Counterintuitivity

The idea of fei by the people of Yap makes you think a lot about the concept of money. The way they based their wealth on trust made me change the way I thought about money. The idea of using large worthless stones as money sounded ridiculous to me at first. It just seems absurd that a family can be wealthy for generations because of a large stone that is some where in the bottom of the sea. But, when I began to think about it more i thought about the way we represent wealth. In so many ways the fei for the people of Yap is the same as our currency. For some reason we decided peices of green paper represent wealth like the people of Yap decided round stones would represent it. The only difference is that we decided to choose something small enough to fit in our pockets and easily carry around. It made me think what exactly is money. After thinking about it I believe money is whatever people with power say it is. They decided it would be little pieces of paper so that is what we believe means something when there is actually no real value behind it. I think that they just had to pick something to be what we represent power and wealth with and it just so happens that the people in charge of the U.S decided it would be our dollars and the people of Yap decided it would be fei.

Money as an abstract concept is not an overly foreign idea to me. Taken out of any societal context, exchanging fairly worthless metals or paper for immediate and real goods and services doesn’t make much sense. However, it’s also quite easy to understand how money works in the present day. Money is the ability to purchase something, a sort of short-form contract where everyone agrees that a unit of currency is worth something, though exactly how much that unit of currency is worth greatly varies.  Since everyone follows this model, it’s easy to see how money works, at least on a micro level.

What fascinates me more is how money gained its value in the first place. How does a bartering society, one that exchanged real goods and services, go to exchanging these same goods and services for intrinsically worthless baubles?

My hypothesis is that any currency started out as something only the upper class in society had. For example, with the Yap Islanders, after the fei was discovered or popularized by explorers, it could only be acquired by those with the means to put together and crew ships. The fei also had to be scarce enough that not everyone who wanted the pretty rocks could have them, so it could become a status symbol. This symbol was then given to those that had done them some sort of service, and eventually became recognized as currency in that fashion. It not only represented the upper class in society, but was also a measure of skill and expertise – a bad smith, for example, wouldn’t have as many customers as a good one, and consequently less money. They could then exchange money for what they wanted, and the cycle continued. Eventually this evolved into the complex system a multitude of countries employ today, where the value of money is no longer tied to the upper class giving it meaning, but rather a government. In present society, even if the upper class moved to declare a currency worthless, as long as the government still considered it an official currency, it would remain so. It now functions as a contract, one that cannot be broken without the government setting an appropriate penalty.

The most striking thing about the Yap economy is not that they use massive stone discs are money, but that their ownership system doesn’t have any safeguards. In America, we have banks that secure and track money, government agencies that regulate the banks to make sure everyone is being treated fairly, and public media to spread the word when a bank does something unsavory; in Yap, the only way to identify who possess which stone disc is by shared belief and word of mouth. There are dozens of ways this could be exploited, so I am quite surprised that they’ve somehow kept to this idealistic form of ownership.

On the other hand, it is clear that sometimes the government has no idea how to manage its own money either. This is brilliantly illustrated in Brazil’s economic woes starting in the 1950s, where they printed money without caring to think about how it would affect inflation. To be fair, I also don’t have a secure grasp on how inflation works, but I’m also not employed by the government as an economist. Equally sad is how each new plan of fixing it seemed to make the problem worse. Locking the prices when money was quickly becoming worth less and less had the obvious effect of convincing people to not sell anything, and I’m amazed the idea of confiscating everyone’s money only ended in an impeachment, as opposed to a revolt and subsequent assassination. Even the URV is a  a strange idea; it seems to work only because people failed to realize that the cruzeiro itself was still fluctuating.

At first, the story of the people of Yap sounded completely foreign and abstract to me. I thought they were some fictional people with very ambitious methods of presenting wealth because of the massiveness of their currency. I couldn’t grasp how these people could put so much trust in one another that they didn’t have to be in physical possession of the money to spend it. It had been my understanding that in today’s societies, money is really just a system of numbers that has arbitrary values depending on the society. Like why would five gold coins have more worth in one country than another? There is no method of precisely measuring the value of money. So it has been my assumption that the assigned worth has been chosen arbitrarily, which can easily explain why the values of different currencies fluctuate so often. It was then, while analyzing the way our own system works, that I realized we really are just like the people of Yap. There was no method or formula to say how much the beauty of the fei was worth in Yap, just as there is no method or formula that states a set value for the dollar. That is because the dollar has no value, other than what we’ve agreed it to be worth. There’s no material in the paper making one bill more valuable than another, it’s just the agreed value printed on it that makes the difference. Although new ways are being innovated to pay for things such as chips inside cell phones, they still are based on a system like that of the people of Yap. That is, we spend our money even if it’s not physically being exchanged. The people of Yap didn’t have to physically exchange their money because it was too tedious to actually transfer possession, while we give our money to banks for storage, and it’s our money to spend, even if it’s not in our physical ownership. Although the banks may not necessarily put our dollars in a box with our name on it, they do keep electronic count of how much money they have which belongs to us. So when we pay with a check or debit card, we, like the people of Yap, are transferring ownership of some of our wealth without physical exchange taking place. Human beings haven’t really gone far in terms of innovation, because we are still just transferring ownership without physical exchange, whether that is by trusted word, debit card, or any future method we come up with.

The Story of Yap is one that made me think a lot about the way we as americans also exchange currency. Some people might say that the idea of carrying  big rock around and exchanging it as a form of money is irrational saying it’s just a rock what sort of backing or worth does a rock have. Well if you look at our money its the same concept it’s just a colorful piece of paper. The US dollar bill is exactly that and nothing else a dollar bill with no physical representation behind it just the idea of wealth. So in the end I guess what im trying to say is our money is the same as the fei we were just smart enough to make it pocket-sized.

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.

I suppose you can say that my thinking of money has changed, because I really had not thought about it until talking about Yap. At first, I was thinking how ridiculous the trading of large stones was, and how even if the stone was not in the possession of the owner, it could still be common knowledge in the population to whom the stone belonged. Then the idea of comparing the Yap’s currency to ours flipped my initial view.

Today, society does the same exact thing. We put money in banks, and even if that money is not in our physical possession, we know it is ours. Society requires a form of tracking on the wealth of individuals. With every action comes an equal and opposite reaction, or in this case, every credit on one side of the ledger has a debit on the other side. In society, the action is work and the reaction is payment for the work done. That is what money always did and still does represent…work (even if the money is inherited…work was still initially done to earn it). The idea of tracking wealth is important, because it establishes socio-economic classes, which inevitably shapes society, for better or worse.

It is kind of funny to think that we use a dollar bill that is essentially worthless if not for what it stands for. Even if what money stands for is never seen, the fact that society accepts it, makes the representing factor important.