Currency, at least in my mind, is a system of balance. Growing up in the twenty-first century, my perception of wealth has always been based on the pieces of paper within one’s pocket. Life without currency seems like chaos to me. Who’s to say the cow farmer is wealthier than the carrot farmer when business and transactions were based on the agreements of trade? Is a cow worth one hundred carrots? Who’s to set the principle? I found Milton Friedman’s article “The Island of Stone Money” discussing the island of Yap to be an easy way to understand the concept of currency through a culture with an unorthodox method of transactions.
The island of Yap, with its inhabitants, the Yap, have a currency called fei. It would sound outlandish for me to say their currency is a variety of beautifully decorated stone discs larger than a person scattered around the island if it were not true. According to Friedman in his article, the island does not contain enough metal to make signature coins, so the islanders had to resort to stone. Some fei may be a few feet wide or large enough to fill a small room, so when there is a transaction in which a fei may be too much of a hassle to move, the acknowledgement of ownership is exchanged.
The Yap’s mentality regarding the exchange of large fei is similar in our modern normality of digital banking and cryptocurrency. Arguably the most well-known cryptocurrency, Bitcoin, is not physical. It cannot be seen or traced, due to its existence solely relying on the owner’s hard drive. Bitcoin can be transferred from one person to another, of course. However, it is easy to imagine your numbers being decreased in order to increase the numbers of the person you are paying. For digital banking, it is easy to imagine the bank transferring your cash to another’s account when the transaction notification goes through their system. For the Yap, simply stating the transfer of ownership is good enough for the community.
I would feel uncomfortable with the fact that my valuable stone disc remains on the property of the previous owner. At least with digital transactions I can see my numbers deplete, giving myself a sense that I am growing ever poorer with my financial decisions. In the early 1900s, The United States of America engaged in a transaction of gold with France in which the gold being held by the Federal Reserve in New York had a change in label to being France’s gold. I feel safe knowing there is a label on the transaction to save the time and effort of moving gold internationally, but it still is almost the same as what the Yap do.
I have faith in currency systems but I value clarification regarding my money. If I bought something through digital means and did not see my numbers decrease, I would not complain since I just purchased something for free, but that is chaos and a reason to lose a little bit of faith in the service used in the means of purchase. This minor hiccup, while it benefits me, does not benefit the bigger picture. I’d be a fool not to take advantage of the hiccup but is it really the right thing to do? The New York Times article “Japan Tries to Ease Fears That Its Policies Will Lead to Currency Wars” explains things regarding the deflation of the Japanese Yen over time and what Japan is trying to do to fix it. The average citizen of Earth does not know how their nation’s currency is monitored and regulated. I’m going to school to study these types of things and I still don’t know how the currency of my country is regulated. While reading the aforementioned article I had trouble understanding it. While I don’t understand it, I have faith that the Japanese government is doing whatever they need to do to fix their problems.
I can’t see what is happening nor do I fully understand it, yet I have faith in it. I’m sure the majority of people can relate to that statement when it comes to how our currency is managed, as well as many other things. I’m not entirely sure how the computer I am currently using works, but it functions how I expect it to when I press the power button, so I have faith in it. The Yap are all okay with accepting ownership of their fei with one another, so why should I not think it is right if it seems to be working? The United States economy has failed in the past, yet I still have faith. Human faith in currency seems counterintuitive when there is proof of failure and constant discussion of the highs and lows of an economy.
The Yap’s currency consists of agreements as well as working like normal money. A merchant could deny the worth of one’s fei if they do not feel it is fit for their good. It has no value outside having the ability to purchase goods, yet there is no documented value. Is this not similar to the predicament between the cow farmer and the carrot farmer? The only difference is the value and possibilities of the things being traded. Giving away a stone disc gives away purchasing power, but giving away carrots is giving away food, coloring, the ability to farm more carrots, and more. The Yap have a physical currency that is dependent on nonphysical principles. It works and there is faith. While I still prefer the clarification that my account is overdrawn, I would not mind the Yap’s currency culture.
Friedman, Milton. “The Island of Stone Money.” The Island of Stone Money(1991): 3-7. Web. 10 Sept. 2016
Goldstein, J., & Kestenbaum, D. (2010, December 10). The Island Of Stone Money. Retrieved from https://www.npr.org/sections/money/2011/02/15/131934618/the-island-of-stone-money
Renaut, A. (2013, April 13). The bubble bursts on e-currency Bitcoin. Retrieved from https://sg.news.yahoo.com/bubble-bursts-e-currency-bitcoin-064913387–finance.html
Reuters. (2013, January 25). Japan Tries to Ease Fears That Its Policies Will Lead to Currency Wars. Retrieved from https://www.nytimes.com/2013/01/26/business/global/japan-tries-to-ease-fears-that-its-policies-will-lead-to-currency-wars.html