Currency values

[caters]

This is for my Kepler Bb story when a civilization is already underway and before there are laws. I was thinking that I could have a 100% coin currency.

The coin value in currency would be determined by inside and outside metals. Iron would only be allowed as an inside metal unless the whole thing is made of iron(though this isn't really a law)

Here are the values I was thinking:
100% iron: 1 unit
Inside iron, outside nickel: 2 units
Inside iron, outside tin: 5 units
Inside iron, outside chromium: 10 units
Inside iron, outside copper: 25 units
Inside iron, outside zinc: 50 units
Inside iron, outside silver: 100 units
Inside iron, outside gold: 1000 units
Inside iron, outside platinum: 1 million units

So basically the inside metal determines the base value(so if the inside were gold, the base value would be 1000) and the outside metal determines the multiplier(so a 100% gold coin would be 1 million units of currency).

This would mean that a person could have the equivalent of a million dollars in just a few coins. The mayor would get about 25 100% platinum coins for free to fund for whatever the city needs(so he or she would still have trillions of units by the time he or she either died or a new mayor got elected. In either case, the leftover money would be passed on to the next mayor. Same thing for governor and president but at a higher magnitude.

Anyway, do you think this could work or do you think I should change the values of the metals or the multipliers or what? I am open to suggestions.

 

[Queshire]

What would the currency be called in everyday conversation? Same for the various denominations of coins?

 

[Russ]

Does my memory fail me or is this the story about the generation ship?

It strikes me odd that such a technologically advanced society would rely on coins.

 

[WooHooMan]

Something I've learned about money in fiction is that the more detail you go into, the more the audience will ask questions or try to pick it apart.

So, since this seems to be a case of commodity money, what determines the market value of these metals?
I assume that the rarity of the metals determine it's value (platinum is rarer than copper and thus more valuable) but are there any failsafes against inflation if, say, a new gold mine is discovered?

 

[caters]

What would the currency be called in everyday conversation? Same for the various denominations of coins?

That I haven't figured out yet.

Does my memory fail me or is this the story about the generation ship?

It strikes me odd that such a technologically advanced society would rely on coins.

I explicitly said in my first post that this was my Kepler Bb story where I go from individual level, to family level, to civilization level on a sparse planet(Well not in wildlife terms but in humanoid terms).

And Kepler Bb isn't really all that technologically advanced. I mean sure it has some forms of advanced technology(medical simulator, interplanetary communicator, both relying on solar, satellite, or both) but it is mostly below Type 1 on the Kardesheiv civilization scale.

It is however a fast growing civilization. The reason I say that is because Robin is a quick builder(can build main chamber in just a few days and all other chambers in just a week or 2 per chamber). He also knows that his grandparents and Lisa will help him on this(Grandparents for sewing and gardening, Lisa for knitting and pregnancy support). Not only is Robin good at building and coming up with construction plans but he is also one of the best doctors. He knows how to diagnose and treat pretty much anything.

Something I've learned about money in fiction is that the more detail you go into, the more the audience will ask questions or try to pick it apart.

So, since this seems to be a case of commodity money, what determines the market value of these metals?
I assume that the rarity of the metals determine it's value (platinum is rarer than copper and thus more valuable) but are there any failsafes against inflation if, say, a new gold mine is discovered?

Yes rarity is what determines the value of metals so since Iron is so common, it is not worth very much whereas since platinum is so incredibly rare it is worth a lot of money.

And I think the way I have it(lots of ways to get a million units, only 1 way to get a trillion units), is kind of a failsafe against inflation.

 

[Vaporo]

Obvious question: If the internal metal is covered by another metal, how can you tell what metal is on the inside? If you try to do it by weight, somebody will just make a bunch of counterfeit lead-cored coins covered by nickel and insist that they have gold inside.

As I understand it, what you have set up here is simply not how commodity-based currency works. A true commodity-based system is based on the intrinsic value of whatever currency is being traded. i.e. the value of the coin in a commodity-based system is equal to the base value of whatever metal it is made of. Multiplying the value of the two metals in the coins in the fashion you have described is not a commodity-based currency.

For example, let's say you have two coins with an iron core and a zinc shell (we'll assume that the shell and core have the same volume). Under your system, both coins would have a value of 50, for a total value of 100. However, if you were to swap out the zinc and iron cores so that you would have one coin made of pure iron and another made of pure zinc, their value would be 1+2500, over 25 time the original value without adding any intrinsic value. A commodity-based system, which is based on the intrinsic value of materials, cannot have this.

 

[caters]

But how else could I get there to be values like a trillion units without using paper? That is why I thought that total value = base value(inside metal) * multiplier(outside metal) would be best for a completely coin based currency and so the mayor would get 25 pure platinum and the governors and presidents would likewise get 50 and 100 pure platinum(and thus that amount of trillions).

 

[TheKillerBs]

This... doesn't really make sense, though. Trillions of monetary units seems like it's either a vast amount of wealth or you have a crippling inflation problem, although judging by your post, you seem to be going for the former. And, well, vast amounts of wealth usually don't get moved at once, and when they do, it's usually not very easy. I find the idea of people going around with the equivalent of millions of dollars on their person highly unrealistic, especially in a coin/metal-based currency.

 

[Queshire]

But how else could I get there to be values like a trillion units without using paper? That is why I thought that total value = base value(inside metal) * multiplier(outside metal) would be best for a completely coin based currency and so the mayor would get 25 pure platinum and the governors and presidents would likewise get 50 and 100 pure platinum(and thus that amount of trillions).

Generally you don't want to. Or at least you want it to be big and heavy enough that it takes a cart and a horse to transport it, for example bars or maybe plates of metals. I imagine that exchanges involving trillions are going to be exchanges between cities or perhaps major companies? Well, when you operate on that scale you're 1) going to be able to field security to protect the currency during transport and exchange and 2) will want to field that security anyways. At that point making the money difficult to transport doesn't really hurt them since getting a cart and horse can easily be folded into the expense of the security anyways and it benefits them by making it hard to steal from them.

For the mayors, governors and presidents that platinum is only ever going to be a number written down in a ledger somewhere anyways since carrying around your country's entire yearly budget in your pocket is just asking for trouble.

EDIT: Also, what did you mean by before there are laws in the original post?

 

[WooHooMan]

I'd almost recommend changing it to a fiat/representative currency system but you generally don't want the material the money is made out of to be more valuable than the wealth it represents. Maybe if instead of gold and silver, you add a few other cheap metals like aluminum or tin.

 

[Russ]

I explicitly said in my first post that this was my Kepler Bb story where I go from individual level, to family level, to civilization level on a sparse planet(Well not in wildlife terms but in humanoid terms).

Ah, forgive me for confusing the two. This is the one where people are living effectively at a stone age level but sometimes people are going to teleport knitting needles, thread and books on knitting to them over interplanetary distances right?

Basically these people have to make their own tools like people of the stone age did(At least for 11 years per person). That includes things like baskets, spears, and bows and arrows as well as tools for building things.

Later on however it quickly goes from stone age to modern technology as an interplanetary communicator is transported to Robin and Lisa's coordinates as well as some modern materials.

So here are my concerns about the coinage plan you have. I don't think the cultures with small numbers of people operating at the stone age level operate on the level of millions and trillions of artificial currency units. I suspect they don't even consider numbers like that in their culture and language.

On the other hand, cultures that can transport knitting kits interplanetary distances likely don't rely on metal coinage either.

I would also be concerned about how easy it would be to steal massive amounts of "units" in a single coin.

Of course it all depends on how large the economy is, how much a "unit" will buy etc.

I think Rothfuss has written some really interesting stuff on currency and coin that might help you.

 

[Smajdalf]

If you think about this in other way, the first material wealth was stolen/taken from planet where you live. So, there's the question: Why to have currency? It only determines how much your ancestors managed to steal/take. Why not to pay with informations, materials and other things? A coin is just a small, nearly worthless piece of metal. And a dollar is just a piece of paper.(e.g.) What about paying with crystals which store some type of energy?