let him keep the value of the stone without having to actually obtain it due to the fact that it was at the bottom of the ocean. This is very similar to the French exchanging their dollar assets in the U.S. for gold and telling them to keep it but store it on the Bank of France’s account. Even though they did’t physically possess the currency, they still were granted the value of it. This raises the question, what exactly IS money? My initial view of money while growing up was that it’s something that someone possesses and ultimately represents their worth, in an economical sense anyways. But as I grow older and learn more about how currency works, money isn’t really worth anything. It’s the value behind it that we provide that gives it it’s worth. Essentially, the value of a dollar is how much we believe it’s worth. The system all works the same in that if people give a bar of gold value, they can give a wheel of stone value as well.

This same principle applies to Brazil and the stunt that the government pulled on their own 150 million people. Chana Joffe-Walt tells us in “The Lie That Saved Brazil” that the Brazilian government tricked their country into thinking their currency had some sort of value when there wasn’t really anything to back it up. In the 90’s Brazil had been facing high inflation rates and didn’t know what to do about this problem. Prices for just about everything had been increasing by the day. This problem roots back to the 1950’s, when the president at the time wanted to build a brand new capital of the country in the middle of the jungle. Obviously building an entire new city in what seemed to be practically unsettled land would be very expensive, so the government decided to print the money in order to afford the costs. This drove inflation through the roof for the following 5 decades, causing a plethora of problems. Joffe-Walt describes a story about a man she met that had a stack of money on top of his dresser and that money would lose value just sitting there because of inflation rates. A number of presidents tried to find a solution to the inflation situation but many of them failed. Then came four economists called upon the Brazilian government to help with this crisis. Their idea was not to print more physical money, but to get people to BELIEVE that the money had value. A new currency that didn’t exist was created called “URV” (Unit of Real Value) and it was made to gain peoples trust. Everything from prices of products to taxes to salaries were written out in URV. People still paid in the old physical currency, but it would all be converted to the URV. Every week a URV conversion table was released to compare, let’s say 1 URV to however much the old currency was in that specific week. This idea actually worked due to the fact that people only paid attention to URV and not the old currency they used to use. Inflation eventually dropped and Brazil got rid of their old currency all together. They decided to turn URV into a physical currency called “reals” that matched the value of the URV and ultimately solved the inflation crisis simply by tricking the country. This whole situation fits perfectly into the conversation of “do we need money?”. An entire economy was fixed thanks to something that doesn’t even exist, and the thing that did exist ruined it in the first place! Now it’s not like this ‘fake’ currency came out of no where and saved the day, it was the perception that it gave to people that helped pull the economy out of the gutter. The people are the part of the process that led to Brazil getting out of the inflation deficit because they gave the URV a value. The people are a part of the process that led to Brazil getting into the inflation deficit because they printed money and drove down their currency’s value.

Another situation that ties into the currency conversation is the ordeal taking place in Japan, more specifically the Japanese government. Hiroko Tabuchi explains in his article “Japan Approves $116 Billion for Urgent Economic Stimulus” that the Japanese government approved spending over $100 billion dollars to kick start the slow growth of their economy. This stunt is headed by Japan’s Prime Minister Shinzo Abe who told the countries central bank to start putting money into the economy in order to stop deflation. By doing this consumers will begin to spend and businesses will invest. The problem with all of this spending is that it can lead to an increase in Japan’s already large debt. Spending all this money has also already driven down the value of their currency, the yen. This ties into the currency conversation because it has to do with peoples perception of the amount of money their country is spending.

References

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/ 

Friedman, 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.

Tabuchi, Hiroko. “Japan Approves $116 Billion for Urgent Economic Stimulus.” nytimes.com. 10. Jan. 2013. https://www.nytimes.com/2013/01/11/business/global/japan-approves-116-billion-in-emergency-economic-stimulus.html

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3 Responses to Stone Money- doorknob9

  1. doorknob9 says:

    I’m comfortable with the content of my essay, but I think it needs a lot of improvement on the structure of it.

  2. davidbdale says:

    OK, doorknob. Let’s talk structure.

    P1. In the NPR broadcast “The Invention Of Money” reported by the Planet Money team and in Milton Friedman’s essay “The Island Of Stone Money”, they go on to explain the story of the island of Yap and their currency.

    “They go on to” suggests that we are entering a conversation already in progress. Your first sentence doesn’t make a claim that will intrigue a reader to continue, Doorknob. If, instead, you started with the simple claim that “On the island of Yap, money is carved from limestone and can be as big as a car,” then you could make us wait until much later to find out that the story comes from Milton Friedman’s essay, as reported by the NPR Planet Money team.

    On this island in the south pacific, people used literal stone ‘coins’ as their currency called fei. The large chunks of limestone were cut into wheel shapes on an island however many miles away and brought to Yap on small wooden boats. They used stone because there was no metal on the island that they could use as a form of currency. These stones weighed thousands of pounds and were hard to move, so if you did a job for me, I would tell you that the stone is yours without actually handing it to you. The bigger the stone was, the more it was worth. Owning a large amount of these stones was also seen as having wealth.

    Here your narrative sounds like a list. Coins called fei / chunks of limestone / wheel shapes / miles away / no metal / thousands of pounds. Once that rhythm is established, nothing sounds amazing, even the amazing idea that these huge stones didn’t have to move to denote a change of ownership.

    “Because Yap has no metal, and no limestone, the islanders paddle hundreds of miles to carve huge stone disks from limestone and polish them into “coins” the size of cars—the bigger, the more valuable. For large transactions, and because everyone on Yap knows everyone else, a fei, as these massive stones are called, might not have to be moved from its resting place to “change hands.”

    And so on. If it’s a story you’re telling, it should sound like story.

    While shipping one of the large stone wheels to the island of Yap during a storm, an islander dropped it into the ocean. Since it wasn’t the owner of the wheels fault, the people of the island decided to let him keep the value of the stone without having to actually obtain it due to the fact that it was at the bottom of the ocean.

    The same way an essay depends for its impact on the order in which details are delivered, small anecdotes like this one also can be improved by arranging their elements. We want to capitalize on the claim we just made that the stones don’t have to be MOVED to indicate change of ownership. That includes the claim that WHERE THE STONES ARE is irrelevant to ownership. But we could still be surprised that they don’t even have to be on the island! So: “In fact, location is so irrelevant to ownership that one massive fei never made it back to Yap from its quarrying journey but sank to the bottom of the sea. Even so, the Yap acknowledged that the islander who had commissioned the journey was enriched by a reportedly glorious fei no one but its carvers had ever seen.” Notice that the storm is irrelevant to your point. Also irrelevant is the question of who was “at fault” in its loss. And you only have to say once that it’s at the bottom of the ocean.

    This is very similar to the French exchanging their dollar assets in the U.S. for gold and telling them to keep it but store it on the Bank of France’s account. Even though they did’t physically possess the currency, they still were granted the value of it.

    Here you make a common strategic error of assuming your readers have consumed the same background information you have, Doorknob. They have not. No reader unfamiliar with Friedman’s article or the Planet Money broadcast will know what you mean. You need to educate while you illustrate. “Preposterous as it seems to measure wealth by ownership of precious stones nobody has seen, it’s not uncommon in our own society. Before the Great Depression, when France wanted to convert the value of dubious US dollars into gold, the French were satisfied to be told that an amount of gold had been transferred to their account, even though that gold never left underground vaults in the US. They were separated by an ocean from their precious wealth, but nobody doubted they owned it.”

    Notice here that the details of labeling gold in drawers is not the important detail you need to convey. Your own version makes clear that you understand that concept. The only polish your version needs is a way to convey to readers the CONTEXT of your anecdote, making it easier to grasp the nature of the transaction and drawing the clear analogy to the fei below the sea.

    This raises the question, what exactly IS money?

    I don’t think it does. It does raise questions, but not that one. One thing for certain: this sentence should begin a new paragraph. You’ve done the important work of establishing a theme for your essay: money is odder than we thought, and certain aspects of it, such as physical possession of a valuable object, are dubious at best. THAT you can emphasize in a paragraph certainly.

    My initial view of money while growing up was that it’s something that someone possesses and ultimately represents their worth, in an economical sense anyways.

    This is ambiguous where it needs to be very clear. Is “something” a physical object? Does “possess” mean “hold in one’s hand”? For “represents their worth economically” why not substitute “represents their wealth” so we’re not confused by what you mean by “worth”?

    But as I grow older and learn more about how currency works, money isn’t really worth anything. It’s the value behind it that we provide that gives it it’s worth. Essentially, the value of a dollar is how much we believe it’s worth. The system all works the same in that if people give a bar of gold value, they can give a wheel of stone value as well.

    The reason you’re worried about structure is becoming clear, Doorknob. These questions you’re asking are not the questions raised by the examples you’ve related so far. Why the Yap chose limestone would relate to these questions. Why anyone would value gold in the first place is relevant to the question of how dollars “backed by” gold to give them “the value behind” them is a relevant question. But those questions must be asked after you’ve given us material that LEADS TO those questions.

    Am I making sense here?

  3. davidbdale says:

    I’ve taken your post out of the Feedback Please category to give you time to absorb and react to the “help” I’ve offered for your first paragraph. (I hope it’s help.)

    By all means, put the post back into Feedback Please if you’d like me to continue, but make some revisions to P1 first, so I know we’re having a dialogue.

    Thanks!

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