Guns of Infinity(Pt 2)

gender-locked-male
low-fantasy

#2745

@cataphak

Can you elaborate what you mean by if Tierra by Tierra would be in less perilous situation if it had a fiat currency? It would seem to me that a fixed currency standard to the Kian Doubloon would superior price stability than say an unmoored currency only backed by King Miguel promise to repay.


#2746

If Tierra had a fiat currency with a centralised economy, then it could simply pay off the debt by increasing the money supply gradually. While there would be some level of inflation, it’d also build confidence in the state (since its creditors know for a fact they’ll be paid off) and it’d quickly create surpluses again.


#2747

They’d just do quantitive easing which is a wonderful thing of financial magic.

Namely- just take the profit margins you make off of treasury bonds and notes and shove it back into the economy.


#2748

Well more problematic for commodity based currencies is that they are subject to commodity prices. One markets get more integrated (around this 19th century irl) then the economy is subject to forces they have little to do with what is going on locally. Gold or silver scarcity or oversupply globally that has nothing to do with the supply of “money” locally for example.


#2749

@Cataphrak
Why hadn’t that happened yet? A centralised economy sound nice or are the conditions not right for it

Words that Petyr were use… Cause you know he a wizard banker.


#2750

Not really he just borrowed money…


#2751

To most lords and Robert looks like he just rubs two coins together and more appear.

Oh how your wife? If i recall right you two were expecting


#2752

I saw this idea a while back, but perhaps Tiera could change to a flat currency at a certain time, and have people exchange their crowns for it before a certain deadline where crowns won’t be accepted as Tierras currency, and sell off those crowns, though I guess it depends how much money those metals can be sold for. Anyhow, a flat currency would be useful either way, though it wouldn’t be easy going against Takara and Kians interests, If it cannot be done then perhaps we can simply “threaten” to do it unless Takara and/or Kian throws us a bone or few, though it could bite us in the ass if they are not interested in having good relations with Tiera.


#2753

The thing is, how commodity backed currencies work is that you pick a good like gold, usually you decide the weight and all that for how much gold is in your currency.

So 1 Tierran crown is worth x ounces of gold. So if it’s like 85% gold and it weighs 8 ounces, the value of the currency is decided that way.

With Fiat currency $1 is $1 because the government says it is.

So in order to do a currency buy back- the government would need to give everyone the amount of money it would take for the value to offset which is a lot of money.


#2754

@Cascat007

Just curious… Outside of finding massive silver deposits in Mexico, how in the Infinite Sea world could a country get an over/under supply of gold or silver. There is probably a great deal of gold/silver currency in circulation and not in banks.


#2755

@Bryce_Kaldwin
Would there be any appreciable advantage/disadvantage (if switching to fiat money) to simply decreeing that a crown is worth 1c, without changing the coin?

I feel like I’m missing something obvious, but most of what I know of messing with the currency’s value is rather earlier than 1800.


#2756

That’s pretty much a given, it would be foolish to not pay back the citizens of a country on the brink of a depression, stealing all the money of the Tierran that exchanged owns would be a good way to start a rebellion, but anyhow I don’t see how that’s a problem if the government makes a massive purchase of some sort of metal thats worth like 10 cents, you could purchase a crapload of them for simply 1 crown alone.


#2757

Okay so Tierra has banknotes, which is what will make this process easier. Because of the banknotes the next thing to do would be to standardise the denominations of the bills.

For example 1, 5, 10, 20, 50, 100 and so on. The problem is that unless @Cataphrak can clarify is the composition of the Tierran currency namely is it 90% silver for a Tower and 75% for a Gryphon and the weight of the coin since they should have a standardised weight for each coun respectively. The way a gold backed banknote works is similiar to a modern fiat note except what they do is when someone turns in the note to a bank and ask for its value in gold or silver, they are issued gold and silver from the bank vault worth the amount of the bill.

To change it to a Fiat currency, you remove the whole getting the commodity in exchange for the bill while also ensuring that you maintain control over the silver and gold bulion that your nation holds and would use to back your currency.


#2758

That sounds spontaneously simple to do in terms of “The currency is now worth X. Any questions, talk to the Grenadiers.” and complex at getting the obvious responses to that calmed down.


#2759

Find more in Kian or Takara or under the ocean as their technology improves would be one way. Another possibility is increase scarcity because of technological or cultural changes. Gold or silver become in fashion for clothing or jewelry in a country that produces it like Takara for one. Some bane-oriented tech, gold as a conductor for example, is developed in a gold producing country for another. Inherently a commodity based currency are subject to commodity economic forces. That is generally speaking not good for something being used as a medium of exchange.


#2760

Honestly, the big evil Aetorian banker is smiling because they probably hold all the bullion and loan it out to smaller banks around Tierra. The problem is when these banks loan out the money and the farmers can’t pay them back because the price of wheat is too low and they can’t buy anything and the banks start to lose their money and collapse, the farmers lose their homes, and the bigger banks start to collapse and next thing you know we are sitting on top of a depression and crying.

Then the currency gets reduded to being nothing and we can’t pay our national creditors back and they repo the whole country as collateral.


#2761

Kian: “All according to plan.”


#2762

Someone help me my economy broke and I don’t know how to fix it.

Kian walks in

“Oh that’s tragic let me help you…”


#2763

Takara walks in

“Ahem…”

Antar walks in

“Bar the door before the M’hidiyossi show up.”


#2764

We owe the most money to Kian and you can bet that they will leverage every bit of that.

Namely the fact our banks are probably still functioning because of Kian bank loans.