• Welcome to the Fantasy Writing Forums. Register Now to join us!

Ask me about money.

Hello, I am new here!

I am an economist and hold a MSc in finance with a profile of accounting and auditing. I can help you get realistic behaving businesses and explain how certain accounting or finance and or investing processes work.
 
I have no current accounting questions, but Welcome to scribes.

Sorry wrong thread ;)
No worries, I have noticed a lot of authors getting basic money stuff wrong. So I figured I would make myself available to anyone who would like to not look foolish to an educated reader. :)



Edit: In the book I am working on the kids will start out in complete poverty. Then they will have something happen where they get money. Problem is that they have no legal way of making money. (They hunt monsters, spirits and such.) So they get introduced to a dwarf accountant that keeps a book of grudges. He will help them launder their money through a complex structure of blind trusts and a legal business. This way they can use it to pay for things with legal looking money. I think having my background makes a character like that interesting, and I am going to have a great time exploring his morals, clients, etc.

Edit two: Went and grabbed my note for their meeting:

- When they meet the dwarf:
The old dwarf sat in his tall chair and looked at them through thick grey eyebrows. “You need to defeat the true evil of the world.”
“Monsters?” Izzy said hopingly. “No, the tax man.”
 
Last edited:

Queshire

Auror
Well, this might be tossing you in the deep end of fantasy money, but what should someone be aware of when writing a setting where the primary form of money is magic power crystalized into physical form?

In the setting anyone can become a mage. It's like learning martial arts in a first world country; something with relatively easy access but still not something everyone does for one reason or another. A first level mage condensing their own magical power can generally produce enough crystals to handle food and housing, but generally little more than the necessities, but if they sit around only doing that all day then they generally wouldn't have enough juice left afterwards to make any progress on strengthening their magical power so they still need to supplement their income with a job, harvesting crystals from the bodies of monsters or from mining natural deposits.

Other than being used for cash the crystals are also used to power runic arrays that provide amenities that generally equate to what we have in modern day and as fuel for the process of enchanting items though towns that can do so generally prefer to tap into a nearby ley line instead of using crystals.
 
Well, this might be tossing you in the deep end of fantasy money, but what should someone be aware of when writing a setting where the primary form of money is magic power crystalized into physical form?

In the setting anyone can become a mage. It's like learning martial arts in a first world country; something with relatively easy access but still not something everyone does for one reason or another. A first level mage condensing their own magical power can generally produce enough crystals to handle food and housing, but generally little more than the necessities, but if they sit around only doing that all day then they generally wouldn't have enough juice left afterwards to make any progress on strengthening their magical power so they still need to supplement their income with a job, harvesting crystals from the bodies of monsters or from mining natural deposits.

Other than being used for cash the crystals are also used to power runic arrays that provide amenities that generally equate to what we have in modern day and as fuel for the process of enchanting items though towns that can do so generally prefer to tap into a nearby ley line instead of using crystals.
It reminds me a bit of Brandon Sanderson`s gem system from the Stormlight archives.
So here are some questions:

1. Are mages the only way to generate this currency?
2. Are these crystals cumbersome to move around, is there a banking system based on promissory notes of crystals in the bank or central bank vault?
3. Is the only way to drain them to use them, or do they lose their charge over time causing inflation / deflation?
4. Are people willing to finance ventures to mages based on their future ability to produce crystals?
Example: A bank will give a crystal loan to a mage so they can focus on becoming stronger to then produce more crystals.
5. If anyone can become a mage, given how you answer the questions above and the world, why would not everyone become a mage?

Hope this helps, and I am happy to go a bit back and forth with you on these.
 
Well, this might be tossing you in the deep end of fantasy money, but what should someone be aware of when writing a setting where the primary form of money is magic power crystalized into physical form?

In the setting anyone can become a mage. It's like learning martial arts in a first world country; something with relatively easy access but still not something everyone does for one reason or another. A first level mage condensing their own magical power can generally produce enough crystals to handle food and housing, but generally little more than the necessities, but if they sit around only doing that all day then they generally wouldn't have enough juice left afterwards to make any progress on strengthening their magical power so they still need to supplement their income with a job, harvesting crystals from the bodies of monsters or from mining natural deposits.

Other than being used for cash the crystals are also used to power runic arrays that provide amenities that generally equate to what we have in modern day and as fuel for the process of enchanting items though towns that can do so generally prefer to tap into a nearby ley line instead of using crystals.
Here I will follow up with a scenario that I see could be interesting:


Anyone can be a mage, but there is a price to pay that people find to high. Like they are not able to have a family, sex, kids, whatever fits the story. The crystals lose their value over time unless they are infused by mages again. So a lot of mages will get their money from the bank by reinfusing their crystals. And the banks make really good money lending these crystals to businesses.

The reason that a level one mage makes just enough money to live is that the banks have been continually union busting to keep the rates for infused crystals low. So saving crystals is viable, but they start losing charge after about one year. So the money that mages get paid is the interest on the loans from the businesses. And the crystals are really just a limited resource that has objective value. Like money in our world is a stand in for valuable time, in this world it is a stand in for valuable energy.

Actual crystals are only used on minor transactions, the main crystals are held in the bank vault.

There are a lot of cool stories that can form around this system:
1. Mages decide to rob the bank, they have different powers.
2. One powerful mage makes a plot to kill other mages so his services become more valuable.
3. The government decides that having a base value to money is hurting the economy and creates chaos through fractional banking. (More of a world build)
4. Young mage tries to become rich and powerful in a system stacked against him. (Most mages never progress because they are drained.)
 

BearBear

Inkling
e5ef177625ed927cf681e11f6ba1264b.jpg
 

skip.knox

toujours gai, archie
Moderator
What can you tell us about moneychangers? How did they actually operate? Who used them? They've been around a long time, so I wonder if the practice changes over time.

And, have you thought about how magic might spin the whole business?
 
What can you tell us about moneychangers? How did they actually operate? Who used them? They've been around a long time, so I wonder if the practice changes over time.

And, have you thought about how magic might spin the whole business?
Spesifically the word money changers can be a bit of a sensitive subject. This is because it is used by antisemitist as a slur towards Jewish people. It is an old word for what we today call a foreign exchange. There is a whole philosophical argument around this and I can recommend a book called "Thou shall prosper" by Rabbi Daniel Lapin to understand the difference in views between Christian's and Jewish people on these matters.

I believe the first reference to money changers I know of is the bible. Where the Jewish temples would have them. They make an appearance in the new testament when Jesus kicks them and merchants out of the temple and thereby cleansing it. Temples at this time was a place where travelers would congregate to trade their goods. The money changers would buy and sell currency charging a spread so that you would be able to trade with the temple merchants. I believe some temples had their own central currency issued by these changers.
1920px-Scarsellino_-_Driving_of_the_merchants_from_the_temple_-_Google_Art_Project.jpg

The business model has not changed since those days, now they have moved to airports and banks. They charge you a spread or commission to change money from one currency to another.


A spread is the difference between the bid and ask for a market. Someone asks for a price for stock A for 100. Another person is bidding to buy that stock for 98. The 2 then becomes the spread. A money changer will essentially work like a market maker and play both sides making the spread. So when you change your money in an airport they have an artificial spread that is extremely high.
Spread_in_FX_-1.png


So in short a money changer or foreign exchange agent is someone who allows you to change one currency into another making money on the exchange. They do not assume any currency risk other than their native currency. Their business risk is in being able to exchange enough money to pay for rent, staff, etc.
 

Queshire

Auror
1. Are mages the only way to generate this currency?
They are not. There's monsters with magical power that naturally crystalizes in their body when they die so you can dig crystals out of their corpses, naturally deposits of the crystals that can be found in places with high levels of ambient magic and machines that can condense the ambient magic to produce the crystals, however the first two are dangerous and the last can only be maintained by powerful factions that have expenses which balloon to match.
2. Are these crystals cumbersome to move around, is there a banking system based on promissory notes of crystals in the bank or central bank vault?
The standard is coin sized. I'm purposefully referencing games like D&D and WoW so depending on how concentrated the magical power is in the crystal they go from a dull bronze glow, to silver and then shining a bright gold. Bags of Holding are commonplace. There's even ones specially meant to hold money, however the amount of extradimensional space someone has access to. While that handles the bulk of moving around a bunch of heavy coins it also makes them convenient to steal so you still get banks for security.
3. Is the only way to drain them to use them, or do they lose their charge over time causing inflation / deflation?
I had planned on the only way to drain them and the crystals themselves would crumble away when fully drain. I was aiming that inflation or deflation would result from the variable number of crystals in existence.

4. Are people willing to finance ventures to mages based on their future ability to produce crystals?
Example: A bank will give a crystal loan to a mage so they can focus on becoming stronger to then produce more crystals.
There are those willing to finance ventures, but rarely to produce crystals as that's an inefficient, if safe, use for a mage's magical power compared to the profit they could get by hunting monsters and collecting rare resources. Typically these come in the form of mage guilds instead of banks.

5. If anyone can become a mage, given how you answer the questions above and the world, why would not everyone become a mage?
Mostly it seems like a lot of effort and possibly danger for little return. Becoming a mage in the first place requires frequent meditation sessions pulling in mana from the atmosphere while you can't even sense it or know that it's working. Depending on what kind of mage you want to be it also requires particular training. If you want to be good at using your magic to strengthen your body then you need to pair those meditation sessions with physical training while if you want to be a traditional fireball tossing wizards you need to study and reflect on the transformation of the elements. Basically they act as classes.

Once you're able to use your mana it takes additional training and/or resources to do something with it and the fastest way to advance generally comes down to either being part of a powerful faction/clan or go out and risk your life fighting monsters.
 
They are not. There's monsters with magical power that naturally crystalizes in their body when they die so you can dig crystals out of their corpses, naturally deposits of the crystals that can be found in places with high levels of ambient magic and machines that can condense the ambient magic to produce the crystals, however the first two are dangerous and the last can only be maintained by powerful factions that have expenses which balloon to match.
Minor spoiler warning for storm light archive:
This is very close to the Storm light archive system, there they kill monsters to get shards that they can use to fuel power armor and make resources from. In that world they have people who can change one material into another through a form of magic that turns stone into more useful materials including food. This is mostly a measure for the battlefield as a replacement for farms.

Yours is different in that the charge inside the shard is what is valuable. In the Archive books you leave them outside in a high storm and they charge back up. And they are used to charge magic and all other sorts of stuff.

Where yours is different is that mages can make these crystals with their bodies. There are a lot of interesting lore possibilities here. Like if the reason they can`t just make infinite crystals is that they need to be at a location that has condensed ambient magic.

The standard is coin sized. I'm purposefully referencing games like D&D and WoW so depending on how concentrated the magical power is in the crystal they go from a dull bronze glow, to silver and then shining a bright gold. Bags of Holding are commonplace. There's even ones specially meant to hold money, however the amount of extradimensional space someone has access to. While that handles the bulk of moving around a bunch of heavy coins it also makes them convenient to steal so you still get banks for security.
So the coins works like a battery with a charge meter. With stuff like bags of holding the general rules of practicality change greatly. People would probably still want some sort of system of credit. I find a lot of fantasy just assumes a simplistic system of commerce just because it is in the middle ages. What this system does is that it is a universal form of coinage. So that makes general trading a lot easier, their money is good no matter where they go.


I had planned on the only way to drain them and the crystals themselves would crumble away when fully drain. I was aiming that inflation or deflation would result from the variable number of crystals in existence.
Inflation is by strict definition an increase in the money supply. In this economy if they for example would face a problem of over hunting the monsters they could risk deflation. The reason we have inflation is because it is the lesser of two evils. It was partially why the US had to leave the gold standard. In your world if the mages are not alone in creating the money, there would be a very real danger in over hunting the monsters.

In your case the coins made from crystals disintegrate with usage. This means that usage is constant and supply is variable. Imagine a crystal budget like this. (Crystal GDP if you will)

Crystal produced every year:
By mages:5.000
By Monsters: 5.000

If there are not 5000 plus population growth every year, then you risk hunting them to extinction. Meaning that if you need a total of 10.000 crystals to survive and thrive this would be a massive problem and could lead to deflation.

There are those willing to finance ventures, but rarely to produce crystals as that's an inefficient, if safe, use for a mage's magical power compared to the profit they could get by hunting monsters and collecting rare resources. Typically these come in the form of mage guilds instead of banks.
So the production of crystals does not scale linearly with their level of competence?

Say I were to give a mage a loan for enough crystals to live for five years. Could they with hard training be skilled enough to pay me back over a period of five years with interest?

In this case there would need to be a present value of crystals equal to or more than my expected return.

Mostly it seems like a lot of effort and possibly danger for little return. Becoming a mage in the first place requires frequent meditation sessions pulling in mana from the atmosphere while you can't even sense it or know that it's working. Depending on what kind of mage you want to be it also requires particular training. If you want to be good at using your magic to strengthen your body then you need to pair those meditation sessions with physical training while if you want to be a traditional fireball tossing wizards you need to study and reflect on the transformation of the elements. Basically they act as classes.

Could be that investors own mages guilds so they can collect their invested returns back through members dues over time. Look at the reply to the former question.

Once you're able to use your mana it takes additional training and/or resources to do something with it and the fastest way to advance generally comes down to either being part of a powerful faction/clan or go out and risk your life fighting monsters.

Sound good.
 
Top