On the surface, the story of the islanders from Yap may seem outlandish and make them out to be unenlightened neanderthals. These individuals use giant stones crafted from limestone, which is obtained by boat from an island 400 miles away, as their currency. The typical American would most likely view this, scoff, and wonder how anyone could be so illogical. However, their tale is no more laughable than that of our own, shedding light on our fictional and transitory economy that places value on pieces of paper that have no intrinsic worth; we simply give them imaginary values and treat our monetary proceedings as infallible.
The NPR broadcast “The Invention of Money” presents a clear picture of an economy that appears quite different from our own. The Yaps’ use of large stones for large purchases does not make much sense. These cumbersome rocks are near impossible to transport, so when a rock is given to someone else as payment, it remains in the same position. The island collectively acknowledges that the fei, the designated name for the currency, is now under new ownership. Milton Friedman’s “The Island of Stone Money” explored another instance of the The Yaps acting questionably. The Germans, who claimed ownership of the island, wanted the Yaps to build them roads. To do this, they painted black crosses on all of the fei and said that they were now in their possession. The Yaps, who were used to respecting claims of ownership, conceded and built the roads to regain their fei.
From a first world nation perspective, these practices seem alien. Yet, America has undertaken similar peculiarities. For much of our nation’s history, we relied on the gold standard. We mined from afar, hauled and traded large hunks of metal, albeit not as big as the stones of the Yaps. Still, the idea is rather absurd. In 1932, France asked the U.S. to transfer its dollar holdings to gold. The Federal Reserve placed the designated amount of gold in cabinets with labels indicating that France owned it. No money changed hands. This simple act undertaken by the Federal Reserve set the nation into panic, the markets viewing the U.S. dollar as weaker and the Franc stronger. This is eerily reminiscent of the German actions on Yap.
Currently, we have something which may be even more outlandish than the system the Yaps utilize: we rarely interact with physical currency. This is not to say that American dollars should be regarded as being worth much of anything; they are simply a slip of paper that represents the concept of money, or the established buying power held within that paper. Money is continually becoming more abstract. Physical dollars rarely trade hands these days. Rather, numbers and information are transmitted electronically, through computers and other forms of technology. The information needed to represent transactions floats about in cyberspace. Thinking of our money in these terms, our own economy appears much more imaginary and intangible than the redesignating of rocks.
Bitcoin is a prime example of this recent trend of entirely non-physical money. Wholly digital, bitcoins “can go to zero either because they have no underlying value or because some hacker has stolen them and left you with no recourse” (Reeves, 2015). The Yaps’ stone money appears smarter and safer than bitcoin. To steal a fei requires extreme physical force and isn’t likely to go unnoticed as thieves roll it down the street. Bitcoin can be stealthily stolen online by hackers, without any real world evidence left behind. The currency is also subject to great swings in price, “driven by speculation, investment, and government regulation” (Phillips, 2014). While the bitcoin is speculated on and driven up and down in value by several outside forces, the fei’s worth remains generally the same, a large one continuously being used as a dowry, payment for property, or other high-end purchases.
As we analyze the practices of foreign cultures, whose customs may appear illogical, we must not overlook the fallacies in our own doings. It may appear counterintuitive to use immense stones as currency, but the American reliance on credit and debit cards, bitcoins, and banks is no more sound. Two plus two equals four, as does three plus one. Each way of going about a task has its positives and negatives, whether they entail large limestone monies or the U.S. dollar, but usually end up with similar, if not identical, outcomes.
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Glass, Ira and Channa Joffe-Walt. “The Invention of Money | This American Life.” This American Life. WBEZ, 7 Jan. 2011. Web. 04 Sept. 2015
Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University, 1991.
Reeves, Jeff. “Bitcoin Has No Place in Your- or Any- Portfolio.” Marketwatch. N.p., 31 Jan. 2015. Web. 07 Sept. 2015.
Phillips, John. “Bitcoin: What to Expect in 2015.” CNBC. N.p., 15 Dec. 2014. Web. 07 Sept. 2015.