The power of any monetary system depends on the value the nations public believes its currency is worth. The fact is, neither gold nor paper can feed us, shelter us, or sustain us in anyway. The creators of the money place the value on a dollar or a stone and decide if it is worth a loaf of bread for example. Now obviously the government physically prints the money. But there are other people, groups that control this money making process. Groups with much greater power and influence over the government even. Whether we examine the society of Yap or that of Brazil in the 80’s, we will find that faith in currency comes from the people who made it. For example, Brazil’s government in the 80’s physically produced the money but the people who came up with the idea for the money have nothing to do with the government. This is clearly a rather unusual and regularly unheard of situation. However this is how it happens; except the people/groups I spoke of earlier are in positions of more power and this is not regularly publicized.
Similarly, in the case of Brazil’s economic situation in the 80’s,the public felt as though they had no purchasing power. It got to the point in their country where inflation was about 80% a month. This means prices would rise everyday until simple things were no longer affordable. Over time, the country had a series of Prime Ministers who were ineffective against this problem. This is an example of how even governments have no control over the nations currency. Rather it is the people who create the money, these power groups of which I spoke, who instill its faith in public who use it. This problem was not resolved until 4 graduate students were called in to create a new system. That is exactly what they did; create a currency and tricked the people into having faith in it its value.
In the specific case of the Japanese government, the government believes that creating more money will save or boost the Japanese economy. The thought is that if their is more money in the economy businesses will be more likely to invest and try to get that money. Businesses will also be more likely to invest because there will be less of a detriment if investments don’t go as well. However, the more of something you have the less valuable it becomes. With that said, we can see how this plan can backfire and hurt Japans economy. Should that happen, just like the people of Brazil in the 80’s, the people of Japan will see no value in their currency.
To sum up, the thought is that objects such as stone (gold) or paper (dollars), have actual value. The people who create the currency have tricked us into believing they do, just like the 4 graduate students tricked Brazil. This is evident with the case of the French government. If you give your gold to someone else and you believe that gold has value, you will believe you are losing value. As an average citizen, you have no say in how much purchasing power your dollars have. If your nations monetary system says that your x amount of dollars make you poor, you will think and behave like a poor person.
Works Cited
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.
Joffe-Walt, Chana. “How Fake Money Saved Brazil.” Www.npr.org. N.p., n.d. Web. .
Joffe-Walt, Chana. “The Invention of Money.” Thisamericanlife.org. N.p., n.d. Web. .
Tabuchi, Hiroko. “Japan Approves $116 Billion for Urgent Economic Stimulus.” Www.nytimes.com. N.p., n.d. Web. .
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Counterintuitive Spring 2024 
MoneyTrees, you never asked for feedback on this post, and you didn’t request a grade. You should have done both before scheduling a conference.
You need to correct several patterns of grammar and punctuation errors: they/their/there; possessive apostrophes; the banned 2nd person all come to mind. There may be others.
You also need to resolve a fundamental confusion at the heart of your argument. You say
I wonder who you think creates and mints the money if it’s not the central government? What you say about the difficulty of “controlling the value” of money is certainly true, but it’s completely untrue that the “people who make money” decide whether a dollar is worth a loaf of bread or not. The marketplace decides that.
In general, your theories are not tied closely to specific illustrations, such as cows and chips provide. You would do well to read that post again and incorporate as many concrete examples as you can into your rewrite.
Grade Code 1D2
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Hello Prof. Hodges. I have edited my post and would to receive feedback. Hopefully I clarified some of your concerns.
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Feedback requested. Grade requested.
Feedback provided. Grade provided. —DSH
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Moneytrees, you are wasting far too much energy trying to support an unsupportable position.
You and I both acknowledge some basic facts:
1. Gold isn’t edible.
2. Buyers and sellers of commodities (not governments) decide if the currency is trustworthy.
But your third claim, that “the creators of the money place the value on a dollar and decide if it is worth a loaf of bread” is just untrue. The only thing the makers of the money decide is that a 5-dollar bill is worth 5 one-dollar bills. The market decides if a loaf of bread costs 1 dollar or 5 dollars. That can change from day to day or place to place despite anything the government might wish.
In Brazil, the people who came up with the idea for the new currency had no power at all. They simply made a proposal to the government, which in turn printed new currency, issued the notes, determined the exchange rate against the cruzero, and ultimately took all the old currency out of the market.
Paragraph 2.
Again, most of what you say is true, but your sentence, “Governments have no control over the nations currency. Rather it is the people who create the money, these power groups of which I spoke, who instill its faith in public who use it.” We agree governments can’t force anyone to trust the currency. But there is no other group with power to do so. The exercise was a huge gamble. If inflation hadn’t been so crippling, nobody would have given up the old currency. They must have been desperate to trust in the new system, which on the face of it made no sense.
Paragraph 3.
You make a good case that pumping too much currency into a market can have disastrous consequences. What is the nature of the “lack of confidence” you suggest here? Do they fear their money won’t be accepted? Or do they have a different fear?
Paragraph 4.
You’re confusing yourself by using two nearly identical terms: 1) value; and 2) actual value. You say that paper money has no actual value, by which you mean the paper is pretty much worthless, which is true. But when you say we’re tricked into thinking that is has value, you’re mistaken. That worthless piece of paper has a very tangible value: I can give it to you in return for twenty bags of chips. It has “purchasing power,” which is value. And when I give my gold to someone, I am, in exactly the same way, losing value.
In other words, when the culture places value, by community agreement, in a “valueless object,” that object has an agreed value. It turns paper, for example, into money. The paper is worthless. The money can be traded for chips.
I told you to be on the lookout for, and to correct, several areas of punctuation and grammar:
—apostrophes
—their/there
—the banned 2nd person.
You may have corrected some errors. Many remain.
You have strong argumentative gifts, moneytrees, but you lack discipline and you too easily convince yourself that you’re making sense.
Grade Code 6E5
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