Writer's Workshop: backing the Equestrian monetary system · 6:06pm Oct 6th, 2015
Once upon a time, the United States ran on silver.
Have you ever seen a fairly old paper U.S. currency note? One older than the majority of people on this site? Far back enough to see two words lacking on a modern version: "Silver certificate". It was a simple principle. You had, say, a ten-dollar bill, and you could use that ten dollars to pay off all debts public and private, at least up to ten dollars in value. Or... you could go to the government and say "I want ten dollars' worth of silver." And technically, they would have to give it to you. They wouldn't want to, because to a very large degree, the world's money supply is basically the most widespread consensual delusion in existence and if too many people ask for what's supposedly backing their currency, the backing supply will run out long before the currency will.
And yet the idea is there. That when you hold cash, it's supposed to lead back into something tangible. Whatever someone has assigned value to and can't readily be carried, portable money substitutes for. Precious metals, for whatever reason someone decided they were worth something. Jewels, perhaps. (Humans have a certain weakness for shiny objects. Ravens with slightly improved grasping digits and lower impulse control.) You can't ask the government for that backing material any more, at least locally. There are still silver certificate bills in circulation -- they were supposed to be pulled, but collectors and dusty rainy-day stashes occasionally release a bill or two -- but unless they're crisp enough to resell as that collectible, they can only be used for their face value. The value we're all basically lying to each other about because as long as we all lie, the system remains more or less intact.
Once upon a time, the United States ran on silver. Then gold. (Today, possibly debt.) The currency must lead back to something, even if that thing doesn't exist.
So... what do Equestrian bits lead back to? What makes the nation's coinage worth anything? Is there anything more than a mass delusion which ponies buy into as readily as humans?
Jewels seem impractical. They have some value, but they're too easy for individuals to collect for anyone who's willing to take the time for searching and can get past any possible Diamond Dog issues. You can trade them, sell them, occasionally pay someone with them outright -- but overall, they just seem too common to back an entire currency system. We haven't seen much of the precious metal supply chain, aren't entirely sure what ponies might consider precious to begin with, and we can't judge by the palace because a castle with enough resources to pull it off is always going to be glistening in the sun... but even that could feel a little odd. The money appears to be gold (or polished brass, pyrite, a metal we have no name for). The backing might not be the same. Switching it to silver... well... what makes silver special to a pony, or to any nation which might deal with Equestria? What has power in that world, enough to render the promise of a coin quasi-real?
(Irrelevant side note: I did say that the 'verse once struck currency in silver and gold at the same time: in the early days, the coins were minted for both rulers. Silver coinage might come back as a variant stamping with equal value, just to get Luna back into that part of the game. For now, silver bits are... special, if only for their extreme rarity. Technically, they can still be spent... but they're mostly found in collections, or as precious personal keepsakes given out by Luna herself. There may also be small copper change around. For obvious reasons, platinum currency might be an issue.)
Every writer will have to come to their own interpretation for that. But when I personally consider all the options... I think the power behind the currency system leads back to something very real: the Princesses.
If the name "bits" hadn't been assigned to us, I would count Equestrian currency in sols (or lunes). Because there are times when currency leads back to labor. You clear my fields for eight hours and I'll give you four chickens. However, I really don't feel like keeping those clucking menaces around, so here's a piece of paper which you can present to a man in town, and he'll give you the chickens for me... on such small things do economies grow.
And the ultimate labor is that which makes Sun and Moon keep working.
What's Equestria's ultimate promise to the world? We will keep the cycle going. And that's about as strong a backing for a monetary system as you can ask for.
So if I was working on this, I would have the money powered by pony labor, with the sisters at the top of that scale. Ultimately, money is traded out to the other nations with the understanding that the palace will maintain the orbits. Oh, there are other forms of ponyhours being traded out: send us these goods and we'll dispatch pegasi to adjust your weather system. Access to magic -- especially that which the other species don't have -- gives a nation some powerful leverage in the world economy, although some of that is countered by what said other species can bring to the table. But at the far end of the chain... there is a simple promise. What backs Equestria's economy is the most fundamental labor to exist in that world, performed four times per cycle -- or there is no cycle at all.
A few thoughts stem from this.
* Every time the sisters get sick, hurt, and so on down the line, the economy might tremble in concert with any flu shivers. There is a certain breed of consumer who empties store shelves at the first hint of overcast skies, and there would be a certain breed of pony who has stockpiled for an apocalypse scenario known as Celestia Has A Light Cough. On the global scale, those sapients can be ignored -- but when the world knows the sisters are in danger, you might see some terrifying reactions, and many of those would reach the economic levels. Wonder what was happening in the griffon stock markets on the rather delayed morning of the Summer Sun Celebration, and how much was echoed elsewhere...
* So in the United States, you could once trade your money for backing silver... and Equestrian currency goes back to Princess labor. So why not have the early-issue Sol/Lune Certificate, where technically, you were allowed to take your money to the palace and trade it in for direct labor on your behalf, performed by Celestia and/or Luna herself? Of course, as Equestria's population grew, that would have become an impractical idea, and the certificates would have been pulled in, with new currency issued, something without that direct promise attached. But there's probably still some of the old coins left... and if that promise must still be legally honored...
There's a certain charm to that. And more than a few story ideas, most of which might ultimately fall under comedy.
* What's behind the currency of the other nations? What do they have to offer which keeps them on their own systems? It can't match up to what Equestria offers (unless, say, you have a species quietly maintaining gravity), so would the entire world just go onto bits in the end? Is there enough magic and power around to let the other intelligent species maintain some economic independence?
Let's talk about money.
Optionally, let's talk about Luna's reintroductory minting and the potential collector's rush therein.
I like to think that the currency is literally backed by magic. Figuring out how starts sounding like the labor theory you mentioned above, though. Does currency represent a certain amount / power of magic theoretically wielded on your behalf by the unicorn ruling class?
3447426
Like, one bit is worth X Joules of expended magical energy?
3447432
Something like that. In Pratchettian circles, I think the unit is popularly known as the "Thaum."
I think it's rather simpler than all that, really. What gives coinage value is the fact that the government guarantees that its coinage can be used as legal tender. People (or ponies) will treat it as valid so long as society remains stable enough that people don't think the government will collapse and no longer be able to uphold that guarantee. Which is why apocalypse nuts like to hoard gold: they think this is going to happen aaaany day now.
Of course, considering how often Equestria has nearly been overthrown in the past few years alone, this is arguably a perfectly rational belief.
Hmmm...Realitycheck covered similar problems in two of his stories...lemme see if I can't dig them up.
(Lol) and I have quite a few silver certificates...had an offer once for $150 for the best one. Its sentimental value to me won out; it belonged to my grampa.
As for the Sols and Lunes idea, why not incorporate that to some extent? Perhaps "bits" is merely a catchall term, like "dollars" or "cents" are? After all, we have different denominations of bills and coins...perhaps Sols are even-numbered, and Lunes are odd-numbered?
This was a fascinating read, but I think there's a hole in the idea of Equestrian money being backed by the labor of the princesses. Since their service lacks intrinsic value, other factors would expose the currency to wild fluctuations in its value. For example, confidence in the value of their service would falter during winter, wherein certain parts of the economy that rely on the day/night cycle (such as agriculture) are mostly dormant. A particularly wild swing could collapse the economy unless something else is holding it up through such periods.
3447441 There's actually a perfectly rational foundation for that fear. The US national debt has exploded in the past couple of decades, and that money is going to have to be paid back somehow. Besides, history isn't on the dollar's side; no fiat currency has ever managed to survive for half a century, and it's been over forty years since the commodity backing was fully removed. Unless the dollar is reinforced or replaced in the near future, collapse seems inevitable.
My cynical side tells me that the Equestrian bit is most likely made out of its backing precious metal. I base this on the fact that they gold could have been enhanced either by something or magic to be stronger than the base metal normally would be.
Or maybe gold on Equestria is inherently stronger than our Earth version.
I do like the idea of the bit being backed by the Princesses' service. The day will come to a close and a new dawn will rise.
3447441
What most of those apocalypse nuts are failing to consider is that if society ever completely fell apart gold would be useless. Without civilization, it doesn't matter much that gold is a good conductor and it's too weak to be useful for most things. Bullets and gun cleaning supplies are a more logical choice if you're planning for the end times, along with food and the materials to help you set up a farm.
Not an apocalypse nut myself, I just always thought it was funny that any of them try to hoard precious metals and other expensive objects. Most of them actually have little value except for what society gives them...much like money. I mean, which seems more useful to you, a bunch of shiny red rocks or a reliable rifle that can kill a deer?
3447465
I Am Not An Economist, but I'm not sure that's really true: the UK never paid down its debt from the South Sea Bubble, and in the intervening years they rose to become the greatest empire the world has ever seen. The US never paid its debt from WWII, and became the dominant superpower. For countries, being in debt forever is perfectly normal, and so long as society remains stable the mere fact of having a debt is no real obstacle to prosperity. I really wouldn't worry for the survival of the US Dollar.
That does raise another question: does Equestria have a national debt? Are they a creditor to whom other nations must pay? Are Equestrian Bits a global currency like the US Dollar, which can be traded almost anywhere? Controlling the movements of the sun and moon seems the sort of thing that would give you as much global influence as you wanted to grab.
3447521
Agreed.
Probably the gold standard. Griffons use the same currency, and (like in the myths) love gold and probably wouldn't accept money that wasn't either 1) made of gold or 2) could be theoretically traded for it.
3447521 Mad Max: Fury Road shows what would be valued in the post-apocalypse: water (aqua cola), gasoline (guzzolene), and bullets (...um, bullets). The main villain established his fiefdom by gaining control of places that can produce each of those.
If raising the sun and moon is viable backing for currency, then the pre-Equestria unicorns likely used it as backing as well. Merging the economies of the three tribes would have been tricky. If the pegasai were, as some believe, a civilization where military and government authority are the same thing, I have no idea what sort of economy they might have had. The earth ponies may have had a gold standard.
What if the Crystal Empire's economy was backed by units of energy from the love that powers the crystal heart. If they could quantify the energy stored in the heart, and use that as a backing, then Sombra completely wrecked their economy.
"Excuse me." The Royal Guard being 'excused' glanced down at a fairly small young colt, who was looking back up at him with an intense expression seldom seen on one so young. "Sir," implored the little colt again, "I would like to purchase three minutes of Princess Luna's time."
"Excuse me?" said the guard, momentarily distracted from his duty of standing still and looking impressive in the early morning sunlight.
"It's a family hair loom," said the little colt, showing a tarnished and blackened disc of metal, in which Princess Luna's profile could be discerned, if some imagination was applied. "Since our teachers said the money was originally backed by the Princessessess presence, and this coin is really, really, really old like the Princessess, I thought I could buy Princess Luna for a few minutes to help me with a problem."
"You want to... buy Princess Luna." The guard blinked repeatedly. This kind of thing was never covered in training.
"Rent, actually," sounded a very soft and royal voice near the guard's ear, which made him freeze into his normal immobile stance. "Back in our early days of rule, we gave out tokens of our appreciation which could be exchanged for an appointment in our presence. There were so many ponies who wanted to see us, and so little of our time that it turned out to be a very useful practice. As it turns out, we are free this beautiful morn for a few minutes, and would be glad to escort this young one for some conversation within the Royal Gardens. Right this way, young sir."
As far as "what backs Equestrian currency" - well, it is possible that Equestrian currency IS gold. Bits could just be plain old gold coins, though there is some evidence otherwise (namely, the fact that they don't seem to be all that heavy). Of course, they could just be made out of copper, which is much more common.
However, a more likely backing is simply the same as real-world economies - namely, it is a fiat currency, backed by a government.
It is a common misconception that fiat currencies' values are entirely imaginary. In real life, they are actually backed by a couple things:
First off, you can pay the government of the country for various fees and services (a driver's license, a business license, paying fees to the FDA for drug approval, ect.)
Secondly, you pay the government of the country taxes in their currency.
These are both highly relevant, real-world factors which make currencies have value, because both of these give you some tangible value. Obviously a country which is unstable is going to fail at both of these things, and thus its currency would be much less reliable.
Other countries using the Equestrian Bit as a reserve currency actually makes sense; after all, if Equestria falls and there's no more day/night cycle, you're pretty much screwed anyway.
Admittedly, one kind of funny possibility is that at one point, gems were used as a fiat currency because of dragons, but as ponies became better and better at finding gems, the bottom fell out of the gem market and everyone was forced to abandon the old crystal standard.
3447465
One rather amusing thing that a lot of people don't realize, incidentally, is that gold and silver are themselves fiat currencies - a great deal of their value comes from people believing they have some value. Gold itself has no intrinsic value, and in the case of societal collapse, it has no special value, because people don't need gold. If the dollar collapses, there's no reason to believe that gold would be particularly valuable. Non-perishable commodities are much more valuable in such scenarios.
Of course, they fail to understand the way the world works to begin with, because that sort of scenario isn't really plausible. It is a power fantasy, like a brony ending up in Equestria and being important. A world where ONE MAN can make a difference with his gun and wits and isn't just some crazy person in a shack.
Incidentally:
This isn't really true. United States Notes were issued in the 1860s, and continued to be issued until we switched over to fiat currency entirely in 1971, a period of over a hundred years, and they are continuous with modern dollars, while existing alongside the gold and silver standard. Also, the US started the transition to nothing but fiat currency in 1963, as they tapered off the issuance of silver certificates and issued notes backed by the US government.
The reason that we moved away from gold and silver as fiat currencies is in part because their prices are far too variable as commodities; they aren't actually fixed in value, and thus, the idea of using them as a "standard" is silly because an ounce of gold today may not be worth as much as an ounce of gold in a year. Numerous collapses or increases in the value of gold and silver in the past lead to major economic problems, and in reality, there is far more value in the world than there is gold and silver, which makes using them as standards nonsensical.
Today, the values of gold and silver frequently fluctuate considerably, exposing their instability. Gold is a less valuable commodity than platinum in terms of usefulness, so any time gold is more valuable than platinum, all that value is speculation.
3447555
Hmph. Storytease.
As long as we're typing: this was my idea.
I keep showing Luna getting into some degree of trouble at her Open Palace sessions, so now it's Celestia's turn. A rather old, slightly concussed-seeming farmer stands his time in line, gets to the Solar throne room, and informs Celestia that she will be clearing his fields for eight hours, two days from now. Celestia, simultaneously bemused, confused, and worried, gently asks why he would make that prediction. And he spills out two saddlebags worth of ancient coinage onto the marble floor.
Discussion takes place. The farmer is... not quite all there, but in a rather amiable sort of way. He's a little out of date, but is still suitable for sour cream baking. The money was hidden in his family home for centuries. He's having trouble getting ponies on his property this season, and then he found the bits. So he's trading them in, because according to the small print around the edge (nothing wrong with his eyesight), they're Good For Nearly All Princess Labor, Public And Private. And back in the old days, when the sisters were backing the currency system of a young nation rather directly, that's exactly what they could be used for, under the same theory as a silver certificate: hoping nopony actually asked them to do it. But much like that silver, there was eventually more currency out there than the siblings could cover through their own efforts. So the original issues were pulled back and replaced, with a few very rare specimens still surviving in private collections, good for at best a few seconds per holder.
But while those coins were pulled back -- the legal promise was never rescinded. That call-in is still good. And as Celestia points out to Luna, they need to get that currency out of circulation. The farmer wants something harmless. If he spends those bits elsewhere and the wrong party gets their hooves on the coinage... well, others with a call to eight hours of alicorn labor might be a little more sarcastic about it, and half the press is already having far too much fun with this. The best way to remove the bits from the general pool is to accept them in exchange for their labor.
Green Acres is the place for thee...
3447465
The debt... thing is not exactly as it seems, with 38% owed to... well the federal government itself. And we are paying it back the same way everyone pays their debt, with interest. But what we owe every... month? year? plus our other bills is less than our income, so we aren't in the terrible financial position that some would have us believe. No, I'm not worried about the government collapsing because of money issues, at least not directly.
I'm looking forward to the abolition of money once robots finish taking all the jobs. All Hail the Machine Overlords!
https://en.wikipedia.org/wiki/Time-based_currency
The question remains however what is a bit of time worth. Nobody appears to work for a wage in Equestria, and I haven't seen evidence of a salary system. If we use an info-preneur model then four bits is a nibble and eight bits is a byte of information a book usually has 1000 characters per page each character is eight bits so a 250 page book would have each bit be worth roughly $31.25 USD, but since everyone knows two bits is equal to 0.25USD, no doubt because of inflation and nothing to back it up, you can easily understand why everyone in Equestria is living at Tech Level 6 or 7 and the rest of the real world is on the verge of achieving tech level 9. Although, we could also use this model to assume a bit of time is two hours of work, the idea of culture that exploits earth ponies who are making less than fifteen cents an hour is depressing. If a 10hr day's wages is equivalent to $80USD then the outlook becomes a bit more optimistic.
http://www.dailymail.co.uk/news/article-1333776/Spanish-woman-Angeles-Duran-claims-owns-sun--plans-start-charging-ALL-users.html
But as you can see the current economic crisis was caused by frivolity, because we just had to hog the sun all summer long.
Ultimately, all money is debt, and coins, bills etc. are convenient tokens for transferring this debt between people.
Anyway, I'm imagining bits as fairly low-value currency, probably copper or brass coins, useful for stuff like buying groceries at the market or paying for a lunch at a restaurant. Silver and gold coins would be reserved for bigger purchases, with promissory notes used for stuff like foreign trade or financing the construction of cloudships and such.
This is not quite accurate. Silver certificates were a variant of the standard United States Note, and were redeemable for their face value in silver dollars, which themselves only existed in large quantities thanks to some successful lobbying on the part of the silver companies. The value of silver itself was allowed to continue fluctuating, and for most of the silver dollar's life, the face value was worth more than its silver content. In practice, most people who had the certificates preferred them to hard coinage out of convenience, and most silver dollars went straight into storage instead of circulation after being minted.
What's closer to what you're thinking of were ordinary United States Notes (and the later Federal Reserve Notes), which were originally fiat currency when they were introduced after the Civil War, but which were redeemable for their face value in gold from 1879 to 1933, at which point private ownership of gold was made illegal. This worked thanks to the price of gold being fixed at an effectively static value by the government for decades, until international market pressure finally forced the dollar to be decoupled from the value of gold in the early 70s, and in turn gold was legalized again and priced according to the free market.
3447545
Fuel would be a huge variable. If you have a good place to bunker down and start farming, there may not be much reason to keep gas in the tank. If resources are scattered over a large area, it's essential. Depends a lot on how things land when society crumbles, I suppose.
That said I'm pretty sure it's the sworn duty of all Australians to honour their heritage and put on whatever random shit they can find, cover their vehicles in weapons and spikes, and start calling themselves things like Coma Doof or The Earl of Wrenches. Then they must engage in nomadic, vehicle-based warfare over resources.
3447637
I am an innocent victim of my sources.
(Semi-innocent?)
I've seen a gold certificate $1 bill. There was a certain temptation to call it in until I realized that $1.00 in gold could potentially get lost under a fingernail.
Silver coins, at least for U.S. currency, are... annoying. I hate it when I get one in my change. They're never clean enough to sell as a collectible, machines won't recognize them as legitimate, and far too many cashiers get suspicious when money goes *clunk*. (Silver hitting a surface sounds different than modern coins: I can frequently tell when I've gotten a dud by ear.) In a system where I still can't get some people to recognize the existence of a dollar coin and just try spending a fifty-cent piece, the only thing I can do with a silver coin is stick it in a small container and let it collect dust.
I have about nine dollars in unspendable national currency. That's annoying.
ETA: For those outside the States: national coinage from nickels through dollars was made with a degree of low-grade silver through 1964, after which the metal no longer appeared in general-release issues. So anything with that date or earlier will generally go *clunk*. Coin-counting, vending, and automated purchase machines can't account for the different weight and will reject them.
3447537
There are some key factors you're overlooking.
When the South Sea bubble burst, the government was in a strong enough position to prop up the economy, somewhat like the US government did a few years ago when it bailed out the failing banks. However, that crisis was caused by private enterprises (elevated into monopoly positions by the British government) who overestimated their own value. A monetary crisis is an altogether different monster.
As for the US, you're right about us not paying off our debts. However, the first time the debt exceeded our GDP, back in 1945, it was regarded as a problem, and tax rates rose to unprecedented levels, which lasted for decades. It took nearly forty years for the top tax rate to go back below 70%. On top of the tax increases, government spending was cut in half after the war, and debt was under 50% of GDP by 1970. This time around, no such draconian measures are being taken.
Personally, I think a collapse of the dollar is not only inevitable, but imminent. However, I also think that the free market has managed to produce some viable alternatives that people will quickly learn to use in place of the dollar. In my opinion, what we're looking at isn't so much a disaster as an uncomfortable transition into something better.
3447584
You glossed over a key part of my prior comment. I specified that US currency was not fully fiat (i.e. was backed by commodities to some extent) until the 70s. However, you're certainly right about gold and silver being just as variable. I'd never dispute that. The difference is that they're proven to hold value consistently over long periods of time. It is always possible that civilization could decide they're no longer a desirable commodity, though, and if that ever happens, any currency based on them will fail.
3447649
To my knowledge (and cursory research), gold certificates were never printed in anything smaller than a $10 denomination, so a $1 specimen was counterfeit in the first place. And like silver certificates, they were changed for their value in gold coin, not bullion, although nobody's been required to honor that for decades anyway. Legally speaking, both kinds are equivalent to standard paper money these days.
3447674
*blink*
That's... disappointing. I found it pressed between the pages of a book I'd purchased for a dollar at a flea market, and thought I'd broken even.
I'll say this: as a counterfeit, it was one amazing job. It looked and felt like old money.
Interesting. I figured that gold (and possibly silver) was much more common in the crust of the pony planet than ours, same as jewels. (Not exactly the soundest argument, but it makes intuitive sense, which seems to be a good guideline for magical worlds.) Until electronics become widespread, it's good for little other than currency, likely alloyed with some baser metal to harden it and stretch the supply.
As for what's backing it? That I haven't considered. I do like the idea of a labor-backed currency. I like the elegance of explicitly making money what it always has been, a universal bartering good, and the idea of backing currency with a promise to help feels nicely pony, for lack of a better term. That being said, I can see the system originating not with the sisters but with early earth pony communities. The first instances of labor exchange were probably verbal agreements or written chits. Later, the unicorns' shiny baubles weren't good for much other than looking pretty, but they did make decent bargaining chips. After all, in a setting where gold is so plentiful, it's not going to appear quite as valuable in its own right.
This is probably riddled with flaws, but this isn't exactly an area I've given a lot of thought until now. Thank you for putting a spotlight on it.
3447654
The collapse of the US dollar isn't imminent. If the US dollar collapsed, all currencies worldwide would collapse. It would be a global economic catastrophe and the end of the present economic system of the planet.
As such, no one would allow it to happen. But more practically, it can't really happen as-is precisely because everything in the world is more-or-less dependent on the dollar and the US economy - it is very hard for the US dollar to collapse because the value of a lot of other currencies are predicated on the value of the USD. And indeed, the USD is actually growing stronger - the USD is worth about .9 Euros now, up from less than .8. It has also been growing stronger relative to the Yen, ruble, and even the yuan (though the last is to some extent a result of Chinese manipulation). Basically, the dollar can't lose much value because everything else would lose value, and that would prevent it from falling all that much.
The most likely scenario would not be a "collapse" but general increase in inflation that would reduce the value of the national debt, but the reality is that inflationary pressure is actually relatively low on common consumer goods. Without a lot of extra money going into the purchasing of a lot of everyday commodities, it is hard for inflation to really happen, because you have to pay your employees more to charge them more, which doesn't seem to be happening.
If you look at the long term value of gold:
gcasset.com/wp-content/uploads/30628-100-Year-History-of-Gold.jpg
It actually fluctuates considerably. Indeed, its previous "stability" was the result of governmental manipulation - as you can see from after it was decoupled from currency (and thus, primarily influenced by gold speculators instead of governments intent on keeping its value fixed), its value has fluctuated by about 500% from peak to trough. The value of the dollar has been much more predictable over time, and subject to much less fluctuation. The dollar does devalue over time, but its valuation on a year-to-year basis doesn't change all that much compared to gold.
These sorts of fluctuations in the value of gold is actually a big reason why a lot of governments abandoned the use of gold and silver - they had to go to a lot of effort to try and prevent changes in valuation of precious metals, but every time a big silver mine opened up in a new place, or something similar happened, it sent shockwaves through the economic system and the government had to scramble to make sure everything didn't change wildly in value.
Here's my thoughts:
The bits represent something each pony has only a small piece of: racial magic. So besides goods and services, the bit has a standard value of magic from one of the other races it could be redeemed for, and was put in place the first hearths warming to keep the tribes from hoarding anymore. Ponies could get earth pony magic to grow crops, unicorns to provide magical help building, Pegasi to help with the weather, etc. Modern bits no longer reflect the wording, but i could see somepony like Pinkie's father in your stories finding an old chest of coins with the language of being redeemable for the magical abilities of a race and demanding that instead of being put to use that it be stripped from them.
Or somepony trying to buy their way into alicornhood because they read an old fable saying that it was how the princesses did it and not knowing it was fiction about the dangers of money.
3447715
No joke: one of the endings I thought of for the story idea above was the sisters using a very exhausting spell to find any other such remaining caches of old coins and discovering there was but one, the property of a certain Mr. Pie...
One river.
I've always read it as being the most basic of all uses of currency. Ponies don't, on the whole, need a lot of material goods. They can graze, and given that the weather is controlled, could get away with simply living outside like wild horses if they had to. When clothes, processed food, and other comforts are just that, comforts, and not necessary as they are for humans, a lot of the driving force is taken out of the economy. Hell, as Rarity demonstrates, even precious stones and metals are readily available and essentially just expensive enough to be worth her finding her own rather than paying someone to do it. The only ones who value them outside of being pretty decorations are dragons, and that's because they're tasty.
So we have bits as essentially a convenience. They're fiat currency, pure and simple, regulated by the Thrones to provide an easy way for ponies without direct need of each other's work to barter.
I rather tend to think Equestria has what amounts to a planned economy at the end of the day, anyway. The government, via the weather service, effectively controls the food supply in that they can determine what crops will get ideal conditions to grow, and where.
3447649 (checks spot market) Silver coins seem to be going for around 13x face value now for the price of their contents (.90% silver ones), or 15x if you're trying to buy them, so that $9 is worth around $100 if you cashed them in.
3447654 I'm not quite ready to think the US Dollar is about to blow up yet, but if you took a list of every step that would be needed in order to save the country from bankruptcy and prevent hyperinflation, and then did the exact opposite, you would have the economic policy for the last decade. It makes me worry.
3447593 You can always *start* with the young colt and his Luna Penny, something to make everypony giggle at the sillyness of it all as he trots off home all happy with his expenditure. Only on the next day, to have his *grandfather* show up with the family stash and a somewhat larger request.
Of course, there's always afterwards...
Grandpa: Thank you very much, Princess Luna. We'll see you next year.
Luna: Next year? Prithee what dost thou imply?
Grandpa: Well, we got a whole basement of them things on account of some relative of ours a few centuries back going a little loco in the coconut and trading for 'em. I figgure at this rate we oughta be out of 'em in about a decade or two, depending on how deep the basement is.
Edit: Green Acres Is The Place For Thee would make a wonderful story title. Quite self-descriptive, for those of us old enough to recognize the play on words.
3447682
It's odd that such a thing would even exist, on second thought. Counterfeit $1 bills exist and always have, but not usually from the hands of anyone who can put together a convincing fake*, and being a gold cert would only draw more scrutiny than normal, never mind that they were never made in that denomination. Perplexing.
*There is a fascinating story about the Secret Service's decade-long quest to track down a man who produced terrible one dollar bills and nothing else.
3447712
Your idea that the dollar can't fall, owing to the impact such a collapse would have on the world, is overly simplistic. The world isn't married to the USD. They just want a stable currency that holds value well. For that purpose, the dollar is currently the best option; even if there are other currencies that hold value as well, none are as prolific as the dollar. China is trying to elevate the yuan to reserve currency status, and if that happens, the dollar will have no protection remaining.
Your graph is also simplistic. It doesn't take into account any factors other than the basic price of gold. Nothing in economics exists in a vacuum, though. Your data only shows the past century, and a new factor has emerged in that time, another commodity the world values just as highly—more so, at times. If the price of gold is compared to the price of oil, a pattern emerges. When one rises, the other falls an equivalent amount. They are the world's two most sought-after commodities, and together, they represent a rock-solid store of value, and that diversification (especially if combined with other commodities) could shield a currency from the sort of fluctuations you talked about.
3447748
Nah, let's stick with separation of concepts. You write yours, I'll probably never write mine, and I'll get to fifty story downvotes before thee...
(Which is something I was thinking about posting on. It feels like the Feature Box stories are collecting an unusually high number of red thumbs lately.)
As far as the silver coins go, they're in heavily-circulated condition. For a couple of them, that works out to As in 'In the right light and with a lot of imagination, you can kind of guess that it might have once been a nickel.'
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*reads article*
Huh. Thank you for that link. I feel mentally richer for knowing the story.
*checks Amazon*
Unfortunately, it's about twenty bucks for the movie. Oh well. Maybe I'll get lucky with Turner Classic.
I can't explain my find. Unless someone was really relying on the never-check rule...
To actually talk about the topic at hand for a moment, Iron Will and the griffons are after bits specifically, so it's debatable that the world doesn't have any other monetary standard.
There also don't seem to be denominations, so it's possible that the bit is simply a standard mass of gold* rather than having some face value. Large transactions are then handled by weight, rather than counting the individual bits (which savvier merchants then examine for gold-coated lead substitutes).
*Everyone on the show is far stronger than we are. The weight of gold is probably inconsequential for everyday spending cash.
Their currency is backed by lemon drops (the candy, not the pony).
1 free internet to anyone who gets the reference.
3447593
Wouldn't it also be important that they deal with the issue relatively quietly, there's always the risk that there are other cashes out there and once the possibilities are out in the open certain unscrupulous parties may go on a collecting spree.
In the beginning, there was no money, only barter. You saw the episode Trade Ya (season 4), you see how complex it can get. Money is simply a Universal Medium of Exchange made to simplify things. The only requirement is everyone has to agree. How universal is the EQ bit? ICR what, but they used something to bribe the griffons in Gryffendor.
The only magician backed currency ICR offhand was in Niven's The Flying Sorcerers, so the idea is fairly fresh
It might be that, in the beginning, the Princesses had trouble getting ponies to accept this new fangled thing & they promised a "market basket" of various goods & services. Each year, the gummint publishes a list of "This is what this year's bits are worth" in the EQ equivalent of the small print of some govt document. (Tax regulations, perhaps?) This is still being done by some obscure, long forgotten clerk somewhere (God bless the civil service)
Once upon a time, that basket included "Work done by the Princesses". Plausibly, this stopped when Luna was exiled -C just had too much to do to do that anymore (or so she said). That was 1000+ years ago, BUT she still (theoretically) backs all coins with her pledge to redeem them. (it's just that prices are ridiculous -nopony ever turns it in. Historically, US coins were minted as though silver was worth $1.295 an ounce & silver didn't cost anywhere near that much. That is, the gummint profits on every coin & you lost money cashing it in) Celestia violates her word, it MIGHT kick off an international monetary crisis of legendary proportions. One unheard of since Luna's exile.
) & it's worth ..."I will come & help you ALL day"
OR
Historically, governments minted all kinds of coins for all kinds of reasons. Readers are probably old enough to remember the various state coins & some probably remember the bicentennial quarters. It could be that, as each new coin is minted a list of what it's worth in various goods & services is published by the treasury department. Oh look, it Wittle Wuna's First Currency (daw!
OR
It could be that, when the various tribes united the Princesses had to pledge to back the various tribal currencies. (Germany got into trouble that way when they had to back East German currency at a (possibly) unrealistically high rate during unification). The Pegasi had some sort of military dictatorship? (reading between the lines of Hearth's Warming Eve). Possibly their currency was labor backed?
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Following up on an earlier thought, it occurs to me that the griffons in Griffonstone (s5, I guess Estee hasn't seen it, so sorry for the spoiler) want Equestrian Bits so eagerly because, since their own society has collapsed, they have no functioning currency of their own... but Equestrian Bits are valid everywhere.
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Because of witnesses in the throne room, I had it as getting into the press very quickly, mostly due to the amusement factor and, for the Murdocks Press Corps, open-ended opportunity for Princess-bashing.
(The headline after Celestia tells the farmer that she needs to check the law is along the lines of Dictatress Personally Chooses Which Laws She Will Be Subject To -- Again. Celestia wearily predicts what the story will be after she completes her labors and nails it: No-Priorities Princess Wastes Government Time Indulging Idiot Subject.)
And yes, there's going to be a major scramble to see if there's any other caches of those old bits after the story gets out. Thus the tracking spell.
3447932
Among the things which the Amazing Race has taught me is that the currency of a fairly strong nation can potentially be accepted just about anywhere, unchanged from its original form.
Of course, with the Racers, this is because 95% of the time, their leg funds will be in U.S. dollars, they don't have time to try and exchange currency, plus local merchants and cabbies -- especially cabbies -- can guess that the teams don't know how much things are supposed to cost when converted across and when confronted with the U.S. dollar, can gleefully overcharge.
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Title-wise, I was thinking about going with Good For Nearly All Princess Labor, Public And Private, as it's more suggestive of the actual story content. I would get your suggested line in, but I try to keep Luna's speech Modern Overly Formal and away from Very Loud Medieval unless she's stressed enough to slip. (And when she's really out of her element or in private thought, contractions appear.) But if she's just going for the rhyme...
3447965
Yeah... it can be done, but that might not be the ideal way of doing it. And by that I mean that might be akin to holding a big sign that reads "I AM A PARTICULARLY CLUELESS FOREIGNER, PLEASE TAKE ADVANTAGE OF ME" and blasting an air horn.
In the Griffonstone episode, this is arguably what happens, come to think of it. Pinkie Pie and Rainbow Dash go to Griffonstone only to discover that everyone there is a greedy, money-grubbing j-*COUGHHACKCOUGH* griffon who will charge them for the time of day.
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This describes about 30% of all Racers to ever hit the course. Including the air horn.
But the reality of the game is that time spent at a currency exchange line or machine is time which everyone else is using to catch a cab. Most of the time, you can get through the leg on your U.S. funds and you don't want to fall behind through doing anything which isn't racing -- so you ask "How much in dollars?" and pray. There have been occasions when the locals insisted on their own currency and that's when we got teams desperately trying to convert, plus a very few where local money was supplied at the outset for an upcoming task or collected during it. However, for nearly all of any run, you're traveling on familiar bills.
In the early seasons, many Racers would stop and exchange funds in the airport. There was a term for most of those teams: "eliminated".
3447521 I read a thing that said that other interesting bases for post-apocalyptic monetary systems would be cigarettes and toilet paper, because I doubt that those would still be made after the end (and while they aren't strictly necessary, they make life much more pleasant).
3447770
They may be heavily circulated and clipped to hell and back, but if you bring them in to a coin store, they can just pay you for the equivalent weight in scrap silver. It's still worth a lot more than the $9 face.
I find it interesting that the US still mints gold and silver coins that are legal tender- 1 oz gold coins worth $50, and 1 oz silver coins worth $1. Of course, the face value is vastly below what the spot price of the metal is.
You know, the Austraeoh skype group had a discussion on this semi-recently. We discovered a fascinating truth.
You see, a society spanning thousands of years doesn't necessarily keep its language perfectly intact and unchanged, even if certain high-profile members of that society are around for the entire ride. As a result, it's unreasonable to think that a word like the "bit," as essential to the foundations of government as it is, would remain wholly unaltered. In truth, the "bit" is corrupted Olde Equestriaine for the first thing Chancellor Puddinghead thought of when the united tribes established their financial system.
i.imgur.com/caC36mI.gif
In truth, Equestrian bits are backed in Equestrian butts.
Each bit has a cutie mark stamped on it. And each bit entitles you to ownership of a portion of a certain pony's posterior. Now, you could legally go up and demand it, but nobody does. For starters, the distribution branch of the Canterlot mint works hard to ensure that it is virtually impossible to for all of the bits associated with a particular pony to end up in one location. Second of all, there's a bit of a humbling point to the matter: if you can own someone's butt, then who owns yours? Most importantly, it's incredibly rude.
It's worked for millennia, and cases of impropriety are few and far between. It's a fairly stable system and it's old enough that nobody questions it.
Above all, Equestria is a wealthy nation. The sunlit capitol city is eternally spotless, and the royal treasury overflows into numerous public works. This is partly thanks to the ever-harried and diligent ponies of the civil service, but also in a large part due to the fact that a reasonable amount of it goes directly into the purchase of cakes for its ruler. In truth Sunbutt is, in and of herself, a self-healing economy.
(To be perfectly frank this point is where the conversation turned to "economic stimulus" and "inflation," and I think we can do without going further in depth here.)
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All hail Princess Sunbutt, and her gloriously plush net capital reserve!
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So long as the petrodollar is around, I don't think there will be any viable contenders to replace the USD as the world's reserve currency. And I suspect that the government will go to great lengths to defend the petrodollar's status.
3447642
Hey! I resemble that remark!
Ah yes... The ancient game of "let's pretend our money has value."
I followed a whim some years ago and drew a graph (remember graph paper?) of my annual income vs time. It looked satisfactorily steep enough, climbing year by year, but I lost interest, put it away, and forgot about it.
Recently, I found and updated that old graph, and plotted it against the inflation rate of that same period of time.
Guess what?
Can you guess?
My buying power was almost a flat line over that period of time--despite my income more than doubling.
I earned more than twice as many dollars, but each dollar was worth about half as much in real value.
That's one of the aspects of fiat currency.
At the going rate of inflation, you could put a thousand dollars in the bank at 1% interest (if you can get that high an interest rate), and when you take out your ~$1100 ten years later, it'll be worth around $900 in buying power. Here in the good ol' US of A, the current rate of inflation is slightly higher than the current money-market savings-account interest rate. Huzzah...
And when an ounce of gold costs more or fewer dollars than it did, the value of the gold has not changed...
Thinking about it IMO, what happened is:
Every time a new coin is issued, the Treasury Department publishes a decree, "How much is that coin worth?" Possibly, the list covers everything in the CPI (page 97 of the tax code -your tax dollars at work) No one ever turns the coins in because the prices SUCK (For instance, in 1933 FDR offered to sell for $35 the same ounce of gold you could buy for less than $23 on the open market)
The coin was issued a LONG time ago for a special event (Perhaps Luna's Cuteceana party or her hiring her 1st mercenaries?) (We're not sure how long ago it was. It was translated by an archeologist from Canterlot University. He said it was written in cuneiform on a clay tablet, then baked.) The language was typical of Pegasus mercenary contracts. The service was supposed to be military service -but this was not specified. When Nightmare Moon was exiled, there was a financial crisis It was defused because Celestia promised to honor all of Luna's coins.
"YEP! But, don't worry! You're a fine, strapping big filly. You look like you can pull a plow all day long because you're all day strong!"
Sure, you might be able to get your lawyers to weasel out of it, but "What would happen to the financial markets if it got out that you are defrauding poor farmers by repudiating your currency?"