The Magic-Walmart myth

[Jonny Nexus]

Besides reducing transportation cost (easier to transport $10,000 than $10,000 worth of gold), the biggest difference between fiat money and specie is the reliance upon the law to enforce the payment of promissory notes; a significant difference is not in the economic function of the currency.

Well I think that's kind of my point. When we talk about money we're using a modern mindset that doesn't fit a primative economy.

You could say there are three stages an economy can go through. (I'm making my own terms up by the way):

Stage One - Barter Economy: I will swap you a valuable item I have that you need (food say) for a valuable item that you have that I need (some cloth say). The problem with a barter economy is that it isn't very liquid in that it relies of me finding someone who has what I need who also happens to need what I've got.

Stage Two - Coin Economy: We will agree to use a particular portable and long-lasting substance whose quantity available is reasonably fixed as a standard item to barter. Gold, say. So I can swap my food for some gold you have and then later swap some gold for some cloth. This removes the need to pair up producers. However, it only works if I'm happy to swap gold for food today knowing that my gold won't be halved in price by tomorrow.

Stage Three - Money Economy: Now we agree to have a concept of money, represented by abstract tokens. I'm happy to swap my food for some otherwise meaningless bits of paper because I have enough faith in the future of civilisation (i.e. the government and the rule of law) to believe that tomorrow I will be able to swap those bits of paper for some cloth.

The key thing here being that a government can't just print more gold. Gold's rarity is intrinsic; it would stay rare even if the government fell and anarchy reigned. Whereas the paper currency would then be nothing more than arse-wiping material.

I make all the prices based off of silver pieces instead of gold. So a sword that costs 10gp would cost in my campaign 10sp, or 1gp. This is merely for flavor, and here I agree with you on the atmosphere.

Nice to know I'm not the only one.

 

[Raven Crowking]

If you don't stop with the Wal-Mart analogies I'm going to start having underpaid magic shop workers try to push an extended warranty any time they buy a sword and make them do Dex checks to get the child-proof caps off their healing potions.

Don't forget, then, to have the magic item fail the day after the warantee is up.

"You face the ruins of fabled Shanthopal, where once long ago magical artisans create many strange and wondrous things. Then, one day, a race of blue-skinned giants set up shop. Calling themselves the Arcane, they opened a MagicMart. All who entered their doors were greeted by a lowly kobold worker, who had but a few coppers in his pouch. Soon, the Arcane MagicMart was able to undercut the local artisans. Folk flocked to the MagicMart to save a silver piece or two. But, Lo! That money they saved put the magical artisans out of business, and it was the magical artisans who supplied the gold to the coffers of the Prince, and who brought traders from far and wide.

"While the MagicMart brought traders as well, the money they spent was taken far away, and to strange places, by the Arcane. When the Prince tried to tax the MagicMart, the Arcane threatened to remove Shanthopal's only remaining industry. At long last, the townsfolk who had, through poverty, agreed to work at a kobold's wages sought to band together, and by so doing force the Arcane to give tnem better pay and benefits.

"But the Arcane were not deterred. They simply closed that MagicMart, and opened a new one a thousand leagues away, where the ruins of another city now sprawl.

"And so it came to pass that once-shining Shanthopal fell into decay, and then ruin. Still, hardy bands of adventurers stop here from time to time, to search the streets and the once-stocked aisles of the MagicMart for what may by chance have been left behind, and to struggle with the kobolds and debased humans who now make the ruins their home.

"Your party has assembled on the outskirts of the ruined city. You hope that, through courage, intelligence, and luck, you may yet roll back a profit from this once-proud place."

 

[Raven Crowking]

The key thing here being that a government can't just print more gold. Gold's rarity is intrinsic; it would stay rare even if the government fell and anarchy reigned. Whereas the paper currency would then be nothing more than arse-wiping material.

Until a bunch of collectors come along, anyway.

In North America, witness Confederate dollars.

 

[Felix]

Well I think that's kind of my point. When we talk about money we're using a modern mindset that doesn't fit a primative economy.

I thought your point was that there was simply "too much" of it. So a sword costs 15gp, and its real-world analog would have cost the equivalent of 5sp. So what? It merely means that there's more gold present in the setting than existed in Europe. Changing this only changes the flavor: it has nothing to do with the economic function of the money or the "modern mindset", the definition of which I'm still unaware.

The key thing here being that a government can't just print more gold.

Of course governments can "print" more gold. They did this historically by making coins out of alloys instead of pure gold. To some extent this was a virtue because of how soft gold is. But governments in coin economies can debase their currency as easily as governments today.

Gold's rarity is intrinsic

Its rarity is relative to the location, not the metal itself: it was rare in Spain. It didn't exist in Virginia. It was "common" in California. And neither is gold's value intrinsic: its value is based off of an assumption that other people will be willing to trade goods and services for a shiny metal, much like diamonds are valuable because men believe (justifiably?) that women won't marry them unless presented with a suitably big rock.

 

[Felix]

"While the MagicMart brought traders as well, the money they spent was taken far away, and to strange places, by the Arcane."

You forgot to add, "... to dirty for'n parts, swarmin with backward for'ners, damn their eyes. I shore hates me some for'ners, thems not bein from aroun' here and whatnot."

 

[Raven Crowking]

You forgot to add, "... to dirty for'n parts, swarmin with backward for'ners, damn their eyes. I shore hates me some for'ners, thems not bein from aroun' here and whatnot."

Isn't that what "a thousand leagues away" means?

Or, in premodern times, "fifty miles away"?

 

[Felix]

Isn't that what "a thousand leagues away" means?

It doesn't portray the same level of hatred of those who are different from you. It's like racism, but with maps!

 

[Raven Crowking]

It doesn't portray the same level of hatred of those who are different from you. It's like racism, but with maps!

I believe that term is "Nationalism".

 

[Felix]

I believe that term is "Nationalism".

Jingoism would be more appropriate, I think. But I flatter myself that "racism, but with maps" has a certain... je ne sais qua.

And nationalism, and to an extent jingoism, aren't as pejoratively loaded as *hushed whisper*... racism. Which was the general idea.

 

[Gentlegamer]

But if I take gold that's been buried in a hole in the ground for the last 1000 years and then introduce it into the economy, that is a big increase in the money supply, just as if a modern-day ruler prints a load of money.

Off-topic:

That's not how money is created in modern times. Money is created when governments borrow fiat money through a financial system that that has no limit to borrowing because the money is not a commodity. Because modern financial systems count both money on deposit and money that is loaned at the full amount, instead of the actual amount in the vault, money is "created." This lessens the value of each unit of money, therefore creating inflation. This inflation is a tax levied on the economy by the government.

Ex: if you have $100, and inflation reduces the value of that $100 by 10%, that means you can only buy $90 dollars worth of goods with that $100 . . . essentially government caused inflation has taken $10 from you as a tax.