Gold Pieces for Credits

[Reynard]

Trillion Credit Squadron has rules for creating a world's money supply. Dynasty is a bit abstract in generating world wealth while Pocket Empires from Marc Miller's Traveller has detailed world wealth generation.

 

[simonh]

But printed in the wrong book.

NOPE. I started by considering the CT data and am still on that line and never shifted talking about gold from other systems. :wink:

Does MGT even break out price of individual items like that? I haven't looked.

Fair enough, so if different Traveller editions and sources are fair game then we have 3 competing sources for the price of gold.

Merchant Price implies about Cr 0.2625 per kg (assuming 14 cubic metre blocks of gold, which seems outrageously silly*, but whatever).

T20 says Cr 8,000,000 per dton, which works out at about Cr 25,000 per kg if we assume no container or packing space.

Hard Times says Cr 3,000 per kg in coin form.

So really it's a matter of take your pick as to which you think seems to most plausible and consistent with other aspects of the game.


Simon Hibbs

* For a start pure gold is highly ductile, so a big block like that is going to collapse under it's own weight in significant gravity. It's not a safe or stable form to transport gold in. Realistically, I think you can probably multiple the first two estimates above by at least 5 to get a value that takes into account realistic storage/packing.

 

[Tom Kalbfus]

The gold standard isn't workable, and even if we started issuing currency in actual gold coins, the chances are they'd be hoarded, and you have a money squeeze.

If you got paid in gold coins instead of fiat money, would you still buy groceries with it, or would you horde in in your safe and starve to death? Granted that is an extreme example, but still illustrative of the point.


I think hording would only occur if the value of the metal was greater than the currency made out of it, for example the value of copper is often greater than many pennies made out of it, but most people don't think to melt down the pennies and sell the copper, it is easier to spend pennies than sell copper ingots, because in the later case, you have to find a buyer, and it is a lot of trouble to melt the pennies and assure the copper buyer that the copper your selling is of the quality he desires etc. The amount of profit to be made by melting pennies and selling the copper is not usually worth the trouble.

 

[simonh]

... instead of learning that inflation was a terrible thing, they studied how they could repeat that in the United States, and in order to do that, they had to eliminate the gold standard, they they could print gazillions of dollars!

I think you're learning the wrong lesson from that. Note that being 'on the gold standard' didn't actualy stop them printing too many dollars, it just magnified the pain by enablign a carry trade between print dollars and actual gold - hence the controls on gold trading. The gold standard made the situation worse, not better. It also prevents you managing your money suply at all, because you can't actualy control the supply of gold, let alone manage it responsibly.

In practice though, the gold standard is an attempt to track gold supply and value with a paralell fiat money supply. Paper money itsn't gold, after all, and as gold supplies increase or gold is traded there are limited ways to manage the money supply in parallel. So you have two variables youre constantly trying to co-ordinate. The actual relationship between the paper/fiat money supply and gold price still varies considerably over time and as financial systems become more sophisticated, the ways the variances and inconsistencies in the system can be exploited or cause instability increase.

This is hugely compounded in a distributed economy with long transaction delays like the 3I. One system could be awash with gold due to a big asteroid find, while others could be gold poor. inflation, interest and money supply rates would be uncontrollable and because there's a long communications delay you would actualy never know how much gold was out there, or where it was. At least with fiat money you can establish standards and long term strategies for money supply management. With asset based money you have no controll and even less knowledge.

Simon Hibbs

 

[Condottiere]

I think it's illegal to melt down coins in most countries, besides usually being more expensive to manufacture than their actual face value, plus something about defacing currency.

I believe that if the copper price goes up, copper pennies would be endangered.

 

[Tom Kalbfus]

... instead of learning that inflation was a terrible thing, they studied how they could repeat that in the United States, and in order to do that, they had to eliminate the gold standard, they they could print gazillions of dollars!

I think you're learning the wrong lesson from that. Note that being 'on the gold standard' didn't actualy stop them printing too many dollars, it just magnified the pain by enablign a carry trade between print dollars and actual gold - hence the controls on gold trading. The gold standard made the situation worse, not better. It also prevents you managing your money suply at all, because you can't actualy control the supply of gold, let alone manage it responsibly.

In practice though, the gold standard is an attempt to track gold supply and value with a paralell fiat money supply. Paper money itsn't gold, after all, and as gold supplies increase or gold is traded there are limited ways to manage the money supply in parallel. So you have two variables youre constantly trying to co-ordinate. The actual relationship between the paper/fiat money supply and gold price still varies considerably over time and as financial systems become more sophisticated, the ways the variances and inconsistencies in the system can be exploited or cause instability increase.

This is hugely compounded in a distributed economy with long transaction delays like the 3I. One system could be awash with gold due to a big asteroid find, while others could be gold poor. inflation, interest and money supply rates would be uncontrollable and because there's a long communications delay you would actualy never know how much gold was out there, or where it was. At least with fiat money you can establish standards and long term strategies for money supply management. With asset based money you have no controll and even less knowledge.

Simon Hibbs

With fiat money, you can counterfeit. If all money is is a bunch of atoms, you can use nanotechnology to rearrange atoms and make more money. Fiat money is an arrangement of atoms, common atoms like carbon for example. Now gold atoms are rate, their inherent value is in their relative scarcity to other atoms, there is no easy way to make more gold. You can find more gold and in local areas where there is more gold, gold has less value than where there isn't. All this does is encourage locals to mine more gold until it runs out, then gold resumes its normal value once again. One thing I've seen with fiat money, is the value goes down over time, prices constantly go higher, sometimes swiftly and sometimes slowly. Governments have tried to stimulate the economy by printing more currency, mostly this doesn't work, only government policies that tax lightly allow for greater economic development, not printing lots of money. Money is just the measure of wealth, it isn't wealth itself! Governments have been slow in learning this lesson, but they often print money as a substitute for taxation, they basically make the dollars everyone holds worth less, buy printing more dollars and using those dollars to buy stuff thus transfering value away from the taxpayer and into the government's hands. A counterfeiter does pretty much the same thing, if he can get is fake currency accepted, then he robs a little value out of every legitimate currency note that is in circulation. A counterfeiter is stealing from you and everyone else, and all he has to do is print money to do it, he doesn't have to break into your house and steal your stuff, the government can do the same thing, only legally. I do think the government printing money is a dishonest way for them to acquire revenue, if they were on the gold standard, they couldn't do this, they'd have to tax to fund their projects or sell bonds and pay real interest rates in order to get those bonds sold. I think government stealing your gold is a cheat, or saying you can't own gold so they can get more of it or forcing you to sell gold to them at a fixed price are various ways for them to steal your wealth, because they didn't do their job in managing the currency to keep in in line with the supply of gold. So they do a poor job and then steal your gold to make up for the poor job they did, that is not acceptable to me. I'd rather pay taxes up front and know how much I am paying than have the currency I hold devalued!

 

[simonh]

Tom, so you're not actualy advocating a gold standard. After all the US, British Empire, etc all has paper money when they were on the gold standard and printed much more of it than they actualy had gold. A lot more, really because they had to in order for their economies not to collapse. What you're actualy advocating sounds like banning all currency exept actual physical gold. So people wopuld be given gold coins every month when they are paid, would physically put that gold in a bank, would have to take gold coins to a utility office to pay their bills, etc, etc.

You would also need to ban paper instruments such as cheques and promisory notes, because they're made out of non-gold atoms too and could be used in lieu of actual gold thus bypassing the issues you raised.

Basically you'd ban all modern finance and take us back to the middle ages, but In Space.

Or am I missing something?

Simon Hibbs

 

[F33D]

Fair enough, so if different Traveller editions and sources are fair game then we have 3 competing sources for the price of gold.

Simon, I'm only looking for what is the cannon price of that commodity in the 3I. As far as I know we have only one source that sets it. I'll take the latest canonical price.

 

[dragoner]

Money supply should be linked to population and GDP increase.

Currency is at best a convenience, at worst an agreed upon fiction, the fed/various central banks do fine managing the money supply, why fix what isn't broken?

 

[dragoner]

Or am I missing something?

There are goldbugs here, thus why I posted a pic of ron paul, their leader. A friend asked why Krannert school of business management, the business school of Purdue, a major STEM school, would ask goldbugs to speak. My reply is that they are brought in to laugh at, my question is why they come to the school at all.

And yes, they do want a medieval society, in more ways than one; like with religion.

 

[F33D]

Money supply should be linked to population and GDP increase.

Increasing/or decreasing by # of people makes absolutely no sense. Why should the buying power of the money in my savings account drop (I lose money) just because there are more people coming into the country? Can you answer that question?

 

[Tom Kalbfus]

Tom, so you're not actualy advocating a gold standard. After all the US, British Empire, etc all has paper money when they were on the gold standard and printed much more of it than they actualy had gold. A lot more, really because they had to in order for their economies not to collapse. What you're actualy advocating sounds like banning all currency exept actual physical gold. So people wopuld be given gold coins every month when they are paid, would physically put that gold in a bank, would have to take gold coins to a utility office to pay their bills, etc, etc.

You would also need to ban paper instruments such as cheques and promisory notes, because they're made out of non-gold atoms too and could be used in lieu of actual gold thus bypassing the issues you raised.

Basically you'd ban all modern finance and take us back to the middle ages, but In Space.

Or am I missing something?

Simon Hibbs

Currency amount must be kept proportional to the amount of gold owned, that is all. You can still have bank accounts, its just that the total volume of currency in must equal the amount of gold, in the 19th century gold reserve requirements were enforced, for every dollar in a bank account, the banks were required to keep a certain amount of gold in reserve so that each note can be redeemed in gold. That is how it used to work.

 

[F33D]

Currency amount must be kept proportional to the amount of gold owned, that is all.

And when the econ size FAR outstrips the amount of gold available (happed LONG ago), you get MASSIVE deflation. If the US had stayed on the same standard (xdollars = x ounces gold) we would now have paper currency where one dollar was worth an automobile, practically. :lol:

 

[Condottiere]

It's in your government's interest to ensure there's minor inflation incurring annually. It helps discount their debt. It also encourages the electorate to invest their savings.

As regards to money supply keeping pace with population and GDP, it tends to prevent financial bottlenecks that choke economic growth.

 

[Reynard]

Remember that the 21st century isn't even a paper currency anymore. We have digital currency and I don't just mean that 'bit coin'. You don't have money based on a physical resource, you create money by saying it exists in virtual reality. Value is no longer based on scarcity or a finite representation.

As to hoarding gold or any other currency value source, we have another 21st century invention -tax havens. The rich, because no poor or middle class can ever need or use one, hoard trillions in virtual black holes. The 'money' exists but will never see the light of day as a means of power and control. Gold or digi-dollars, it's still very possible to hoard. Again, truth stranger than fiction or at least scarier.

Oh, and melting down pennies is a crime? Hmmm, so is stealing copper from homes and businesses to sell. I don't believe those people are too concerned when they get paid.

 

[simonh]

Currency amount must be kept proportional to the amount of gold owned, that is all. You can still have bank accounts, its just that the total volume of currency in must equal the amount of gold, in the 19th century gold reserve requirements were enforced, for every dollar in a bank account, the banks were required to keep a certain amount of gold in reserve so that each note can be redeemed in gold. That is how it used to work.

Ok, it's just that you were counting it as a way to avoid counterfeit currency, but if you have paper currency anyway I'm not sure what you meant by that. And if you can still have bank accounts, presumably you can still transfer money electronically with all the disadvantages that entails. So really, I don't see what having gold in a box somewhere adds to the situation. All you're doing is trading electronic numbers and paper representing gold in a vault instead of electronic numbers representing tokens issued by a central bank. I don't get it, how does the existence of the gold prevent electronic fraud or counterfeiting?

Simon Hibbs

 

[F33D]

It's in your government's interest to ensure there's minor inflation incurring annually. It helps discount their debt. It also encourages the electorate to invest their savings.

As regards to money supply keeping pace with population and GDP, it tends to prevent financial bottlenecks that choke economic growth.

It creates inflation, hurts those trying to save money for whatever, bounces people UP tax brackets (as the gov intentionally misstates inflation rate) and has NOTHING do do with "preventing financial bottlenecks). Total load of rubbish.

 

[Condottiere]

Governmental economic policy?

 

[Tom Kalbfus]

Currency amount must be kept proportional to the amount of gold owned, that is all. You can still have bank accounts, its just that the total volume of currency in must equal the amount of gold, in the 19th century gold reserve requirements were enforced, for every dollar in a bank account, the banks were required to keep a certain amount of gold in reserve so that each note can be redeemed in gold. That is how it used to work.

Ok, it's just that you were counting it as a way to avoid counterfeit currency, but if you have paper currency anyway I'm not sure what you meant by that. And if you can still have bank accounts, presumably you can still transfer money electronically with all the disadvantages that entails. So really, I don't see what having gold in a box somewhere adds to the situation. All you're doing is trading electronic numbers and paper representing gold in a vault instead of electronic numbers representing tokens issued by a central bank. I don't get it, how does the existence of the gold prevent electronic fraud or counterfeiting?

Simon Hibbs

Lets say their is a vault with a number of gold bars of different sizes representing various denominations.
Each denomination represents a certain amount of gold and each bill serial number matches the serial number on a particular gold bar in the vault.

Denominations are as follows in this example:
$0.01 or a penny is set at 0.1 mg of gold (and a milligram as you know is a very tiny amount.)
Each penny has its own serial number and is redeemable for a very tiny gold bar that contains 1 milligram of gold.

$0.05 or a nickle is set at 0.5 mg of gold, each nickle has a serial number that matches on on a slightly larger bar of gold with 5 mg of gold in it.

$0.10 or a dime is set at 1 mg of gold

$0.25 or a quarter is set at 2.5 mg of gold
$1.00 or a dollar is set at 10 mg of gold
$5.00 or a five dollar bill is set at 50 mg of gold'
$10.00 or a ten dollar bill is set at 100 mg of gold
$20.00 or a twenty dollar bill is set at 200 m g of gold
$50.00 or a fifty dollar bill is set at 500 mg of gold
$100.00 or a hundred dollar bill is set at 1 gram of gold

Each of these denominations is tied to a specific bar of gold. If there is a fake currency note then either the serial number doesn't match a specific bar of gold or it duplicates that of another currency note, and no two currency notes can be allowed to represent the same bar of gold.

So if the total money supply is $50 trillion, then somewhere in the vault there must be 500,000 metric tons of gold. Perhaps there are electronic tags on each bar of gold, so a currency note reader then queries the Federal Reserve to confirm and a bar of gold which the currency note represents in fact exists, that way we know the note is legitimate. Maybe we can rig it so the serial number is the actual dollar and not the piece of paper, that way you can send a dollar bill through a fax machine and spend the copy, once a transaction occurs the serial number changes, the electronic tag on a particular bar of gold is given the new serial number and so on. To make sure each currency note has a unique serial number, each serial number would consist of 15 alphanumeric digits ranging from 0-9 and A-Z making it a very small probability than a random set of numbers will indicate a specific bar of gold.

 

[simonh]

Lets say their is a vault with a number of gold bars of different sizes representing various denominations.
Each denomination represents a certain amount of gold and each bill serial number matches the serial number on a particular gold bar in the vault. ...

So there's no database to look this up, to verify each penny coin you literally have to have someone go and physically read an actual gold bar in a vault? That doesn't sound like a very scaleable solution. How often do you expect verification calls on coins and notes in circulation to happen? What of a coin or note is lost, which happens all the time, what happens to the piece of gold? If there's a timed recirculation system after a certain time, what happens if the coin is found again many years later? Managing, maintaining and updating a physical tracking system like that is going to be unbelievably unwieldy, time consuming and expensive.

According to the US treasury there are billions of dollar denominated bills in circulation, and the average lifespan of a bill is 18 months. So you're going to have perhaps a billion expiry events and physical tracking calls per year minimum just from that. Also you won't be able to use debit cards or electronic payment systems, as we do now, because that would be falsifiable and would bypass the protections physical gold-based currency is supposed to provide unless you do a physical gold bar tracking and verification call on each transaction. So everything would have to be paid for by physical money, so you can probably multiply the physical currency requirement in a system like that by several orders of magnitude. Make this a rold-wide system instead of US only and you can up that another order of magnitude at least. So your gold storage and tracking system would have to be able to cope with perhaps hundreds of billions, and more likely trillions of physcial tracking calls and recirculation/re-tagging events per year for a planet like ours.

Also, there actualy isn't enough gold. The total world gold supply is about $7 trillion worth, but the global economy is worth about $77 trillion. If the world's central banks had to buy up gold to form reserves, the gold price would be so completely distorted it's value would be completely unrelated to any other use for gold. In fact it would be unfeasible to use gold for any other purpose than gold reserves. You might need to have a gold rationing system for things like actual engineerign uses for gold. All this is why we had controls on gold trading back in the day, because the gold standard distorts the market for gold itself so badly that the whole system becomes a farcical circus show.

Then you've got the problem in the 3I that this gold is sitting in a vault that might be 100 parsecs away from the credit it is associated with.

Simon Hibbs