Counterintuitive Spring 2023

Money ever weighing down your pants? Try being on the island of Yap where their money is limestone. I could only imagine having to carry around round disks of limestone in order to buy things. These disks can range from the size of a cd to as tall as a person. Not exactly pocket change now is it. And with our generation we don’t even need to carry money around anymore; instead we have little plastic cards that hold all of our money for us making our lives a little easier to keep track of our money.

With that being said, have you ever found yourself asking, what is money? The five reporters in the broadcast, “The invention of money” get the gist of this question. One of the reporters, Ira Glass states, “Money is fiction.” In another article, “Economist View: Yapping About Money: The Stone Money Of Yap” they ask you how you define money, and if the yap stones could even be considered money? With standard textbook definition, “Whatever is used as a medium of exchange, unit of account, and store of value.” Which in the article they state how the yap stones have value; in order to be considered money it needs two functions. They go further more into detail about whether or not to consider yap stones money or not.

To me after reading and listening to everything that I had, it seemed true. We all have different values of a dollar depending on what we’re buying. And when I first heard the story of the Yaps and how limestone was used as money, I thought to myself, “That’s crazy! How could you even determine how much one of the disks was even worth? There’s no set value like how our money is.” But money is fiction and the value is only what we perceive it to be. If we feel a dollar is worth a dollar or 100 pennies then it is. And the Yaps know or would understand the value of a disk better than what we would understand.

In an article I was reading titled, “Not Exactly Pocket Change: The Giant Stone Currency of The Yap” and also in the broadcast they talk about how our money compared to the Yaps money isn’t really different after all. As stated before, we keep our money in our bank accounts which we then use our cards to make purchases. When our money is in the bank it doesn’t sit there with our names on it, it is being lent out to other people. As the author of the article, Andrew Kincaid said it, “Your bank account is just an agreement between you and the bank that “x” amount of money is yours. You take it on faith that the bank will have that money.” Same goes with the Yaps; you just trust them that everyone knows whose stone is whose. Also something interesting I listened to in the broadcast was that the money you put into the bank is just merely numbers on a computer screen. When you purchase something, physical money is not being transferred; just a few numbers on a computer are being changed. This can relate to the stones because the actual stone isn’t being moved, just the names of who owns them.

My take on money seems to be that it’s very complex even though it’s really not. I feel I was quick to judge other places on how they handle money compared to us rather than seeing how similar we actually are. For example when reading about the Yaps, I was quick to judge how stupid of an idea that was and how they could just simply trust people by what they said was theirs. But I didn’t look at our society and how we seem to be doing the same thing with banks. It’s all in the matter of trusting the bank, that they will have your set amount of money when you come back knowing that they lend it out to other people as same goes with the Yaps trusting each others words.

Works Cited

Bryan, Michael F. “Economist’s View: The Stone Money Of Yap.” N.p., 15 Sept. 2005. Web. 08 Sept. 2015.

Friedman, Milton. “The Island Of Stone Money.” (n.d.): n. pag. Feb. 1991. Web. 08 Sept. 2015.

Kincaid, Andrew. “Not Exactly Pocket Change: The Giant Stone Currency Of The Yap.” N.p., 11 July 2014. Web. 08 Sept. 2015.

“The Invention Of Money.” N.p., 07 Jan. 2011. Web. 08 Sept. 2015.

Money is Fiction

Sure you can see, hold, and feel a dollar bill in your hand. Simply theres no way money can truly be fiction. But if you look at it from a different angle you may know exactly what I’m trying to say. Value is how much something is worth and to think we have a system that places everything in our world to a certain value is pretty cool. At the same time it may seem impossible. Through the ups and downs of our economy and the use of whatever item you may be putting a value will always vary. Let’s see if our friends from an island called Yap can help us understand how exchange with a legal tender really works.

Your house is for sale and I’m going to purchase it with a large rock at the bottom of the ocean. Deal? This may sound crazy to you but this actually happened on this Island called Yap. Well I’m not so sure about the house part but they use large, carved stones as currency called fei. You’re probably wondering what’s so significant about some crazy people on an island using rocks, some heavier than a car, as currency. Well hopefully this will help you understand why these people are  so crazy.

Everyone wants to live the American dream, right? And in most instances an American dream involves wealth, money, the green paper everyone seems to be obsessed about. What if I told you money isn’t real? It’s completely fiction and is merely just a legal tender. It represents an exchange but the actual bill isn’t literally worth what is says on it. An example, used in the pod cast “The Invention of Money”, when you pay an online bill all you do is click a button. And the money goes from your bank account to your supplier just like that. You don’t have to literally walk the money to the seller.

Who makes the green bills everyone strives for worth what they’re actually worth? What makes a dollar really worth it’s value? Who says that a flimsy green bill with a one on it is only worth 4 gum balls? Meanwhile the same flimsy bill with the number one-hundred on it is worth 400 gum balls. If you were to close your eyes you wouldn’t be able to tell the difference between a one and a hundred dollar bill. Although one of them will have you chewing for a lot longer time. Another reason why money is essentially fiction.

Another issue mentioned on the pod cast, that may help you better understand this concept is what happens when someone tries to count all of the currency out there at once. It is hard because you may end up double counting some money. For example, I deposit my cash into my bank account. Then the bank loans it to someone else to start a new business. So this man may have just bought into the system but he used my money right? It’s a very hard thing to understand and that’s why it’s so surprising to hear that money is fiction.

Of course we are the ones who place the values on material items. In an article I found called “Billionaire mind: Money Is NOT Real” the author goes on to say, “The material things have no ‘money’ value in themselves – we give that to them.” In the end it is a truly amazing concept that we place so much trust and value on a green piece of paper. Imagine if money just didn’t exist. Everyone would go out and do their jobs for no pay. It would seem as if there would be no point but then again you wouldn’t have to pay for anything. Everybody would help each other for free, what a great world that would be.

Works Cited

Friedman, Milton. “The Island of Stone Money.” (1991): 1-5. Feb. 1991. Web.
Glass, Ira, and Chana Joffe-Walt

Friedman, Milton. “The Island Of Stone Money.” (n.d.): n. pag. Feb. 1991. Web. 08 Sept. 2015.

“Billionaire Mind.” : Money Is NOT Real ? Web. 9 Sept. 2015. http://mynikaya.blogspot.com/2009/05/money-is-not-real.html

An interesting take on the beginning of our seemingly irresponsible valuation of money is brought up in the NPR Broadcast titled “The Invention of Money”, they discuss the history of the Yap people of the Caroline Islands and their “stone money”. The Yap developed a system of carving huge stone wheels out of limestone for large purchases between islanders. However, since the large stones weighed thousands of pounds, and there were no roads or carts to move the stone between people, it was simply known and trusted to be owned by that certain islander. Pretty preposterous how an islander could have wealth that is made true by a stone that is on another man’s property.

How could such a system work, when the only evidence of worth the stone has is the stone itself? But it is eerie how we question the simplistic monetary values the Yap people had, while we have established our own make-believe system of money in the present day. We have our dollar bills and our pennies and quarters, as do other countries with respect to their own currency. We started off the same way as the people of Yap, using the precious metal gold instead of nearly inaccessible limestone as our monetary value. Eventually when we saw how our gold supply was running out/being misused, we evolved the system and instead instituted paper bills and coins that were backed by the worth of gold. However, we have not had a backing to our money since the gold standard was eliminated in 1933. It has been 82 years since our money has actually had a material worth attached to it, yet our economies and monetary systems have been kept in tact for the entire duration.

There has been ups and downs in markets, but eventually, the “dollar” gains its worth back just because, for some strange reason, we believe in it. “Money is like Tinker Bell in the final scene of the play, Peter Pan. If people do not believe, it will fade away. But, of course, people do want to believe and the spot-light on Tinker Bell brightens with the loud cheering of the audience” (Livingstone). We have surpassed the point in time where we can question the system in place, and we must carry it on for as long as we can. We have surpassed the days of limestone-money trading and our own history with gold. It is very interesting to look back and see similarities between our society and societies in early history, but it is even more exciting to evaluate and hypothesize what our future holds for us. We can physically see and touch and smell the money that we have, but we cannot see its worth. We know what it is worth in our heads, because we speak and communicate the value behind each dollar. We cannot see it, and yet we still believe in it.

The dollar is sort of like Santa Claus. We see the presents under the tree, the half-drank milk and the devoured cookies from a festive plate, but we never see Santa. There is all this evidence that he exists, there are stories and songs that tell tales of his history, but we never see him. Even if we never see a jolly, fat man in a big red velvet suit, we are going to believe in him. Just like money, we have evidence it exists and we attach worth to it, but the real value is our belief in the system, and that will never fade away.

Works Cited

Beattie, Andrew. “The History Of Money: From Barter To Banknotes.”Investopedia. N.p., 17 Apr. 2007. Web. 07 Sept. 2015.

Livingstone, Zuerrnnovahh-Starr. “Money, a Belief System.” Money, a Belief System. N.p., 15 Oct. 2002. Web. 08 Sept. 2015.

“The Invention of Money | This American Life.” This American Life. N.p., 7 Jan. 2011. Web. 08 Sept. 2015.

Communal Power in Money

Money is based in the mind. The physical dollars and coins we carry around with us day to day only have value because we as a community agreed and made it so. Whether a strip of paper, a hunk of metal, or a towering, chiseled stone, money’s value has never resided in the physical form, but rather in communal trust. Trust in one’s community has, since the invention of a monetary system, dictated the value of an area’s currency. In this context, asking ”Where did the money go?” in times of crisis has a simple answer: we stopped believing in it, so it no longer exists. This concept that has ruled our civilization is no more than an abstract thought, accepted as fact.

There are a few dictations a community decides on in terms of money, including it’s value and how it is transferred from person to person. With many different cultures around the world, money may seem to differentiate in a vast way, but upon closer inspection, our systems all work in a similar way. Let us begin with the Yap islanders, a society that has based their monetary system on gargantuan chunks of stone worth a tremendous value to their owners, named the fei. The stones were physical, while the ownership was imaginary. Large transactions would have no effect on the physical world, as some stones of larger value would be too heavy to move. The people were content with the knowledge that the ownership of the stone was traded, and that trade was honored and respected, without the stone moving so much as an inch out of place. Without any documentation, there is no physical proof that a transaction truly occurred, leaving many to believe this practice is ridiculous, idiotic even.

Even so, this imaginary transfer of wealth is not very different from our own system in the U.S., which started out with chunks of metal rather than stone. Gold was the prime currency in the U.S., however, would be too heavy to carry around in our back pocket. This gold was deposited into banks, leaving it’s previous owner with however many dollars, a piece of paper determining how much gold a person owned. Over time, the value we placed in gold was traded to the dollar, leaving us with the system of paper and coins that rule today. This is the money I hand over when I buy a car, a house, or other large purchases, but much like the Yap currency, these purchases cannot be carried around like my dollars can. The difference between my car and the Yap’s fei is that I have documentation proving I am the owner of my car, whether it be parked in my driveway, the parking lot across campus, or across the country. Even then, my certificate of ownership has no real value outside of piece of mind that I can get my car back if someone tries to steal it. In this way, the Yap islanders are far more trusting of each other than the U.S. population in their transactions. However, given the size difference, if the Yap population were to grow, perhaps they may have to follow the same methods of documentation we in the U.S. use today to protect their assets.

This idea that monetary value comes from trust is evident in several instances. Take the Yap islanders, once again, for instance. These people encountered a deadly storm during a voyage that led to a ridiculously valuable piece of stone falling overboard on a trip back to the island. When those on the ship shared their story that could have very well been faked, the people of the island had the power to deem whether or not this family would have possession of this money, even though the physical evidence of it was at the bottom of the ocean. The people made that family rich, without so much as a second thought, a true testament to the overwhelming trust these people have put in one another. The same would never hold in the United States, or at the very least would be incredibly unlikely. Our modern equivalent would be winning the lottery and losing the ticket stub on the way. There is no conceivable way anyone would believe a story like that without any proof, and even if they were to believe this person, they would never see that money without the proper documents. I suppose our system is a bit more strict in this way.

On the flip side of this, Brazil was recently in a bit of turmoil in their economy. Inflation was rising to ridiculous percentages, and the people were losing faith in the value of their hard earned cash. Every day prices rose, but thanks to four friends, crisis was averted. They had created a new unit of money which they referred to as Unit of Real Value, or URV, which, in my opinion is hilarious due to the fact this money was as fake as fake can get. This system worked as follow: URV’s were a constant value that did not change, as opposed to the current in place currency. Because the URV prices did not rise, the people were much more comfortable in spending their money, and the value of their URV would skyrocket over time due to the sheer confidence and trust that this money was real. Then, in some weird otherworldly way, the overpowering idea that URV was real actually made URV real, viable currency in Brazil. Our own power in the U.S. lies in credit, much to the same effect. Credit is money that truly does not exist, much like the URV, but instead acts as a placeholder for money owed to a vendor or company. Those in the United States use credit because it evokes buyer confidence. We feel there is power and control in being able to determine for ourselves when and how much we pay back. The use or the URV and credit keeps money circulating while still maintaining the public’s faith in the value of their currency. In a way, when the imaginary is pleasing, we make it real.

A new currency has been trending within the last few years, and gives us an interesting look into the communal aspect of money. This currency, referred to as a bitcoin, is strictly numbers and code, only existing virtually though the internet. It is not based in any country, and is a stand-alone monetary system, the power of this currency resting solely on those who use and exchange it. In one article, the nature of this unregulated system is criticized, “Proponents like to talk about how bitcoin has no central bank or authority behind it as a net positive, but that fact also means a lack of true value” (Reeves, 2015), meaning while the lack of authority could be a good thing, nothing changes the fact this this money has no real value. While monetary systems around the world base the currency value through this trust within the community, this population of bitcoin users manipulate and take advantage of that trust. The same author mentions what is called the “greater fool” theory, meaning when transferring bitcoins, one has to find another who is foolish enough to buy your bitcoins at a higher price. Because of this, the true instability of this currency rests in it’s fluctuating values. In just two years, the value of a bitcoin went from $13 in January 2013 to $1,150 in November 2013 to $178 at the end of December 2014 (Reeves, 2015). While transfers of bitcoins are easy and instant, they are also dangerously drastic and shows how powerful trust in an idea can be.

The power of trust in an idea is truly remarkable, especially when viewed through such a short window as is with the bitcoin. Perhaps, this is where the future of money is headed, a high-paced, instant transfer of terribly unstable currency. The bitcoin, in this case, is the perfect example of how feeble a monetary system can be. After all, the value is simply imaginary, and accepted within their community without much debate by those who use it. By a simple shift of the mind, a society can flip its economy right side up. An island can give a fortune to a family without actually handing them anything. A country can put itself on the edge of economic collapse all because we have collectively lost faith in our currency’s value. Money, while based on this idea of trust, truly is intangible, dangerous, and a spectacular display in the power of a community.

Works Cited

“The Invention of Stone Money.” 423: The Invention of Stone Money. This Is American Life, WBEZ. Chicago . 7 Jan. 2011.

Friedman, Milton. “The Island of Stone Money.” (1991): 1-5. Feb. 1991. Web.

Glass, Ira, and Chana Joffe-Walt. “The Invention of Money | This American Life.” This American Life. Planet Money, 17 Jan. 2011. Web. 07 Sept. 2015. <http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money&gt;.

Joffe-Walt, Chana . “How Fake Money Saved Brazil.” NPR.org. 4 Oct. 2010. 30 Jan. 2015. <http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil&gt;.
Reeves, Jeff. “Bitcoin has no place in your—or any—portfolio.” Market Watch. N.p., 31 Jan. 2015. Web. 4 Sept. 2015. <http://www.marketwatch.com/story/bitcoin-has-no-place-in-any-portfolio-2015-01-28;.

Evolution of Money

Money has always been thought of as a physical concept. As the world began to evolve, the material of money changed. As everyone knows, a one hundred dollar bill is worth more than a one-dollar bill. In the end of the day each bill is just of sheet of paper, just like a typical baseball card. The only different indication of worthiness is the number on the bill or the player on a card. While listening to the podcast “The invention of Money”, I have come to the conclusion that “money is fiction”. Money does not exist the way it used to. We now use a system from the bank that theoretically states how much money we have, rather than carrying bricks of gold or giant limestone wheels to prove our riches.

Hundreds of years ago n the island of Yap, inhabitants kept massive limestone wheels used as coins, which was equivalent to carrying gold. In Milton Friedman’s essay “The island of Stone Money”, he states limestone revenue is simply about acknowledgement of ownership. The stones on the island were too heavy to constantly transport so people drew black crosses on their stones to indicate possession and the coins remained undisturbed in their original place from the previous owner. These stones had value just as money has value. Similarly to the value of cows, for they produce milk and eventually meat to help people reach their nutritional needs. Money allows people to purchase goods, like food from a cow, homes, clothing, and other necessities in order for survival.

My idea of money was very similar to the inhabitants of Yap. The higher the number on the dollar bill or the more stone you have represents your riches. Now I believe that money is just an idea. People work hard to earn their money just to receive some flimsy paper with a number that tells us how much that bill is worth. If money is an idea then where does it go when the stock market crashes or when America is in debt? Since “money is fiction”, everyone can agree that the money is never really there. The value can disappear because the physical money is never actually there. The crash of the stock market in 1933 started to happen when the United States decided not to use gold (physical) money but instead use a banking system (idea) to transfer and keep money. This caused France to be “richer” than the U.S. because they had more physical gold.

The article “How Fake Money Saved Brazil” by Chana Joffe-Walt tells us how four graduate students came up with an idea to use a fake currency called Unit of Real Value, URV, to save Brazil’s economic problems. One of the students said URV is virtual; it does not actually exist. URV is very similar to real money since physical money does not actually exist. URV is very similar to the new Bitcoin, a digital currency. The money is not actually there, people are borrowing numbers to purchase goods.

After reading these articles my opinion has changed about money. I have realized that money is an idea. While money is in the bank it comes and goes without anyone realizing because you cannot physically see it. Money is no longer about how much you have sitting in your house; it is about the number we see on our bank statements. Each dollar bill is the same size piece of paper. If the numbers were not written on it then each bill would have the same value. Therefore, money is fiction. Yes it does exist in theory but not physically.

Work Cited

Friedman, Milton. “The Island of Stone Money.” Diss. Hoover Institution, Stanford University , 1991.
Joffe-Walt, Chana . “How Fake Money Saved Brazil.” NPR.org. 4 Oct. 2010. 30 Jan. 2015.
Reeves, Jeff. “Bitcoin Has No Place in Your- or Any-portfolio.” Market Watch. N.p., 31 Jan. 2015. Web. 4 Sept. 2015.
“The Invention of Stone Money.” 423: The Invention of Stone Money. This Is American Life, WBEZ. Chicago . 7 Jan. 2011.

Natives of the Island of Yap use stone coins as currency, that is mined from limestone caves 400 miles away. The name of this rare form of money is called Fei. The bigger the Fei, the wealthier the person. There is a trick to their methods , a person does not have to have possession of the coin to state that they own it. The islanders just know who owns what, because they have a belief in their people. Kind of like us Americans do, we have all the faith in the world that our money is our money, but through all the swipes of your credit/debit cards, Do you get to see one dollar?

The money we think we hold in our hands or posses in our bank accounts today is fiction. The representation our bills and coins once had, is now gone. It no longer stands as important. Now a days we do not need paper bills or metal coins at all, we are comfortable enough to just go to a machine, swipe a card, and see how much money we have in our accounts, and believing that it is there. We might as well live on the Island of Yap, because we have a belief in our currency system so much like the Yap do.

The Yap use to be owned by the Spanish, but now currently reside under German jurisdiction. Coral shell paths covered the island of Yap, so the Germans asked a simple question to pave roads on the Island so they could transport goods and packages easier. The folk of Yap agreed, years and years past and still no roads, so what the Germans did was paint black crosses on the giant limestone coins , Stating that now the Germans own the people of Yaps currency. This upset the Yap very much, so they paved the roads for the Germans and they Germans simply washed the paint off the coins, returning ownership of the money to the Yap. Reading Friedman’s essay, a similar event happened in 1933 when France and America were having some issues with gold exchange, so the French went into the American gold vault and painted crosses on the gold claiming the Americans gold. No difference happened with what the French did to the Americans than what the Germans did to the Yap.

The Brazilian citizens were invested in their money and how they used some sort of fake , made up money to save their country. Brazil was causing inflation day by day in their own country.The Brazilians could not wrap their mind around the concept that the price of the dollar or cruzeiros stayed the same, but the value of the cruzeiros were due to change and how much they could purchase would also change. This example shows you by the Brazilians using the fake currency which was called URV’s changed their country rapidly. This article proved that we depend on money so much that man chooses to just make money when we do not have it, showing that money is a fictional item.

The last article that I read was about how the Japanese approved a $10.3 million yen stimulus ($116 Billion dollars) to help their countries economic issues. Doing this Japan decreased the value of yen so much it made their currency weaker. From fabricating this fake money Japans public debt is twice the size of their economy. Reading this article definitely changed my opinion on how I look at money permanently.

My mind is dumbfound from the knowledge it has just absorbed from reading the Stone Money , Brazil, and Japan articles. Money in my eyes will never look or feel the same way again. From reading these articles money went from the most important thing in my life to ‘wow this thing, this figment of our imagination that we do not even physically touch now a days called by many names, fei, dollar, coin, etc.. Do we really need it? We do not physically possess money anymore most of the time so Is it an item of necessity or is it a figment of our imagination? No one really knows, but now as an acknowledged reader of the idea of money I can now say there is a better understanding floating around my head about the US dollar and currency around the world period!

Works Cited

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

“The Invention of Stone Money.” 423: The Invention of Stone Money. This Is American Life, WBEZ. Chicago . 7 Jan. 2011.

Joffe-Walt, Chana . “How Fake Money Saved Brazil.” NPR.org. 4 Oct. 2010. 30 Jan. 2015. <http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil&gt>

Tibuchi, Hiroko. “Japan Approves $116 Billion for Urgent Economic Stimulus.” NYTimes.com. N.p., n.d. Web