Observations on technology

[gfair]

Why do you assume there's nothing backing the money?  Ever noticed that Nenyuki signet rings are silver, whereas other merchant house signet rings are not?  I'd be willing to bet that Nenyuk as a House is much wealthier (in resources, power, and income, not just coin) than even top-tier noble Houses.

I make the assumption for some very obvious reasons - there is no information anywhere on what backs Sid.  And for Sid to be representative currency, there has to be full disclosure, and access to that commodity.  See, in representative money, the value of the currency is dependent on the value of the asset reserves.  If people can't get access to the assets backing the currency, then the value of the currency disappears.  Fiat money does away with that - there is no asset backing the money, the only backing is that the law states that merchants must accept the currency as a form of payment, or they can be punished.  This is why Sid is, in my opinion, Fiat money.


As for the wealth of Nenuyk, you're probably right crymerci, it probably is the wealthiest House.  After all, Nenyuk has a monopoly on currency.  And most monopolies are incredibly wealthy.  But wealth and financial reserves of Sid and the commodity backing it are entirely different.  So regardless of how much silver Nenyuk may have, if it isn't being used to back Sid, then it has no relevant involvement in the currency system.

http://www.armageddon.org/cgi-bin/help_index/show_help?obsidian

http://www.armageddon.org/cgi-bin/help_index/show_help?money

http://www.armageddon.org/cgi-bin/help_index/show_help?bank

[Jacques]

FYI - acting on information received from others. Read at your own risk.

Most people I've spoken with tell me that the "backing" of U.S. currency is a thing of the somewhat distant past. We haven't been on the "gold standard" in quite a while. Our money is, perhaps like obsidian, worth only the amount that people are willing to exchange for it. Think of it this way: If the U.S. dollar and Japanese yen are both backed by gold, how will the dollar ever be "down" against the yen? Why would the Canadian exchange rate be so variable? It's because the value of the currency is (again, as it has been explained to me) based on the perception of the strength of the economy backing it. You can ALWAYS buy $1 of gold. But that $1 of gold is determined based on the market value of gold, not because the government has said "0.003 grams of gold is equal to one dollar" or some other similar comparison.

So maybe obsidian coins work in the same way. The government has said "this note is legal tender for all debts, public and private" (look at your U.S. dollar bills, folks - it's on there, last I checked), so that's the currency used. People might still barter, but when they don't, the 'sid is the money used. The actual value of one coin would be determined to a large part by how many of them there are and the supply of goods. Inflation COULD happen - so could deflation. But because they're not being flooded into the market, and because the supply of goods is more or less steady, the value of the coin holds more or less the same. The government says you HAVE to accept it, so fine - I'll take 13 for this cup of water, thanks, because the guy next door wants 75 for that new pair of shoes for my wife... (continue ad nauseum)

[JollyGreenGiant]

I thought about posting in here earlier, but gfair, X-D and Jacques did such a great job that I don't have to

[gfair]

Most people I've spoken with tell me that the "backing" of U.S. currency is a thing of the somewhat distant past. We haven't been on the "gold standard" in quite a while.

True - since 1971, and I think the president who unpegged it was LBJ.

Our money is, perhaps like obsidian, worth only the amount that people are willing to exchange for it. Think of it this way: If the U.S. dollar and Japanese yen are both backed by gold, how will the dollar ever be "down" against the yen?

For a couple of reasons.  Currency in our world is traded on international markets, and the variables are still the strength of the economy, but now also the strength of gold and how much gold is pegged to the USD in comparison to the Yen.  It wasn't obligatory to back the full amount of paper notes in Gold, but the backing was usually a certain weight of gold. For example, something like 1/35th of a Troy Ounce of gold.

And since gold typically sees higher value in weaker economies, it's a hedging strategy - when the US economy weakens, and if there are other announcements of weak economic news in the world, then people buy gold, which essentially means the reserves backing any country with the Gold standard go up, making that currency more valuable.

"this note is legal tender for all debts, public and private"

This is the Fiat, specifically referred in this quote as "legal tender" - it's the law that makes it obligatory for all people in the US to accept US dollars as a form of currency for payment.

The actual value of one coin would be determined to a large part by how many of them there are and the supply of goods. Inflation COULD happen - so could deflation.

True - the Chinese were recorded by Marco Polo as the first ever civilization known to use Fiat money, but they also found that if used excessively, inflation would skyrocket.

In Arm, I think the situation is different - if the system were modeled after the real currency systems in the world, you might see inflation and deflation depending on how Nenyuk handles its monetary policy.  But Arm isn't modeled like that - inflation happens, but it has nothing to do with the money supply.