The Value of Money:
Applicable in Purpose or Unequivocally Meaningless?
When I think of money, many things come to mind. Money is life sustaining. Money also provides a fortress for the inner workings of economies and is often, if not always the cause of economic growth and collapse. But how strong is the fortress that is money? How real is the money that goes in and out of our bank accounts today? From Yap using coins as large as cars called stone money, to the Brazilian Real that sought to stabilize Brazil’s economy, to the use, abuse, and conspiracies that spiral around the ever changing United States economy, I will be delving into the concept that is the legitimacy of money and the subjectiveness around what allows money to possess any type of intrinsic value.
Beginning by discussing Yap and their stone money, I had many questions at first, such as, what is it that made these limestone carved discs so valuable? According to The Island of Stone Money podcast, Yap did not have any gold or silver so in a way there was nothing “backing” these stone discs giving them any type of “real” value. However, what gives something value is typically always subjective. If the whole island of Yap believed that these stone discs possessed the utmost value, what is there to argue that they do not? Now, given the fact that these discs didn’t move around much because of their massive size and their ownership was just transferred using an oral ledger, many people brought up in modern day America or any other modern Capitalistic country may argue the legitimacy of this system. Why? Because an oral ledger is not trustworthy. Maybe for a small island where everyone knows everyone, but for densely populated places, orally transferred fiscal systems can lead to many problems very fast. According to The Tale of Stone Money (And How It Resembles Bitcoin) article, “Assets with a higher stock-to-flow ratio are gold and Bitcoin because you can’t just produce more gold or Bitcoin (or Rai stones). They are limited, difficult to produce, or mine, and as a result, they retain value in the long-term.” Because in Yapese society, the Rai stones were not easy to come by; this is what gave them intrinsic value. Like I said previously, there may not have been any type of valuable organic materials/resources such as gold, silver, or precious stones to give these stones any “backup” but the rarity of the material itself set them apart from any other tangible asset of the land to be considered money. The same principle can be applied to bitcoin as well.
Another interesting factor of the Rai stones is how when the German government painted black crosses on them, the island of Yap went into an almost crisis-like state and the Rai lost almost all of its value. If I were to draw a black “X” on a one hundred dollar bill, the chances are I can still take that bill to the store and use it. So why is it that the Rai lost so much value when the Germans defaced them with paint? I personally believe that this is because the Rai itself was the raw material that held value. American currency today is made out of paper, a natural resource that we have ample supply of. As we know, the United States no longer backs its currency with gold so does our dollar mean anything at all? From what I’ve gathered through my research, the answer is a mix of yes and no. Since 1971, the United States currency has been backed by the faith and credit of the American government. Not any type of tangible material whatsoever. When looking at the issue through this lens, of course logistically speaking the United States dollar means nothing. However, for the sake of upholding the economy and not plummeting the country into absolute chaos, Americans have come to adapt to the ideology of their money being only a number on a screen, or a piece of paper with no valuable tangible assets backing it up.
Another form of currency that is similar to this is the Brazilian Real. The podcast How Fake Money Saved Brazil by Planet Money states that “You have to slow down the creation of money, they explained. But, just as important, you have to stabilize people’s faith in money itself. People have to be tricked into thinking money will hold its value.” I believe that this is the case for many governments, to trick their people into believing that their whole entire financial system is “real” when in reality, it has always been a ruse. The Real specifically was a virtual currency, in a way that is worse than just paper bills or coins made from worthless metals. A thought I had was, say there was no electricity or data or anything that makes the Real appear to be legit. Would everyone lose their money and plummet the economy into a financial disaster? That speculation in itself would be enough for me to say that the Real genuinely means nothing.
The Friedman essay spoke of how when the United States “gave” France gold, it was a threat to the financial stability of the United States economy, and essentially this was a catalyst that launched the United States into the Great Depression. I had many thoughts about this and how it doesn’t seem logical at all. Technically, the gold was in the possession of the United States, so how can it be that just because it is now deemed France’s gold (even though it resides in the United States), it catapulted the United States into one of the most catastrophic financial lows in history. Upon having some reflective thoughts about this topic, I extrapolated that the act of “giving” France gold was all in the name of diplomacy between the French and American governments. Much like the oral transferal of Rai stones, this so-called “transferal” of gold from the United States to France, is the same.
Overall I would say that the value of money is lost in today’s economies around the world. As we as a society delve deeper into a more digital world every single day, we lose touch of what it means to have tangible assets and of things that will always hold value. Logistically, digital currency is, like I said previously, numbers on a screen. Sure it holds the power to make you one of the richest people in the world but I genuinely don’t think there is enough stability in any type of currency not backed by valuable assets like gold or silver. Therefore, the money we possess today, as oxymoronic as it may sound, can be looked at as unequivocally meaningless.
References
Joffe-Walt, Chana. “How Fake Money Saved Brazil.” NPR, NPR, 4 Oct. 2010, www.npr.org/sections/money/2010/10/04/130329523/how-fake-money-saved-brazil
Valentin Komarovskiy, MBA. “Could the Dollar Be Backed by Gold Today?” LinkedIn.
Media, Adam. “The Tale of Stone Money (and How It Resembles Bitcoin).” Medium, The Capital Platform, 30 Apr. 2021, https://medium.com/the-capital/the-tale-of-stone-money-and-how-it-resembles-bitcoin-66526f37e97
Goldstein, Jacob, and David Kestenbaum. “The Island of Stone Money.” NPR, NPR, 10 Dec. 2010, www.npr.org/sections/money/2011/02/15/131934618/the-island-of-stone-money
Friedman, Milton. (1991). “The Island of Stone Money” (WordPress.com)
A better citation to Friedman’s dissertation material would include a practical link:
https://archive.org/details/IslandOfStoneMoney
Also, I hid the exceedingly long url for Komarovskiy’s article by linking it to the site. Want to learn how to do that?
Counterintuitive Fall 2024 
Hello, HDT. I’m looking forward to reading what, at first glance, appears to be a highly personalized essay about your changing attitude toward the nature of money. I’m guessing it will track your attitudes toward the various source materials in a before-during-and-after style. That can be quite effective.
My practice is to react with feedback to the essay AS I’M READING IT, so you’ll get a sense of how a devoted reader will respond to your argument a paragraph at a time. Let’s start reading.
—It’s OK but not very compelling.
—The “fortress” metaphor is not apt. A “fortress for the inner workings of economies” does not help me at all to imagine what goes on “inside money,” inside of which there’s another inside that contains the “inner workings” of our economy.
—Banks used to be the fortress for money. They “contained” money. Nowadays, you won’t find bank vaults full of cash or much of anything that the bank owns or controls. Their “holdings” are mostly digital.
—See how easy it is to get distracted by a metaphor?
P2.
—I’m going to break your second paragraph wherever you start to develop a new idea. The rule of thumb for paragraphs is that they develop ONE.
—Now, paragraph by paragraph:
—Your first section is an argument about VALUE.
—It’s fine to name your questions to introduce your ideas, HDT, but only if you answer them promptly before moving on to the next question.
—Readers will wonder what “backs” gold if they don’t first understand that massive limestone discs are different. What you mean is that “gold” isn’t universally considered valuable, was perhaps unknown to the Yap, and is no more inherently “valuable” than limestone. But limestone was unavailable on Yap and had to be imported with great effort, so it was “rare and tangible.”
—That’s subjective, sure, but not arbitrary. Who’s to argue? YOU are to argue. Your reader will certainly argue with you. That’s the job.
—Your second section is an argument about ACCOUNTING.
—This idea of an oral ledger to record transactions is so completely counterintuitive to modern Americans that you shouldn’t dismiss its oddness in your first sentence by locating it in your dependent clause. See: Magical Dependency. https://rowancomp2.com/non-portfolio/magical-dependency/
—What you mean is “an oral ledger in a country of 400 million people WOULD NOT BE trustworthy.”
—You’re dropping questions without answers, HDT. In a society where the entire population keep ledgers and can gather to vote on the ownership of a rai stone to resolve disputes the oral ledger can work. That’s the awesome fact of this section.
—Your third section is an argument about RARITY.
—Here, without making clear that you’re doing so, you answer the question raised at the top of your original paragraph. Rai stones are valuable for the same reasons Bitcoin and gold are valuable. It’s WE who were confused about what gives the stones their value.
—You don’t have to invoke backup at all.
—Eventually, the parts of your argument coalesce in the mind of someone already very familiar with the story of the Yap and their rai, like you and me, but for your reader, the connections are hard to make.
—Your job is hard. To provide the needed context to readers unfamiliar with the subject matter, IN THE RIGHT ORDER so they can follow the argument.
Would you want to try to revise just this one paragraph for clarity and flow before we proceed with further feedback?
This is a process and there’s no strict time limit (except your own interest and availability).
Provisionally Graded.
Revisions and regrades always available and encouraged.
RESPONSES to your feedback are STRENUOUSLY encouraged.
Hello Professor Hodges! Thank you for the feedback it is greatly appreciated. Sorry I did not reply sooner, I haven’t been feeling well since Wednesday (better now), and I also had work very late this week as well. I am going to try and edit my stone money assignment to fit and better adapt to your feedback. Thank you again!
Provisionally graded. Grade may not appear immediately.
Revisions, further feedback, additional revisions, and regrading are all possible. Always put your work back into Feedback Please and leave a Reply if you want any of the above.