Stone Money-ComicDub

The Truth About Money

Money is one of the most widespread and well maintained lies in the history of mankind. If you were to ask the average person why money has value, they would most likely reply with their brainwashed-esque response that “money has value because it’s money”. Before listening to the NPR broadcast The Invention of Money that would have been my exact response, money has value because it just does. The broadcast changed my whole view of how money works, where it comes from and how it is valued. One of the first things mentioned in the broadcast is that money is fiction. If any normal person were to hear this their immediate reaction would be: “What? How can money be fake if I have it right here in my wallet and or bank account?” 

To Answer this question of how money is fiction, a good place to start would be all the way back in 1903 on the most westerly island of the Carolina Islands called Yap. To start things off, in an essay titled The Island of Stone Money, the author, Milton Friedman writes of a man named William Henry Furness III who spent several months on the island writing about the unusual habits and customs of its inhabitants, particularly their money system. The currency used by these people was large disk shaped stones with holes in the center called fei. Using stones as currency already sounds strange enough but the fact is, this wasn’t even the strangest part. The strange part was that the people of Yap did not consider possession of this stone money to be ownership of it. This meant that they were content with acknowledging that a certain person could own one of these stones while being in the possession of another. As Milton Friedman puts it, “Unless you are very unusual, your immediate reaction… will be: ‘How silly. How can people be so illogical?’” However, it is worth noting that this is very similar to something that was done in the United States back in 1933. France worried that the U.S. would start to stray away from the standard of gold backed money so they asked the Federal Reserve to put aside their assets that they had in the U.S. in gold. This was fundamentally the same way the monetary system of the people of Yap operated where the owner of the money did not physically have possession of it but it was still accepted as that person owning it.

This all relates back to the main topic that money is fiction because in the cases of the people on the island of Yap and the incident with the French and the U.S., the money in both situations was built on the trust of the involved parties. What I mean by this is no physical objects with any actual value were exchanged, only the acknowledgement from both parties that one side now owns the money in possession of the other. So going back to the previously quoted NPR broadcast, after stating that money is fiction, they continued on to talk about how money not being real is both good and bad at the same time. It’s good in the way that you don’t have to carry around these thousand pound stones or tons of gold when making simple purchases but it’s bad in the sense that because that money is not a physical thing, it’s value could disappear in the blink of an eye. Once everyone stops believing in it’s value, it becomes obsolete.

To further develop this idea that money is fiction, the NPR broadcast The Invention of Money continues on to discuss how Brazil used this idea of “fake money” to dig themselves out of the greatest economical crisis the country has ever seen. In 1990 the rate of inflation in Brazil was a staggering 80% per month so the prices of products were changing constantly. It was so bad that there were dedicated jobs for people to go around stores updating prices throughout the day. For years numerous presidents tried to fix this problem all with no real results until in 1993 when four people single handedly saved the Brazilian economy with “fake money”. But getting the entire population of a country to believe in money that isn’t even real isn’t something you can do over night. So they started off by creating this new non-physical currency called URV that would then correspond to a certain amount of Brazil’s real physical currency called cruzeiros. Products would then be set at a certain unchanging amount of URVs thus slowly getting people accustomed to this fake currency. Once people started to believe in this “fake money” they simply got rid of the cruzeiros and launched their new fake currency, the real. “The fictional quality of money is inherent in the very idea of money in any system of currency”, this is a quote from the same NPR broadcast that pretty much sums up everything discussed so far.

When researching more into this concept of fictional money, I also came across another aspect of the economy that is just as fictional as money but is still widely believed by everyone, and that is the GDP. GDP stands for Gross Domestic Product, which essentially means the national income. As stated by Jacob Goldstein in the NPR broadcast The Invention Of ‘The Economy’, “…the most important thing to remember about GDP is it’s not a thing. It’s an idea.” The idea of GDP was created during the Great Depression and quickly people start to put too much meaning into the GDP. Instead of becoming a way to measure the current economy, it becomes a sort of Cold War of economies to see who’s doing better than who. Now going back to the main point about money, the GDP is another thing that is not real but people still widely believe in and trust without knowing why. Like I said in the opening of this paper it’s sort of like people are brainwashed into believing in these ideas, but that isn’t necessarily a bad thing because without the idea of fake money, we would still be stuck in the centuries old ways of a bartering economy.

References

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

Glass, I., Joffe-Walt, C., Blumberg, A., & Kestenbaum, D. (2018, February 19). The Invention of Money. Retrieved September 21, 2020, from https://www.thisamericanlife.org/423/the-invention-of-money

The Invention Of ‘The Economy’ [Radio broadcast]. (2014, February 28). In All Things Considered. NPR. https://www.npr.org/sections/money/2014/02/28/283477546/the-invention-of-the-economy

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2 Responses to Stone Money-ComicDub

  1. comicdub says:

    I am leaving a comment here because I’m not sure if you saw my text professor, but I tried submitting this assignment with the correct categories, “comicdub” and “Stone Money” but when I did, it instead submitted it only under the “123 Uncheck this Box” category. I went in and tried to edit my post to add the correct categories but when I try to do so, it tells me “Updating failed. Sorry, you are not allowed to assign the provided terms.”

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