The Invention of Money
The entire banking system is one big agreement. Society determines what has value and how much things are worth. The American government decided that the dollar was to be used for the purpose of exchange and that it was worth a certain amount of gold. If the people did not agree to this conclusion, the dollar would be worthless. Then again, the only reason that gold is valuable is because society determined that it is. Thus, anything can become valuable as long the majority agree to it.
I initially laughed at the naiveté and silliness of the people of Yap and their stone money system. The Yap were taking a random material, shaping it, determining that it had value, and then using it as a form of currency. The fei, large pieces of stone that the Yap used for money, did not even have to physically change hands for one man to become richer. The fei could sit on the previous owner’s property, but as long as they acknowledged that the stone had a new owner, everyone was content.
However, after reading Milton Friedman’s essay and thinking about our own banking system, I came to realize that our banking system is not that different from the Yap’s “silly” banking system. Like the Yap, we randomly determined that a substance, gold, has value and that it could be used as a form of currency. Using a stone that is sitting at the bottom of the sea as currency is the same as using gold that never leaves the vaults at the Federal Reserve Banks as currency. Both systems also rely on trust. If the people do not adhere to rules of how the banking system work, than the system is useless.
Then again, perhaps the American banking system is even more silly than the Yap’s. The fei itself were what was valuable. They could usually be seen and could physically change hands from one owner to another, depending on the size. The American dollar on the other hand has indirect value. The dollar is valuable because it is backed by gold. However, very few people have actually seen the gold and it never physically moves from one owner’s hands to another’s. It just sits in vaults. If it was not for the fact that the people trust the government not to lie to them about the country having the gold, Americans would not be sure that the country had as much gold as it claimed or that it even existed.
The story of how the German’s took the fei away from the Yap by not physically taking them but by putting large X’s on them shows how silly all banking systems really are. It can be compared to the Americans marking the gold in the American vaults as French without removing the gold from American soil and the subsequent chaos that occurred when the American people believed that there was less gold in the American vaults. It can also be compared to the inflation problem in Japan when Mr. Abe decided to flood the country with more Yen and the panic over the value of the Bitcoin. In the case of the Bitcoin, the Bitcoin never really had any physical value. It was just an agreement that online users agreed to. However, inflation in Japan was really Mr. Abe’s fault. He tried to improve the economy by producing more Yen without the gold to back it up. Although there were more Yen in circulation, the amount of Gold in Japan remained the same. It is strange how important money is, yet how valueless it is at the same time.
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Counterintuitive Fall 2022 
Can I have feedback please?
Feedback provided, —DSH
OK, Simone. Let’s rumble!
Title. First of all, thank you for providing a title. It should be your own though, not the name of the assignment. In this case, the title may be perfectly appropriate, but I won’t know that until I read your essay. As you may know (or not), I write my feedback while I read your essay instead of after so you’ll hear my reactions to your argument as it unfolds.
P1. “One big agreement” is a good start, Simone. I want it to be “conspiracy,” or “negotiation,” or “accord,” because they all sound to me like more people had to collude in agreeing; or I want it to be “delusion” or “mirage,” because it supports values that are not based in reality; but I’m delighted that you’re starting with the understanding that Money is a collaborative program.
“This conclusion” is the first place I have even a small objection, Simone. That might be a record. “This conclusion” can’t mean the decision to peg the dollar at a certain value. It’s a fiat, a decision, not a conclusion. Your conclusion, that the dollar would be worthless, is hard to understand. You must mean it in a very general way, that if people resisted currency of any type it wouldn’t have any value. But here, it sounds like a very specific case about America, dollars, and gold.
Your point about gold is partly true but overstated. Gold does have useful metal properties, intrinsic value, like wood and oxygen. But I agree that lust for gold is mostly status-seeking, not joy at its electrical conductivity.
And yes, I heartily endorse your conclusion, that we might have chosen anything: jade, moon rocks, anything difficult to counterfeit.
P2. Wow, you’re good, Simone. This is really strong, sensible, and clear. You might also marvel that the stones were so big they were ridiculously cumbersome, or wonder at the logic of sending expeditions of private citizens to “make more money,” but what you’ve said is sufficient. You will want to suppress the personal reflections for your Rewrite; the new assignment is an analytical essay, not a personal impression piece.
P3. Well, one thing. “Gold that never leaves the vaults” isn’t currency at all. Currency circulates. But yes, both systems rely on trust. “Adhere to the rules of banking” isn’t what I thought you meant by “trust” though. I thought you meant, and you probably should, that we all have to trust in the continuing value of the currency. We’re willing to sell our cows for dollars only because we trust Wawa to take those dollars for potato chips.
We do trust banks not to steal our deposits, but we don’t necessarily have to. They’ll be prosecuted and we’ll be made whole if they take our savings.
P4. “sillier,” not “more silly.”
Your logic fails here, Simone. There’s no appreciable difference in silliness between these systems. You can’t actually call the fei “valuable” because they’re not useful except as symbols. Dollars have the same symbolic value as fei (and they’re easier to trade). You’re also historically inaccurate. The dollar hasn’t been backed by gold for several generations. The only “backing” for the dollar now is the “full faith and credit of the American government.” You’ll need to change all that.
P5. Again, very impressed with your overall facility with language here, Simone. Your second sentence reads like a downhill slalom, but you don’t lose control. I can’t say the “this is like that and also like that and also like that” argument is truly satisfying, but it makes a very nice first draft.
You are, however, desperately in need of a strong conclusion.
Overall very fine work, Simone. What woke you up? I remember being unimpressed by your Morph post. This is a wonderful surprise.
While I like the phrase ‘Let’s Rumble,’ I would prefer to say that we are sparring as neither side means any harm and this back and forth is used as training to make me a better writer.
In regards to the morph, I really did not have a strong reaction to the image. My initial thought was “what the heck am I supposed to do with this.” However, I do plan on re-writing the morph assignment when I get the chance.
After looking at your feedback again, I do not think it’s as harsh as I expected it would be. I will keep referring to this feedback when I write my re-write. I will also keep in mind that the re-write is supposed to be analytical and not reflective. I felt like I was going on too long in the Invention of Money post but I still had to fit in a conclusion and use the sources that I read, so it all got kind of jumbled up at the end.