Stone Money – iwantpopsicle

Money Just isn’t Real

There truly is no such thing as “money”. All around the world, there are different iterations of currency that all possess a monetary value of their own. However, this value isn’t simply just innate. Afterall, every single variation of a US dollar bill, be it a ten, twenty, or fifty, is made of the exact same materials. This is because the value of “money” is subject to change at any given moment, and this is decided by everyone alive who is spending money at all times of the day. Money is not a solidified concept, and in and of itself, is abstract. While we have different values and physical or digital forms of money all around the world, we all still utilize currency in one way or another. 

In the Western Pacific Ocean, there is an island known to the rest of the world as Yap. In the article The Island of Stone Money, written by Milton Friedman, he describes how the people of Yap based all of their transactions on giant stone disks called fei, with holes fitted in the middle of them to insert long poles, if they needed to be moved. “After concluding a bargain which involves the price of a fei too large to be conveniently moved, its new owner is quite content to accept the bare acknowledgement of ownership and without so much as a mark to indicate the exchange.” The people of Yap simply mark the stone, and are content with leaving it right where it is. This is strikingly similar to our banking system, in which a cheque holds the value of money you do not possess on your person, but is held within the bank. The people of Yap simply mark the stone, and are content with leaving it right where it is.

These stones truly do not possess any inherent value. Afterall, they are just big stones. The people placed value upon them. By doing this, they created their own system of currency that they can control amongst themselves. Knowing this, you can conclude that money is just totally fake. There is nothing innate about money, as the labelling is done by humans. We decide when we want to calculate the worth of something. That “something” in question can be quite literally anything. Once that has been decided, a currency can be born. This is exactly what the Yap people did, and what every civilization has done before them.

When dealing with physical money, you must deal with the influence of inflation on the value of your money. Every single day, the value of a US dollar changes, even if by just a little bit. Perhaps the most abstract thought when it comes to money is digital currency. This is because it seemingly has no physical value, and nothing actually moves when you make digital transactions. Meet Bitcoin: the anonymous, inflation proof, and fully unadministered cyber currency of the future. In the Yahoo! News article The bubble bursts on e-currency Bitcoin, author Anne Renaut states “Once mined, Bitcoins are stored on a person’s hard drive in a virtual wallet, and can be directly sent to another person, bypassing banks and remaining largely anonymous.” This makes Bitcoins obtainable by anyone who owns a computer, and prevents the value from being influenced by “politics or human error”. It’s unbelievable how far we have come from simply placing value on a static object and physically handing it to someone else as payment.

Being that Bitcoin isn’t regulated by the government in any way, where does it come from? When someone refers to the process of “mining” Bitcoin, they are speaking in Layman’s terms. There is a software tied to Bitcoin that allows you to earn the currency. Using your computer’s processing and GPU power, it facilitates transactions for Bitcoin between users, thus causing the program to generate 1 bitcoin. Your computer has to solve puzzles, and whether or not you can beat another person’s computer to the chase is directly related to the amount of mining power your computer is providing to the system. “The software is written in such a way that it becomes increasingly difficult to generate new bitcoins, with the number in circulation designed to eventually top out at 21 million” Renaut explains. This is absolutely insane to think about. Literally anyone with a computer can participate in this process(despite the hardware requirements that you will need to generate bitcoin in the modern day, due to the increasingly difficult blockchain and demand for raw processing power). A new currency is being generated by the day, without any interference from the government. One particularly crazy part of this is that not only is Bitcoin a currency of its own, but it has a price in dollars, that is continually increasing as time goes on. Bitcoin thrives on outside currency, but can’t necessarily be controlled by the government. This makes it safe from inflation.

Now we shift focus to one of the strangest parts of currency exchange: inflation. The Brazillian government wanted to build a new capital city for Brazil in the 1960’s. They found themselves short of the money that they needed in order to do this. In order to afford the expenses, they simply decided to print more money. If only it were that simple and there were no negative outcomes to this, but that was and is not the case. Reporter for This American Life and Planet Money Chana Joffe-Walt provides a watered down explanation of this occurrence. “The problem with doing this of course, is inflation. If there are 100 dollars in the economy, you create 100 more? Now every dollar is worth half as much. That’s inflation.” Being that there was more money by a considerable margin, all money in Brazil was worth significantly less than it was before. The inflation rate reached nearly 100%. This caused economic problems from hyperinflation until the 1990’s.

The definition of money is equally mind blowing as it is difficult to pin down. Every single day, there are changes being made to the monetary value of our money, and there are even new forms of money being placed into circulation throughout the economies of the world. All in all, there will never be a day that money can be described as anything other than a completely man made and defined way to perceive value.

References

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

Renaut, A. (2013, April 13). The bubble bursts on e-currency Bitcoin. Retrieved February 16, 2021, from https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html

Glass, I. (2018, February 19). The Invention of Money. Retrieved February 16, 2021, from https://www.thisamericanlife.org/423/the-invention-of-money

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8 Responses to Stone Money – iwantpopsicle

  1. davidbdale says:

    First sentence: There truly is no such thing as “money”.
    Periods and commas ALWAYS ALWAYS ALWAYS ALWAYS ALWAYS go inside the quotation marks. (Except in England, but we waged a war to earn the right to punctuate as we choose.)

    Corrected:
    There truly is no such thing as “money.”

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  2. davidbdale says:

    You don’t repeat the words, but you do express the same concept three times in your introduction, Pop. It’s good material, but about 25% wordy.

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  3. davidbdale says:

    Your second paragraph draws a nice parallel between fei stones and modern currency transactions but misstates the similarities in two ways.
    1. Friedman says “without so much as a mark,” which you have misinterpreted to mean that the Yap marked the stones. They did not. (When the Germans DID mark the stones, it was to deprive them of value, to cancel them.)
    2. The paper check that you compare to the fei stone is just a promise of cash. That’s why we have to “cash” our checks to turn them into money. The fei stones were actually money.

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  4. davidbdale says:

    Bitcoin and fei have something surprising in common. Their value (if they have any) is justified by the amount of effort expended in securing them. In a way, you could say they have value the same way art has value. The talent and effort of creating them produces their value.
    —The limestone quarries were 400 miles from Yap, so only a wealthy person could afford to send a crew of miners across the sea in several boats to cut and shape and smooth and polish the stones and return them to Yap as finished currency.
    —Bitcoin are “mined” by solving very complex equations that require an immense amount of computing power. The coins, limited in number to assure their rarity, are released to anyone who successfully solves the equation, but the wealthy are pressing their advantage by building massive mining facilities wherever the climate is cold and electricity is cheap. Here’s what they look like inside:

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  5. davidbdale says:

    Oddly, Bitcoin is currently benefiting from inflation in a peculiar way. Its built-in scarcity, the difficulty of generating more of it, combined with a wakening demand from investors who are increasingly wary of other world currencies threatened by the pandemic, are all combining to make the demand for Bitcoin far outstrip its supply. This classic description of the reason for inflation applies to currencies as much as other commodities.

    As you say, Bitcoin “has a price in dollars” just as it has a price in every world currency that wants to buy or sell Bitcoin. Similarly, the US dollar has a price in Ruan, and in Yen, and in Pounds, etc. and, just as Bitcoin’s does, its price changes daily against all world currencies.

    How if at all does that alter your remarks about Bitcoin and inflation in the two paragraphs where you discuss the two together?

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  6. davidbdale says:

    If I were planning a rewrite of this essay of yours, Pop, I’d shift the focus completely from “the abstract nature of money” to “the peculiar effect of money supply on inflation.” It’s the theme that runs through your paragraphs most reliably and seems to interest you the most.

    Surely, every time a new shipment of fei arrived from the faraway island where they were mined and produced, the value of the other fei already on Yap declined, right? The old stones didn’t get any smaller, but they did suddenly become less rare.

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  7. davidbdale says:

    I’ve graded your post at Canvas, Pop. No rewrite is required, but you’ve shown me enough skill that I believe you could clearly make this better. You may, if you wish, for one week, respond to this feedback by revising your post for a Regrade. You will receive no further feedback since you didn’t request any before grading. But if you want to try your luck, make significant revisions and place this post into the Regrade Please category within one week starting now.

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