Counterintuitive Spring 2024

When I first heard about the concept of “stone money” I was just young child that was seeing it for the first time…in a cartoon. Growing up I would go back and think of that cartoon and think how ridiculous something like that is, and that it really does belong in a cartoon. Surely nobody in the modern world would use stones as money. I can easily see it being used in the prehistoric era, but not now. What use would there be? How would it work? There’s so many alternatives that can be used, there could just be a barter system.

All these questions and more were answered when I researched the island Yap, and their stone money or “Rai”. In this little German owned nation, the island people use carved and polished slabs of limestone as their currency. The greater the shine and bigger the stone slab, the more value it has. I must say, that I do actually like that concept. It is kind of reminiscent of our system in a way. The harder you work, and more time you put into your work, the more money you can possibly make.

Honestly, I like what the people of Yap have going on with their economy. It seems more laid back. As if money really doesn’t matter. All that matters is the work that you put in. It makes me think of our reliance on money. We look at money as if it’s the end all be all. If you don’t have it you don’t matter in society. It’s a really cruel kind of effect money holds on us. Here are these island people that make their own money. Some even help others make their stone slabs. It just shows that they value work more than they do the stone slabs.

It is actually kind humorous too. So many other countries, as well as our own country. Seem to run into issues with our economy and money. Often times these countries need help by being bailed out, or in Japan’s case spending trillions of yen to boost their economy, or how Brazil needed to make fake money in order avoid inflation. It just shows their necessity on money. But then you have Yap with their stone money living without a care. We look at the system and find it ridiculous, but here we are worrying about pieces of paper. We can’t even trust their value because one day it can just become completely worthless. Some new form of currency can take over and our current monetary notes won’t even be worth the time and work to be printed. Money is a fragile thing, and for us to always rely on it is risky.

By reading the The Island of Stone Money by Milton Friedman, I find that the concept of having something with any type of value will give us power. Yaps probably knew that a fie was just a rock, without any prolific end. However, the fact that a fie was made from limestone, a rock that not everyone had access to, gave value to the rock in the island of Yap. Whoever discovered the limestone first from the Yaps might not even have had the biggest fie or the most valuable one. At some point a fie might not even have had a hole in the center. Nevertheless, as more Yaps had the ability to go 400 miles overseas and come back with a fie, the value of the fie might’ve decreased. Therefore, the difficulty of getting the best limestone was increased. For example, coming with the biggest fie or making the hole in the center as proof of the quality of the limestone gave the rock more value, and as a result, more power to the owner.

The uselessness of a fie made acceptable the idea of not needing to have the possession of the fie. The acknowledgement of being the owner of a fie was enough to have more power than other Yap islanders. Therefore, when “a violent storm arose, and the party, to save their lives, were obligated to cut the raft adrift, and the stone sank out of sight,” there was any problem accepting the owner’s power of the unseen fie because “it was all chipped out in proper form”(Friedman). As a result of having a fie and acquiring power over other Yap islanders, better position in the island were guarantee, for instance to becoming a chief.

I believe that the German government had the idea of how power differs people in a population. Therefore, taking over of what made the Yaps differs among themselves was the easy way for the Germans to get what they wanted because even though the Yaps might had know that a fie was just a rock, being acknowledge with the possession of the limestone kept Yaps from having to work or gave the them the authority of making decisions on the island. Therefore, I think that knowing that the fie were being claim as the German’s possession by having an X, made the Yap islanders to come with a solution to get back the recognitions of what was considered a source of power.

How Fake Money Saved Brazil by Channa Joffe-Walt shows how the idea of having the power of things made Brazil overcome an inflation of 80%. As we all know, Brazil is one of the countries with the best economy in the world. But how a fake concept of money can safe the economy of a country? Even though, Brazilians felt with power when they felt in control of the economy when the URV were introduced, they were still expending more Cruzeiros at a rate of inflation of 80%for a time (Joffe-Walts). However, some of my knowledge about some internationals economies give me a little concept of how people react when they feel empowered. For instance, in some countries people might not pay the same price calculated in dollars for an item, nonetheless, having the same value in dollars would make people buy such items because the dollar has more value than their money; therefore, these international buyers feel more in power when their monetary system has more value as the Brazilians did in order to fix the economy.

Unlike Brazil did, Japan’s Prime Minister Shinzo Abe is trying to inflate the economy approving to spend more than $116 billions in order to make “businesses to invest and consumers to spend” (Hiroko Tabuchi). Now, knowing that money with low value is bad for the economy, why would Japan minister think that increasing the value of the products and releasing money to the population will make the people spend and business invest? Even if the money is given to local companies to invest, there is no guarantee that it will make jobs because of the low demand on products. Therefore, for Japan to overcome the low demand and job loses, the value of money have to be increased and prove to the investors are not going to end in more debt has to be given. At the end of everything money its our way to get power, but when everyone has too much power, everyone loses because the concept of power is lost.

Work Cited

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

Joffe-Walt, Channa. “How Fake Money Saved Brazil.” NPR. NPR, 4 Oct. 2010. Web. 01    Feb. 2015. <http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-  money-saved-brazil>.

Tabuchi, Hiroko. “Japan Approves $116 Billion for Urgent Economic Stimulus.” The New     York Times. The New York Times, 10 Jan. 2013. Web. 01 Feb. 2015. <http://www.nytimes.com/2013/01/11/business/global/japan-approves-116-billion-in-  emergency-economic-stimulus.html>.

“The Invention of Money | This American Life.” This American Life. N.p., 07 Jan. 2011.    Web. 01 Feb. 2015. <http://www.thisamericanlife.org/radio-archives/episode/423/the-  invention-of-money>.

My view of money has changed quite a bit since learning about the Fei of the island of Yap.  Based on The Island of Stone Money by Milton Friedman, the Yap used large coins of limestone as money.  Each coin was a physical representation of significant time and labor because the coins were made on an island hundreds of miles away.  When the coins were “spent”, they were rarely moved to the new owner, everyone in the village simply knew that the Fei had a new owner.  While it may seem completely alien to our system today, think back to the US gold standard.  US coins and paper money were backed by gold, a precious metal that represented time and effort to be mined and brought forth from the earth.  Instead of people carrying around gold all the time, they simply used dollars and cents to represent their wealth in gold.  Starting to see similarities?

The other intriguing aspect of Fei currency comes from the story of the sunken coin.  There was a Fei that was cut and polished, but didn’t make it back after bad weather caused the raft it was on to sink.  Despite it being lost to the bottom of the ocean, all the residents still acknowledged that the Fei was owned and was still valid currency.  In the NPR Broadcast about the island of Yap, they draw similarities between the Fei and our current banking system.  They made the point that today, when people are paid, they are given a check or have their wages deposited directly into their bank accounts.  There is no physical transfer, simply numbers changing on a computer.  Like the Fei, we never see it, but we have faith that it is going to be there when we need it.

The final realization about money is completely based on people’s faith in it.  Shortly before the great depression, the French decided to transfer all of their US currency into gold.  Despite the fact that the gold never left the room it was stored in, the French had lost faith in the dollar.  As a result, people began to question their own faith in the dollar, which eventually led to the great depression.  Another classic example of people loosing faith in their currency is Brazil.  Another NPR Broadcast, How Fake Money Saved Brazil, they outline the story of how over-printing of money caused massive inflation in Brazil.  As a result people lost faith in their money they spent it copiously as opposed to saving it.  To counterbalance the high inflation, Brazil changed its currency into a virtual currency that didn’t physically exist.  Steadily the people gained faith in the new currency, and when it was strong enough, they began printing a new currency based directly on the virtual currency.  Since the faith in the currency was restored, Brazil has worked its way to be the 7th largest economy in the world.  The faith in money has the power to keep it working even when there is over-printing and debt.  Japan has had substantial debt for some time, and now the central bank has printed substantial sums of money as a stimulus to the Japanese economy.  Similar to Brazil’s case, there should be inflation and a loss of faith in the currency right?  Instead of the currency plunging, it has remained relatively stable throughout this process.  Since Japan has the 3rd largest economy, people have faith that the currency is strong, therefore, it remains strong.  After completing the research for this assignment, I learned that since loosing the gold standard, the major backing for the US dollar is people’s faith in it.  It is pretty incredible that entire economies can stay afloat simply on the faith of the people, and without it, the system we have set up would never work.

Works Cited

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR. NPR, n.d. Web. 01 Feb. 2015.

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

In 1903, an American anthropologist named William Henry Furness III, spent several months studying inhabitants of the Island of Yap. (Friedman 1) The Island of Yap is located in the Caroline Islands, in Micronesia. William found the German colony’s monetary system to be especially interesting and wrote the book, The Island of Stone Money. (Friedman 1)

The Yaps treasured limestone found from over 400 miles away. Sailors would carve out chunks of limestone they found into wheels and bring it back to their island. The idea of a large, twelve foot, wheel of stone being the system of currency for a society, is an astounding concept. The Yaps didn’t need to have the material broken down to sizes that a man could easily carry with them. The ability to possess the Island’s source of wealth was by word of mouth. When one islander was the owner of the rock, everyone else on the island acknowledged that. There was no point in stealing the heavy stone from another owner because the value wasn’t physical. The value came from the power of everyone knowing the item belonged to the owner, even if the stone wasn’t physically held by the owner. One day, a slab of “fei”, which is term the islanders used for the limestone, got lost at sea. A violent storm caused the sailors to let go of the stone, but the value wasn’t lost with the waves. The Yaps located onshore believed the sailors’ stories and didn’t discredit the value of the owner’s stone.

The concept of having faith in an item that humans cannot physically possess, isn’t a foreign idea in our society today. Although modern ways of payment have changed, there are still similarities to the past. For instance, the idea of physically handing over cash for an item, is becoming rare. People typically now pay with credit/debit cards, checks, loans and so on. The shared concept that the Yaps have with modern society, is that people don’t need to physically see money or “stones” to acknowledge the value. The material of the rocks wasn’t important to the Yaps. The important thing about the rocks included the value, prestige, and power that was associated with the item. The same idea applies to cash today, considering the paper the money is printed on isn’t important. The important aspect is the value that comes along with the piece of paper, allowing people to purchase what they would like. Value is associated with credit cards too because the idea isn’t that the plastic is important, it’s what the plastic can buy.

The value of money is determined by the importance people place on it. If a society doesn’t care to use the money that is produced, the value goes down. This problem occurred in Brazil, starting in the 1950s. The inflation was so high, that people lost faith in in their monetary system and their economics were hectic. However, Brazil finally received an economic turn around with the help of four, brilliant men. The idea to restart Brazil’s economy came from four men from the Catholic University in Rio. The men decided on replacing the constantly-changing cruzeiros with “URVs—Units of Real Value”. This concept kept an exact price that didn’t change on an item, even if the cruzeros changed. In today’s society, inflation is low and prices stay relatively-consistent. An example includes a gallon of milk won’t be double the price every few months, only a possible couple cents difference.

The concept of money in modern society isn’t as different from the past as many people may believe it is. Whether the monetary system of a country uses stones, money, or coins, each item has significant value. The value of money is determined by society, and doesn’t need to be physically accessible. The Yaps treasured stones because of the power, prestige, and wealth associated with it. Today, people value credit cards and receive payments online, because of the value they know they’re receiving. Lastly, the idea of value being placed on money saved Brazil’s economy when they were at an all time low.

Joffe-walt, Chana. “How Fake Money Saved Brazil.” Planet Money. 4 Oct. 2010. Web. 1 Feb. 2015. .

Friedman, Milton. “The Island Of Stone Money.” The Hoover Institution, 1 Feb. 1991. Web. 1 Feb. 2015. .

Kestenbaum, David. “The Island of Stone Money.” Planet Money. 10 Dec. 2010. Web. 1 Feb. 2015. .

“Yapping About Money: The Stone Money of Yap.” Economist’s View. 15 Sept. 2005. Web. 1 Feb. 2015. .

The stone money history is tremendously interesting, I heard a little about stone money in my Economics class when we were talking about the medium of exchange, the unit of accounting, and the store of value but did mention the Yap and German propaganda.

When I heard the deeper story of the Yap in class, at first I couldn’t help myself but to think that they were naive on some concepts of their monetary system. More specifically in the article “The Island of Stone money”, a family was mentioned whom wealth was unquestioned for three generations. Traditionally known for owning the biggest and most beautiful fei (stone money) that sank in the sea. Despite the fact that no one seen the fei, not even the family and still consider it as the family’s asset was a little crazy for me. But after farther readings, I realized the system used in the present is not every different than what was used by the Yap.

The median of exchange is very similar to what is presently used, if we a cut a check for someone the ink on that paper makes it valuable. The check can be ripped but the money will remain in the owners bank account which is very similar to the “Fei underwater”. Nobody have seen the actual money but there is a written statement that convince us of its presence but this is different for an actual dollar bill. A dollar bill is made with paper and ink just like a check but if totally ripped or burned, the value is reduced to zero.

This made me question the true value of money. Adams Smith and David Ricardo came up with the theory of its value “work is the only true method of exchange and the model for value.” But is this still true to our days? I doubted cause after the wall street journal, it costs 1.7 cents to produce a penny. It made me realize our effort and services are more expensive than the dollar we are paid with, money is worth what us the people think it is. The Yap valued big stones that now is looked at as priceless things, each dollar had gold value attached to it but now nothing and yet we still depend on it. Money is only a method for the government to control the population and its power.

The only things with true value on the planet are living things, whether it’s trees, animals or humans. Gold is extracted by humans, Dollar is made by humans, everything with value in our present day is made or found by living things. If money was the most valuable thing the US would’ve paid its eighteen trillions debt by now because the lenders could use that money.

Money is something where I’d occasionally wonder to myself, where does it gain its value? It has always baffled me how people could imbue a piece of paper with such value and importance, or how similarly sized, designed, and manufactured notes could have an increased value just because of what is printed on them. Now that the topic arose in class, I have an opportunity to delve deeper into the topic and really find out where the value of our currency lies. In my previous “sessions” of thought on the topic, I’ve always reached a conclusion that money has value because people want it to.

Hearing about the Yap and their absurd currency of fei made me chuckle in class, until I realized how similar their style of currency and exchange mirrors ours, just in a primitive skin. The Yap used a form of ‘Stone Money’ as currency, and not like many traditional stone coins one might first think of. Instead of being pocket-sized and portable, these fei were larger than the people who owned it. Dr. Buchanan, a highly rated tax law and law professor with many places of education, including Harvard University, is quoted saying” Rather than putting a few seashells or gold coins in one’s pocket, owners of Yap stones found themselves in possession of heavy stone disks that could be as much as 12 feet in diameter.” (Buchanan).  It’s curious to think that instead of something portable that could be easily used in daily transaction, these people ended up dragging car-sized stones to their homes. This is neglecting to mention that these stones aren’t from a local quarry. The stones were mined and crafted on lands far away, on islands that contained limestone deposits. Islands up to 400 miles away! The stories became stranger, however, when it was mentioned that to make the aforementioned transactions the Yap simply declared a transition of ownership. They never moved the ‘coins’ from their original owner. They simply said “my wealth now belongs to…” and it was done. There had even been stories of a stone that was the largest to ever be made, but it sank to the bottom of the ocean on the journey back. To this day, three generations later, someone still claims wealth from that stone. A stone no one has had an tangible evidence of, or has ever seen; yet, it still provides wealth to the “owner”.

The Yap had a strikingly similar faith in “valueless” money to the faith we hold in currency today. How different is that sunken stone than a direct deposit from someone’s employer? The transfer of wealth today is much like the Yaps’. We move money that nobody has seen or touched through a digital stream of 1’s and 0’s to change ownership. The cycle can continue on this way until the final “owner” needs cash. But how long will it be until we can no longer redeem this “fake” money for cash? How long until cash-itself becomes obsolete?

Works Cited

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

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR. NPR, n.d. Web. 01 Feb. 2015. <http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil&gt;.

Shostak, F. (2004, January 20). How Does Money Acquire its Value? Retrieved February 2, 2015, from http://mises.org/library/how-does-money-acquire-its-value

Buchanan, N. (2013, February 7). Dorf on Law. Retrieved February 2, 2015, from http://www.dorfonlaw.org/2013/02/money-is-magic.html

Money seems to have a big role in our society; you can’t do much or get far if you don’t have any.  Money is valuable in different ways, even when you don’t see it physically.  In today’s society you must have faith in the government, in the banking system, that your money is being handled with in the proper manner, if not then you would be hiding all of your money under your mattress, or around your house.  I never really have a clue what happens in the banks, and how they take care of your money.  I always just thought money was quite simple; you either have some or you don’t, that’s it.  However, by being introduced to this assignment and having it compare the Yap Fei with the US and France gold trade in 1933, and the Brazilian cruzeros all seemed somewhat similar. No one actually sees their money being transferred.  When you get paid, you don’t get a check or get paid even in cash, it’s all directly transferred to your bank account, and that you just have to trust that you got more money.

After reading through this assignment and listening about it during class, I realized that money can just be a big scam if you don’t have any faith and confidence.  The Yap never got to see that one stone that was considered the greatest above all the stones.  It was sitting somewhere at the bottom of the Pacific Ocean, yet the natives still took their word.  They didn’t see the limestone but the family still got the value that it is worth.  Now looking at the Yap’s perspective, I believe that they would think our monetary system is completely out of the ordinary. While they have stones in front of their properties, we have pieces of paper that represent our wealth.

The Germans decided that they didn’t like the pathways on the island of Yap, so they marked black X’s on the stones to show that it actually belonged to the German government.  Once the pathways were formed into nice roads and highways, the Germans scrubbed off the X’s and the Yaps felt as if they had their value back. This is quite similar to what the French had asked for. In 1933, the French wanted to trade United States dollars for gold, thinking they it will be worth much more, since gold doesn’t lose its value. But they did not want to spend any more money on the shipment of the gold, so they simply asked the US if their gold can be put into a separate drawer in the federal reserve bank labeled that it belonged to the French. This shows how much trust and faith that people have for keeping someone’s wealth. By the French not actually having their gold, they know that it is in that drawer, and the Yaps not having their stone, they know that it is still their stone.

Only about twenty years ago Brazil thought it was doing its country a favor by building a new capital, but little did they know they were putting their country into an economic nightmare. In just one month, Brazil’s inflation reached 80% meaning more money was printed, and more money people were trying to spend. In NPR story about Brazil they mention how 80% inflation impacted daily spendings.  They said that one day eggs would cost $1, and the next day it would cost $1.02.  However if inflation continued, by the end of the year it would cost $1,000. This really amazed me and it got me thinking how people could live like this with the prices always rising everyday. Brazil was convinced that the government was helpless to control inflation.  But out of some miracle, Brazil had one bizarre plan that they hoped would work.  They constructed a fake currency that would trick the people of Brazil into thinking it was a new currency called “URV” unit of real value. People would still have cruzeros but everything would be listed in URV’s. The Brazilians slowly understood the concept of the URV.  It created stability within the country and it gave value to their money.

Works Cited

“The Friday Podcast: A Giant Stone Coin At The Bottom Of The Sea.” NPR. NPR, n.d. Web. 01 Feb. 2015. <http://www.npr.org/blogs/money/2011/02/15/131963928/the-friday-podcast-a-giant-stone-coin-at-the-bottom-of-the-sea&gt;.

Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR. NPR, n.d. Web. 01 Feb. 2015. <http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil&gt;.

Friedman, Milton. The Island of Stone Money. Stanford University: Hoover Institution, 1991. N. pag. Print.

Goldstein, Jacob, and David Kestenbaum. “The Island Of Stone Money.” NPR. NPR, 10 Dec. 2010. Web. 01 Feb. 2015. <http://www.npr.org/blogs/money/2011/02/15/131934618/the-island-of-stone-money>.

What is money? No one really has an answer to this, because money in this day in age is a tangible thing that has no real value other than what one knows it can buy her. A 20$ bill can buy  20$ worth of goods, that’s it, nothing more, nothing less. Money changes hands for things that one pays cash for, but anything that someone buys, or pays online, nothing changes hands but numbers in a computer. What the reporters on the NPR article say is that money is fiction, and it is. We don’t know how much of it is out there, we have no clue where it goes, and no clue why things cost as much as they do.

We as a society base our lives around something that only exists because we have faith in it. An American would hear of a society who based their currency off of rocks that belonged to whoever they said it belonged to and say “Wow, that’s pretty primal, that makes no sense at all.”  Realistically though, we aren’t much different than the Yap, with full faith in their coin shaped rocks. Today we trust that our money belongs to whoever we give it to, just like the Yap trusted the fei outside their house belonged to a certain individual three villages away.

A perhaps even more abstract of currency arises with Bitcoins, a virtual currency that isn’t tangible at all. A Bitcoin, according to the article by Anne Renaut  is a string of immensely complex code that can be “mined” by anyone looking to invest in the online currency. Recently Bitcoins reached a record value of 266$ per one coin, but soon after the coin had a serious crash, lowering prices to about 54$. This is evidence that currency, whether virtual or real, is very volatile and unstable. Bitcoin fanatics however say they enjoy the complete anonymity of the coin. This could create a serious problem though. Since the money cannot be tracked, it can be used for things such as human trafficking, drug deals, and black market purchases without any threat of being tracked. So I think that after a period of time governments will realize that anonymity in a currency can cause problems, and perhaps they will find a way to shut down Bitcoins.

When a nation pumps tons of money into the economy to try to boost the economy it seems to always have a reverse effect because more money means more people will be willing to spend their money, inflation goes through the roof, then a depression happens. Then those same families who had an excess of money are now short of money, and a depression ensues.  Japan however is so far doing a great job in creating a stimulus without destroying the economy in turn. So far they have managed to keep interest rates stable while lowering the price of the Yen.

As much as I would like to believe that money is a very stable and predictable asset, it simply is not. For the Bitcoin, the value is decreasing because everyone took advantage of the extremely high prices, sold them, and drove the price right into the ground. In Japan however, the prime minister has so far successfully stimulated the economy without any negative effects. The more I think about it the more it perplexes me, why do things work in some places but crash and burn in others? I have no clue, but perhaps that just the nature of currency. The currency will do what its users make it do.

Works Cited-

“The Curious Case of Japan’s Economic Stimulus.” Truthout. N.p., n.d. Web. 01 Feb. 2015.ulus  <http://truth-out.org/opinion/item/14070-the-curious-case-of-japans-economic-stimulus&gt;

“The Bubble Bursts on E-currency Bitcoin.” Yahoo News Singapore. N.p., n.d. Web. 01 Feb. 2015. <https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html&gt;

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. .

The bubble bursts on e-currency Bitcoin By Anne Renaut | AFP News – Sat, Apr 13, 2013

Imaginary Money leads to Imaginary Prices- howestreet.com