The problem with any theory on the origins of money is the assumption that money has always served the purposes it serves today. Store of value, medium of exchange, unit of account. These are functions, not things. An “Origins of Money” from the vantage point of 1491 America might start with money as a display of status in the form of feathers and beads, and end as a history of wearable jewelry.
In 2019, credit has the greatest moneyness, thus any modern history of “money” involves the origins of debt and violence.
Let’s indulge the Fed and assume that the US dollar is the epitome of money. Well that’s not a store of value. In fact, it’s specifically designed to NOT be a store of value — ZIRP renders the dollar a depreciating asset to encourage investment and consumption. Medium of exchange? That’s mostly done with credit.
Today, the most important use case for USD is to advance foreign policy objectives by sanctioning those that have fallen out of political favor. Money, then, is an instrument of persuasion.
You know what else is an instrument of persuasion? A gun. If I point a barrel at your head, you might relinquish the contents of your wallet to persuade me to go away. Traditionally, the state is defined by whatever party has a monopoly on violence, be it the military or the mafia or the mob. But an entity with a monopoly on money can achieve the same persuasive capacity.
Yap stones are frequently used to fiatsplain how something with no intrinsic value can be used to tabulate debt. That the stones weigh four tons apiece and remain in circulation after sinking to the bottom of the ocean just goes to show how easily a population ascribes value to an arbitrary token.
@KoenSwinkels Those who yap about Yap stones as their main or only example of primitive money, demonstrate their lack of knowledge of same.
— Nick Szabo 🔑 (@NickSzabo4) December 19, 2014
A less often told story is that traditional Yap stones were actually small limestone discs. There are no limestone deposits in Yap, so stones had to be quarried 400 miles away by canoe. The larger the stone, the dicier the journey; a man-high stone was so rare it could buy a village or a plantation .
In the 19th century, Irish-American David O’Keefe showed up with a Chinese cargo ship and steel tools, fetched thousands of massive stones and turned the entire island into his debtors. Massive inflation ensued, which is why the Yapese ended up with ginormous boulders for money.
When you have the ability to loan out infinite amounts of money, you can enslave a population with no violence at all. See also: The entire banking industry.
1. A.H.Quiggin. A Survey of Primitive Money: The Beginnings of Currency.
Routledge Library Editions: History of Money, Banking and Finance, 2017.