The Meaning of Currency
With market prices rising all over the US, it’s hard to ignore our current inflation. People debate the increase in gas prices, minimum wage, and the housing market, all changing society’s perception of money. While gas prices used to be around $2 per gallon, they are now raised to around $4 or $5 per gallon. The value of gas itself has consequentially raised since it costs more to buy. Money is a fluid substance.
Moreover, currency can be seen changing form by the inherent value of the material itself, to the meaning people give modern materials. In the 2020 New York Times article, “The Fiction That Makes the World Go Round,” author Richard Davies explains how our currency used to hold value one its own, in the form of useful materials. Davies says, “The early chronicles of cash show how societies move from monies with intrinsic value (commodity currencies, like salt, or coins made from precious metal) to paper currencies that are valuable because they are tools — ways to exchange goods and services.” While they were used for the same purpose, to purchase wanted or necessary items, they have different meaning to the people of each time period. In early society, basic food products would be incredibly valuable to receive as a form of payment. In modern society, while it could be deemed valuable to some, most people would be very confused if they were given a barrel of wheat to pay for their electric bill.
In addition, different cultures hold completely different standards to their currency. “The Island of Stone Money,” by Milton Friedman in 1991, details the form of currency on the Island of Yap. Yap uses large, circular limestones with holes in the center to show wealth in their community, called fei. They come from an island hundreds of miles away where limestone is found. The size of the stone dictates the amount a person has- typically placed outside their home. Since the stones are so large, they can be wheeled from place to place using a log guided through the center, allowing them to roll it to a location. If the stones are too inconvenient to move, they can stay in place, but the title of ownership simply changes to whomever it was given to.
Anthropologist William Henry Furness III explains how the people of Yap establish wealth and ownership of fei. He reports the story of a family with wealth held at the bottom of the ocean after being left behind on a raft during a dangerous storm. Furness III describes that the people of Yap still agree that the stone is property of the original owners, saying “they all testified that the fei was of magnificent proportions and of extraordinary quality, and that it was lost through no fault of the owner.” This has continued for generations, allowing the wealth to belong to the family even though it’s not in sight.
Although this may all sound very strange to us, our currency is not much different from theirs. For instance, we have “money” in our bank account, not in our hand, while the Yap have “money” at the bottom of the ocean. In both instances, there is no physical transaction taking place. We determine wealth by the number in our bank account. The Yap determine wealth by the size of stone in ownership.
There was a time where the German government marked X’s on the stones of yap to essentially “freeze” their currency. The people lost hope in the fei and deemed it worthless; all until the German government erased the markings. Essentially, that is no different than bank accounts being frozen in the US.
The value of currency even changes throughout time. In the podcast, The American Life, they discuss the value of currency in an episode titled “The Invention of Money,” made on January 7th, 2011. In a discussion called, “The Lie that Saved Brazil,” Chana Joffe-Walt interviews residents of Brazil to detail the recession they experienced from the 1950’s to the late 90’s. Brazil was in such a high inflation that people lost trust in their currency, cruzeiros. They paid in installments, leaving with an item and paying it back over monthly segments. Joffe-Walt explains their interest in terms of sunglasses as, “Say they’re selling for $10. One month later, 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.”
The prices in Brazil became so high, it was almost impossible to afford anything. The prices of products would fluctuate day to day based on the economy. Many Presidents attempted different methods to fix this, but it only changed when economist Edmar Basha was called to impose his idea for the Brazilian economy. Joffe-Walt paraphrases his idea, “People would still have cruzeiros, the local currency in their pockets. But when they got paid, their wages would be listed in URVs. Taxes were in URVs and all prices were listed in URVs. And URVs were stable.” URVs were a “virtual currency,” the actual prices of the items were still varied, but they appeared stable by labelling a product as a consistent amount of URVs. How many cruzeiros were worth one URV changed daily.
URVs eventually became the main form of currency. Along with a balanced budget in the government, inflation receded. The people of Brazil started to believe in the new form of money and established a balanced economy.
As Ira Glass says in “The Invention of Money,” “Money is fiction.” Solving the inflation in Brazil was truly do to the trust of the people in their monetary system. Joffe-Walt explains, “People were the problem. People had to be tricked into thinking money had value, when all signs told them that was absolutely not true.” Compared to the Island of Yak and our own currency, it’s value is all held in the people. We have money because people believe it to be a worthy trade. It is a fabricated human invention. Without the trust in the system, our economy would fall apart, just like Brazil’s in the 1900s. The value of our currency is all held in the faith of society.
References
Davies, R. (2020, September 8). The fiction that makes the World Go Round. The New York Times. Retrieved September 25, 2022, from https://www.nytimes.com/2020/09/08/books/review/money-the-true-story-of-a-made-up-thing-jacob-goldstein.html
Friedman, M. (1991) The Island of Stone Money. Hoover Institution, Stanford University. Retrieved September 25, 2022, from https://miltonfriedman.hoover.org/internal/media/dispatcher/215061/full
(2011, January 7) “The Invention of Money.” This American Life. Retrieved September 25, 2022 from https://www.thisamericanlife.org/423/the-invention-of-money
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Counterintuitive Fall 2022 
You haven’t advised me what sort of feedback you want, BeforeVerge, so I’ll wing it for now.
P1. Your paragraph is looking for focus and missing what I think is the obvious first observation you could make about inflation. When something costs $3/gallon one year, $5/gallon the next year, and $4/gallon the following quarter, has the commodity become more or less valuable, or has money lost and gained value?
Would the same have been true for societies that bartered? Yes. Apples in apple season would have much less value than apples in times of apple scarcity.
That’s the lesson/question to be learned/asked about inflation: how it relates to supply and demand. But you move along to questions of money being physical or intangible, and then to barter as a quaint remnant, not as a reminder that we use money to represent things of value.
If that’s the sort of analysis you would find helpful, I’ll read the rest of your essay with that eye open. If you’re hoping for something else, please let me know.
Yes, this helps. I struggle to structure all of my many thoughts correctly. Advice on how to separate, categorize, and expand on my topics is very helpful. I also acknowledge that I have to loose the high school AP Exam style of writing. It is the most recent one I’m familiar with, but I no longer have only 40 minutes to write a cohesive essay. I will definitely work on improving my writing style. Thank you!
I revised and would like a new grade. I would also appreciate feedback on the structure and organization of my revisions. Do you think anything needs to be taken away or added to make it more fluid?
1. With market prices rising all over the US, it’s hard to ignore our current inflation. People debate the increase in gas prices, minimum wage, and the housing market, all changing society’s perception of money. While gas prices used to be around $2 per gallon, they are now raised to around $4 or $5 per gallon. The value of gas itself has consequentially raised since it costs more to buy. Money is a fluid substance.
—Don’t feel the need to frame this conversation in terms of today’s inflation unless it provides a very strong example. The point of gas prices today is that a change in the SUPPLY of gas has created a very high price even though DEMAND did not increase. We want the same amount of gas; there’s less of it available; so, the price goes up. That doesn’t mean gas is WORTH MORE. And the dollar isn’t WORTH LESS. We don’t learn about the fluid value of MONEY in this case. We learn about the fluid value of COMMODITIES.
2. Moreover, currency can be seen changing form by the inherent value of the material itself, to the meaning people give modern materials. In the 2020 New York Times article, “The Fiction That Makes the World Go Round,” author Richard Davies explains how our currency used to hold value one its own, in the form of useful materials. Davies says, “The early chronicles of cash show how societies move from monies with intrinsic value (commodity currencies, like salt, or coins made from precious metal) to paper currencies that are valuable because they are tools — ways to exchange goods and services.” While they were used for the same purpose, to purchase wanted or necessary items, they have different meaning to the people of each time period. In early society, basic food products would be incredibly valuable to receive as a form of payment. In modern society, while it could be deemed valuable to some, most people would be very confused if they were given a barrel of wheat to pay for their electric bill.
—Here, the point is pretty obvious, but your commentary is confusing, particularly the first sentence.
3. In addition, different cultures hold completely different standards to their currency. “The Island of Stone Money,” by Milton Friedman in 1991, details the form of currency on the Island of Yap. Yap uses large, circular limestones with holes in the center to show wealth in their community, called fei. They come from an island hundreds of miles away where limestone is found. The size of the stone dictates the amount a person has- typically placed outside their home. Since the stones are so large, they can be wheeled from place to place using a log guided through the center, allowing them to roll it to a location. If the stones are too inconvenient to move, they can stay in place, but the title of ownership simply changes to whomever it was given to.
—If the point of P2 was to show that the form and material of currency have evolved, what is the point of P3? It’s yet another form and material of currency, but you seem to WANT to make another point: that it doesn’t have to physically change hands. You don’t mention that until the last sentence. You should lead with that instead, since it’s the point.
4. Anthropologist William Henry Furness III explains how the people of Yap establish wealth and ownership of fei. He reports the story of a family with wealth held at the bottom of the ocean after being left behind on a raft during a dangerous storm. Furness III describes that the people of Yap still agree that the stone is property of the original owners, saying “they all testified that the fei was of magnificent proportions and of extraordinary quality, and that it was lost through no fault of the owner.” This has continued for generations, allowing the wealth to belong to the family even though it’s not in sight.
—And the point of this one is that money not only doesn’t have to MOVE, it can also be INVISIBLE or even LEGENDARY to confer wealth. Your introductory promise about “how Yap establish wealth and ownership” doesn’t make that clear at all. Are you trying to obscure the point of your claims? “Academic-sounding” observations are no substitute for clear, discernible, claims.
5. Although this may all sound very strange to us, our currency is not much different from theirs. For instance, we have “money” in our bank account, not in our hand, while the Yap have “money” at the bottom of the ocean. In both instances, there is no physical transaction taking place. We determine wealth by the number in our bank account. The Yap determine wealth by the size of stone in ownership.
—I think the point here could be better described as a continuing evolution away from currency, period. Our wealth is purely numerical now, almost never reduced to paper bills. The Yap beat us there 100 years ago.
6. There was a time where the German government marked X’s on the stones of yap to essentially “freeze” their currency. The people lost hope in the fei and deemed it worthless; all until the German government erased the markings. Essentially, that is no different than bank accounts being frozen in the US.
—This is impressive. You’ve managed to reduce the long narrative of the road-paving to its barest essentials. You could perhaps build that story back in about five words: “in return for road repairs.”
Are these helpful recommendations, BeforeVerge? I’ve regraded your work now, but more improvement is possible if you have the time and inclination.