Before this assignment was introduced to the class, the concept of money never gave me any trouble to thing about.  In fact, my thinking of money seemed pretty naive. Money was just money, twenty dollars was worth twenty dollars.  I even thought banking was a lot more simple than it really was. It wasn’t until recent years that I grasped the concept that banks loan out our money to other people.  But all this naive thinking was changed when this assignment was introduced. The stories of the Yap Fei and the way the US and France handled their trade of gold in 1933 really challenged the way I thing about money, and how it is a lot more abstract that I originally thought.

The first thought that challenged my previous concept of money was the way Professor David explained the worth of money to the class. As I said earlier, Ive always just thought twenty dollars was worth twenty dollars. Professor David challenged that by saying that its really worth twenty one dollar bags of chips, in the example he used.  While I’ve always known that that is how the money system worked, but I’ve never thought of it that way.  Also, he explained that the reason we except money as payment was because we know that other people will except it.  This is another concept that I knew in the back of my head, but I never thought about it in that way.

When I was first introduced to the story of the Yap Fei, I thought it was silly.  The idea that a giant stone symbolized someones wealth seemed abstract. Further more, it seemed strange that this wealth could have been transferred to someone else just by word of mouth. simply saying that the Fei that sits on a person’s property can be known as someone else’s just by saying it is was obscure.  The obscurity grew when we were told about the wealthiest person on Yap.  The fact that people respected the persons wealth even though they never saw the Fei that justified it. All of the things told in the story of Yap current, from the Fei at the bottom of the ocean to the germans marking a black X on the Fei to claim them, seemed silly to me, until the I read about the France and US exchanging gold in 1933.

In 1933, the French wanted to exchange the US money for the gold that it was worth. But instead of paying extra money for the gold to be shipped, they simple asked for the federal reserves to move the gold into a different drawer and mark it french.  This is exactly like the Yaps simply saying that their Fei is now someone else fei.  Yet this transfer of gold from one drawer to another had a major affect of the US economy. The US dollar became significantly weaker, and that lead to the bank scare of 1933.  This is when the concept of money being “imaginary” started to make sense to me.

In “The invention of stone money” they discuss online banking, and how in todays economy, very rarely does actual money change hands.  When you buy something with a debit card connected to your bank account, the bank doesn’t send that store the money.  There is just a notice on the computer saying that store now has that money, and that you no longer has that money. There is no physical moving of money, you just know it isn’t yours anymore.  This is exactly like the people of Yap spending a fei, but never moving it.  The fei isn’t moved, but the people involved in the deal now know that the fei has changed ownership.  A concept that I originally thought was abstract and obscure, turns out to be something that I experience on a daily bases. The concepts of Yap currency, which I used to see as wildly obscure, now seem to be a lot more normal than I thought.

Work cited

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

Joffe-Walt, Chana. “The Invention of Money.” Thisamericanlife.org. N.p., n.d. Web. .

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