Value of Currency
Currency in any form mainly relies on trust, faith and is a measurement of exchange and value. The nature of money is created out of nothing, however, still plays a fundamental role in different civilizations and societies. “Money is not solid. Its value could disappear” (423, 2017). When trust is broken or dismissed, the value of the currency dissipates as well. Having a national debt of over 14 trillion dollars, money is imaginary, and the dollar has lost its true value, since gold and silver coins. Supporting this claim by author Linton Weeks states, “A million has lost its mystique. A billion isn’t what it used to be, either. Forbes reported earlier this year that there are more than 1,000 billionaires in the world now” (Weeks, 2011). Reporting’s of new billionaires, and multibillionaires every day, currency seems to be very attainable, and has no true meaning. Another example that demonstrates how money is created out of nothing includes “Just last year the U.S. tweaked the way it calculates GDP. And in an instant, the economy was $500 billion bigger”(Goldstein, 2014). Economies run on the idea money is value, but currency is essentially a unit of account that gives value. “The fictional quality of money is inherent in the very idea of money” (423, 2017). This quote demonstrates money is based on faith, which gives it essential value.
A world where currency does have true meaning is the Island of Stone Money, or Yap. “As their island yields no metal, they had to recourse to stone…, is truly a representation of labor as the mined and minted coins of civilization” (Stonemoneyessay.Pdf, n.d.). The island of Yap has a currency based on large stones that pertain a certain amount of labor, hence why it is so valuable. These large stones are made of limestone discs that can weigh up to a car. Stated by author Friedman “…Fei too large to be conveniently moved, its new owner is quite content to accept the bare acknowledgment of ownership and without so much as a mark to indicate the exchange…” (Stonemoneyessay.Pdf, n.d.). This island in the pacific highlights that money is valued through perception and shared through trust of the individuals within that community. Friedman states “money of other countries often seems to us like paper or worthless metal, even when the purchasing power of individual units is high” (Stonemoneyessay.Pdf, n.d.). The people of Yap created a successful currency based on faith and non-physical transactions that demonstrate this non-traditional way of life to outsiders. Seeing a different civilization create currency, it is no different than what America does. Authors Goldstein and Kestenbaum state, “This system, in the end, feels really familiar. If you go online to pay your electric bill, what’s really changing in the world?” (Goldstein & Kestenbaum, 2010). The island of Stone Money supports that currency is an idea that can be created out of nothing, but with faith and trust within, money will keep its true value.
Not believing in currency, Brazil faced disastrous results, but with the aid of the government, there was a creation of exchange. In the Invention of Money, authors state “The government tricked a hundred fifty million people into believing again, that their money was worth something when there was absolutely no evidence to support that claim. And it worked” (423, 2017). Brazil having incredibly high inflation made it impossible to afford basic accessories. “…with 80% inflation, the price is $18. Six months later the sunglasses are $340. And by the end of the year, that price tag reads more than $10,000. Brazilians lived with high inflation like this for decades”(423, 2017). Wanting to expand and create infrastructure with no funds, Brazil created and printed new money out of nothing, leading to incredibly high inflation. “If there’s say, a hundred dollars in the economy, you create a hundred more, now every dollar is worth half as much. That’s inflation. And in Brazil, inflation continued for the next five decades. Year after year, Brazilian money was worth less and less” (423, 2017). Once the value of money decreases, prices result from the economy and what people will pay, rather than the governments idea of what the items are worth. To stabilize high inflation and resolve this issue, the government needed to stop creating money so quickly, and reinforce people’s faith within currency. “They didn’t want to just change the underlying causes of inflation. They wanted to change people themselves. People were the problem. People had to be tricked into thinking money had value, when all signs told them that was absolutely not true” (423, 2017). Real financial problems were fixed with fake currency. The people’s faith in the money, was what made fixed the incredibly high inflation rates. People believed that the economy was fixed since they could no longer see inflation, which resulted in inflation dissipating.
In conclusion, money has no intrinsic value, is created from nothing, and is only valuable when an economy believes in the currency. The idea of money and the power of faith provides a world of exchange universally. Friedman’s work into the Island of Stone Money has illuminated the complex ways that trust, and belief affect financial systems. While Brazil demonstrated individuals can create currency out of nothing. Brazil and the Island of Stone Money are two examples that highlight the important complex structure of human perception when it comes to the value of currency. Whether it comes in the form of stone disks or online banks, money is a widespread product of belief and trust that can be created from nothing.
References
423: The Invention of Money. (2017, December 14). This American Life. https://www.thisamericanlife.org/423/transcript
Goldstein, J. (2014, February 28). The Invention Of “The Economy.” NPR. https://www.npr.org/sections/money/2014/02/28/283477546/the-invention-of-the-economy
Goldstein, J., & Kestenbaum, D. (2010, December 10). The Island Of Stone Money. NPR. https://www.npr.org/sections/money/2011/02/15/131934618/the-island-of-stone-money
Stonemoneyessay.pdf. (n.d.). Retrieved September 18, 2023, from https://counterintuitive2015.files.wordpress.com/2015/01/stonemoneyessay.pdf
Weeks, L. (2011, August 22). The Trouble With Trillions. NPR. https://www.npr.org/2011/08/22/139846133/the-trouble-with-trillions
Counterintuitive Fall 2024 
Thank you for posting ahead of the publication deadline, BabyYoda. I hope you and your classmates who may be reading your feedback will benefit from it while working on your drafts.
Let’s talk primarily about Argument on this first pass:
P1. Currency in any form mainly relies on trust, faith and is a measurement of exchange and value. The nature of money is created out of nothing, however, still plays a fundamental role in different civilizations and societies. “Money is not solid. Its value could disappear” (423, 2017). When trust is broken or dismissed, the value of the currency dissipates as well. Having a national debt of over 14 trillion dollars, money is imaginary, and the dollar has lost its true value, since gold and silver coins.
Supporting this claim by author Linton Weeks states, “A million has lost its mystique. A billion isn’t what it used to be, either. Forbes reported earlier this year that there are more than 1,000 billionaires in the world now” (Weeks, 2011). Reporting’s of new billionaires, and multibillionaires every day, currency seems to be very attainable, and has no true meaning.
Another example that demonstrates how money is created out of nothing includes “Just last year the U.S. tweaked the way it calculates GDP. And in an instant, the economy was $500 billion bigger”(Goldstein, 2014).
Economies run on the idea money is value, but currency is essentially a unit of account that gives value.
“The fictional quality of money is inherent in the very idea of money” (423, 2017). This quote demonstrates money is based on faith, which gives it essential value.
A world where currency does have true meaning is the Island of Stone Money, or Yap. “As their island yields no metal, they had to recourse to stone…, is truly a representation of labor as the mined and minted coins of civilization” (Stonemoneyessay.Pdf, n.d.). The island of Yap has a currency based on large stones that pertain a certain amount of labor, hence why it is so valuable. These large stones are made of limestone discs that can weigh up to a car. Stated by author Friedman “…Fei too large to be conveniently moved, its new owner is quite content to accept the bare acknowledgment of ownership and without so much as a mark to indicate the exchange…” (Stonemoneyessay.Pdf, n.d.).
This island in the pacific highlights that money is valued through perception and shared through trust of the individuals within that community. Friedman states “money of other countries often seems to us like paper or worthless metal, even when the purchasing power of individual units is high” (Stonemoneyessay.Pdf, n.d.). The people of Yap created a successful currency based on faith and non-physical transactions that demonstrate this non-traditional way of life to outsiders.
Seeing a different civilization create currency, it is no different than what America does.
Authors Goldstein and Kestenbaum state, “This system, in the end, feels really familiar. If you go online to pay your electric bill, what’s really changing in the world?” (Goldstein & Kestenbaum, 2010). The island of Stone Money supports that currency is an idea that can be created out of nothing, but with faith and trust within, money will keep its true value.
Is this helpful or merely annoying, BabyYoda? I’ll hesitate to post reactions to the remaining paragraphs until I hear from you that you would value it.
very helpful thank you!
Wonderful to hear. You’re brave, mature, and my kind of student. Let’s proceed with feedback on the rest of the argument.
Not believing in currency, Brazil faced disastrous results, but with the aid of the government, there was a creation of exchange. In the Invention of Money, authors state “The government tricked a hundred fifty million people into believing again, that their money was worth something when there was absolutely no evidence to support that claim. And it worked” (423, 2017). Brazil having incredibly high inflation made it impossible to afford basic accessories. “…with 80% inflation, the price is $18. Six months later the sunglasses are $340. And by the end of the year, that price tag reads more than $10,000. Brazilians lived with high inflation like this for decades”(423, 2017). Wanting to expand and create infrastructure with no funds, Brazil created and printed new money out of nothing, leading to incredibly high inflation. “If there’s say, a hundred dollars in the economy, you create a hundred more, now every dollar is worth half as much. That’s inflation. And in Brazil, inflation continued for the next five decades. Year after year, Brazilian money was worth less and less” (423, 2017).
Once the value of money decreases, prices result from the economy and what people will pay, rather than the government’s idea of what the items are worth.
To stabilize high inflation and resolve this issue, the government needed to stop creating money so quickly, and reinforce people’s faith within currency. “They didn’t want to just change the underlying causes of inflation. They wanted to change people themselves. People were the problem. People had to be tricked into thinking money had value, when all signs told them that was absolutely not true” (423, 2017).
Real financial problems were fixed with fake currency. The people’s faith in the money, was what made fixed the incredibly high inflation rates. People believed that the economy was fixed since they could no longer see inflation, which resulted in inflation dissipating.
In conclusion, money has no intrinsic value, is created from nothing, and is only valuable when an economy believes in the currency.
The idea of money and the power of faith provides a world of exchange universally. Friedman’s work into the Island of Stone Money has illuminated the complex ways that trust, and belief affect financial systems. While Brazil demonstrated individuals can create currency out of nothing. Brazil and the Island of Stone Money are two examples that highlight the important complex structure of human perception when it comes to the value of currency. Whether it comes in the form of stone disks or online banks, money is a widespread product of belief and trust that can be created from nothing.
Thank you for encouraging me to go forward with additional feedback, BabyYoda. I like the way this first session is progressing. You’re under no obligation to revise this first writing assignment, but you are welcome and encouraged to.
Your preliminary grade reflects how well you met the requirements for a first draft on this assignment. You may certainly improve it with revisions if you wish.
Graded. More feedback available following substantial revisions if requested.
PROVISIONALLY GRADED. Grade is on Canvas or will appear soon.
Revisions (and the regrading that follows) are encouraged but not required.
RESPONDING to feedback is STRENUOUSLY encouraged.