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A few realisations I've had over the past few years concerning money:

- Prices are ratios.

- Money is, generally, the most universal exchange medium, within a given region.

- Most currencies take their names from either units of weight or of indicators of quality.

- Many regions and periods have seen what were effectively multi-currency systems.

- There are multiple drivers for currency value.

Economists & economics itself is muddled on much of this.

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@dredmorbius

"the English currency Adam Smith describes (at ... great ... length) in Wealth of Nations is actually one of three independent currencies largely used for different types of transactions: copper for retail, silver for wholesale, and gold for finance."

That's interesting! Especially for fantasy-RPG scenarios.

@natecull @dredmorbius RPGs really do make you think about money a lot. Are old coins "money"? Maybe, maybe you have to get them changed to modern coins, maybe they're just bullion. Adventurers often work in a platinum, gem, or magic item economy, "gold" and lower are for common NPCs.

@mdhughes Definitions get tricky. Examples of historical money, maybe, but usually not legal tender or currency, at least not today.

Though in post-Roman Europe, Roman coins, or credit systems based on Roman prices, were widely used across Europe for centuries. Meeting my "most universal exchange medium" description.

@natecull

@dredmorbius @natecull It's not common to have only modern-style minted coins/paper of the current kingdom be legal tender in fantasy RPGs, I've seen it maybe twice, in asian-inspired games.

But 20th C. fiat currency is the outlier, most before this time had some bullion value in their coins or were directly exchangeable, and people lost confidence in any gov't that debased the coins too much.

Even Imperial China, which used fiat currency and base metal cash strings, had silver backing it.

@dredmorbius @natecull Anyway, my point is: Money is only what you can get people to exchange things for. If there's laws that paper with markings is useful for something (Federal taxes, if nothing else), then people may treat that as money.

If the currency's inconvenient, like copper in fantasy RPGs or paper bills in any hyperinflation economy, it's no longer "money", nobody accepts it.

People are just spoiled by modern fiat currency being somewhat stable, inflation just outpacing GDP growth.

@mdhughes

I guess what I found fascinating is the observation that different types of metal were used for different industries... it wasn't just that 'gold coins mean a whole lot of silver coins' but that you just wouldn't be using gold at all if you were doing adventuring.. (Unless the adventure was breaking into a vault or robbing a large commercial trader). The type of metal would be a cue to *what the transaction was* and not just 'how many zeros on the end of the number'.

@mdhughes @dredmorbius
I wonder if this carried through to the early 1900s? eg was the 'free silver' movement in American populist politics driven largely by commercial traders because those were the ones who used silver (gold being for financiers, their natural predator and enemy)? Or was there something weirder going on with states containing silver mines being their own political bloc?

@natecull Yes, and specifically farmers, as opposed to East Coast banking interests, who promoted the gold standard.

@mdhughes

@natecull Yeah, my dark fantasy games set the economy to silver standard because I want tradesman-adventurers, not hob-nobbing with nobility; gutter copper standard games are much too difficult to climb out of socially.

D&D always defaulted to gold with aristocratic arms & armour available, but then you outpace it so fast, carrying around thousands of gold from a lowbie adventure, you have to move up to higher economies, which we didn't have any social model for until millionaires in the 1800s.

@mdhughes A view I've been drawn to (my own alone that I'm aware, though others likely reach similar ideas) is that seignorage is a measure of trust in the minting authority, and that fiat currency represents a very high level of trust -- effectively, against inflation risk.

Note that specie currencies are subject to devaluation. Adam Smith remarked on it as an inevitability.

Flipside: asset-backed currency is a measure of DIStrust in the financial system.

In fiat we trust...

@natecull

@dredmorbius @natecull That's my view, too. Fiat currency replaces the backing metals with the ability of armed forces and law enforcement to collect taxes in their fiat currency.

Which works just as well, and stops deflation, until your gov't collapses and if a new currency isn't immediately acceptable, people starve.

Hasn't happened too often: Cuba pre-Castro, Venezuela, Soviet Union pre-Gorbachev (arguably post-, too, but the Ruble is "money" now), Weimar Germany.

@mdhughes But it's not just armed forces and tax authorities.

There are countries around the world, wth no US jurisdiction or tax authority, in which the US dollar is widely accepted, either officially, or *unofficiall*, that is, voluntarily, as a or THE preferred currency.

Over domestic currency (w/ force of law & taxes), or alternatives -- other countries' currency, commodity money, gift economy, barter.

Why?

"Armed forces and law enforcement" doesn't pass the sniff test.

@natecull

@dredmorbius @natecull But they do trust the US armed forces to protect US economic interests, so the Dollar is a stable currency to them, literally "as good as gold".

Drug dealers don't have to pay taxes to see that the Dollar's stable, but if nobody paid taxes, the dollar would float freely and hyperinflation would take over, and they'd move to the Euro (and some have).

@dredmorbius @natecull Bitcoin's the weird case, where there is *some* physical backing with GPUs, electricity, and mining time, but it's deliberately designed to be not backed or traceable by anyone. Perfect for criminals and computer nerds who have access to those things, except that exchanging it for money anyone else uses is difficult (and US law enforcement in particular shuts down a lot of Bitcoin exchange sites…) so it's not stable.

@mdhughes Critically: BTC has a _cost_ but no intrinsic _use value_.

Contrast specie/ bullion, which has both cost (mining, refinement, assay) _and_ value (utility of the metal), or fiat, which has neither (freely producible, no inherent utility).

BTC ha failed to deliver on its promised benefits, largely.

@natecull

@mdhughes The notion. of money NOT backed in some valuable commodity was so inconceivable that William Stanley Jevons gave as one of the essential properties of money its underlying (specie) value. Obviously NOT an attribute of. banknotes, credit cards, or bitcoin (though the latter has a work-factor value measured in kWh).

@natecull

@natecull China has some similar history, and of course one (probably the first) examples of paper-based fiat currency.

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