The Micronesian island of Yap has stone money too heavy to move
bbc.com
bbc.com
“The value of stone money has always been fluid, challenging the Western concept that currency value is pre-determined and fixed”
The value of commodities and real estate continually change in relation to currencies and each other.
“The coins are valued by their size – they range from 7cm to 3.6m in diameter – as well as their ornateness and even for the sheer difficulty in obtaining the rock. How much a coin is worth also depends on who you give it to, and what for.”
Sounds similar to gemstones or jewelry. What if these stones were faceted and fit on a ring? It doesn’t sound to me like this is a currency system. It’s simply assets that they use for trade.
But if, say, a foreigner use a machine tool to carve one such stone in 3 days and transport it into the island to sell it to the residents, it's not going to be worth much, compared to the stone that's been in one of their families for decades, and where a few years ago they did a ritual with their son with it.
Going further, if said foreigner marries into a local family, and then performs a ritual with his first born son, in front of the newly crafted stone, the ritual involving the whole village, suddenly the stone that didn't have value, would now be valuable and accepted in trade. And later on, if now grown-up son's child commits a mistake and harms another family, that stone can then be offered as an apology.
It has a corollary to our own currency, but the values they represent are different - in our society, currency represents the values of "productivity", "offering what people want" and "cleverness".
Anyway, that's my speculation.
The concepts fade into each other pretty easily. Stones => gems => gold => gold-backed paper => payer
See the Coinage Act of 1792, which set a "dollar" as 371 4/16 grains of silver or 24 3/4 grains of gold.
I particularly love the story (which doesn’t seem to be mentioned here) of the stone that sank on the voyage back from the quarry. The islanders discussed it afterwards and decided that it still counted. Someone owns a giant stone on the ocean floor that they can use to pay others, and as long as everyone else agrees, it works.
You could sum up the history of money with this line.
I don't agree. I see it as an example of a clear misuse of the word money. Just because they have value that doesn't mean they are money. Those stones aren't used as a payment method for goods and services any more than a sack of grain or bestowing an honorary title. Heck, they fail even the most basic characteristics of money: serving as a unit of account (each stone disk is valued differently and arbitrarily) and a store of value (their value varies with how it's used).
the Triganic Pu has its own very special problems. It exchange rate of eight Ningis
to one Pu is simple enough, but since Ningi is a triangular rubber coin six thousand
eight hundred miles along each side, no one has ever collected enough to own one Pu.
Nigis are not negotiable currency, because Galactibanks refuse to deal in fiddling
small change.That is in no way how modern banking works.
Only about 1/7th of the money in peoples bank accounts in the US has a physical counterpart in any bank vault, almost all of the "money" in bank accounts is purely virtual. Most money today is not printed by the mint but instead wizarded into existence in a fashion pretty much the same as how world of warcraft gold is created, but with regulatory restrictions in place around the wizardry to create desired economic outcomes.
When a crisis prompts the population to collectively attempt to withdraw more than this reserve 1/7th, it's called a "run on the bank". The bank is unable to fulfill it's obligations[1], and economies break down as faith in the currency collapses. This is exactly what happened to Cypris in 2012. The whole system basically hinges on a significant majority of the population not scrutinizing the banking sector too closely.
If you'd like to know more, there are quite a few great youtube videos on fractional reserve banking, and it's absolutely worth investing an hour to watch one of the longer ones. This one is pretty good and approachable, although it's certainly biased: https://www.youtube.com/watch?v=4AC6RSau7r8
[1] It's actually more complex than this. Central banks can help prop up other banks in this case, but central banks also have their limits in the case of a nation-wide run on multiple banks.
With fractional reserve banking the bank isn’t lending out your money... they’re lending out their own money, and you also have a contract with the bank for a similar amount of money. When a crisis like Cypress happens, it isn’t a failure of the bank to return its customers money, it’s a failure of the bank to honor their contracts.
In principle, if everyone who the bank had loaned money to was able to immediately repay it, then you could unwind everything and make everybody whole again. The bank run occurs because this can't happen - the people the bank has loaned the money to simply cannot repay immediately, because they've spent the loan on non-liquid assets.
The fundamental purpose of the bank in such a system is to fund long-term, risky and therefore expensive debt (such as to someone who wants to start a business) with short-term, secure and therefore cheap debt (eg a savings account).
He told me all about the stone money. When he told me how they would carry these things on their boats, I asked what happens when the boat sinks.
He said that the stone was still considered the owner's money, and was thus understood to be valid payment.
All money systems have had inflation and deflation. I doubt it's even possible to design a currency that stays fixed in value.
Actually, these stones are more likely to remain noninflationary/nondeflationary than either old (gold-based) or modern (fiat) currencies: because while gold mines don't scale perfectly with the size of the economy and fiat isn't guaranteed to scale with anything, the ability of people to carve giant stone disks sounds like it would advance quite closely in lockstep with general industrial capacity. So in a funny way they're actually closer to be fixed! In history, problems have been caused both by gold's inability to easily expand when new resources other than mineable land were introduced, and fiat currency's ability to expand way too easily in the event of a political failure. Maybe we should switch ;)
The actual transferrence process could be modernized with a traditional database, or a decentralized blockchain. The claims to the stones could even be turned into ERC721 non-fungible tokens, or for even greater liquidity, each one could represent some large quantity of fungible ERC20 tokens, so that people could own a small percentage of a stone instead of an all-or-nothing proposition.