Pegging Sci-fi Currencies to Services

hyzmarca · Post by **hyzmarca** » Sun Oct 21, 2012 12:56 am

This might belong in MPSIMS, because its economic, but it is intended for a setting that could be used for gaming, so I'm putting it here.

We're all aware of the problem with pegging the value of a currency to a commodity (such as gold) and all that this entails. I would like, if at all feasible, to have my interstellar empire peg the value of its currency to a specific personal service, for reasons related to the psychology of the founding god-like precursor civilization who kicked everyone's asses.

The idea being that 1 galactic credit would be equal in value to 1 performance of this service and that you can, hypothetically, turn your credit into the government for such performances, though no one does this for much the same reason that no one ever traded their US reserve notes for gold back in the day.

The obvious drawback is that people who preform this service professionally can't legally charge more than 1 galactic credit per performance, but that really shouldn't come up much in game. I do imagine that this will have wide-reaching economic consequences, though, I'm just not sure what they are. Stagflation? Economic collapse due to bank runs is unlikely, I think, since you can't get physical commodities. However, the value of the currency is explicitly tied to one service industry, I'm not sure what impact that'll have long term.

John Magnum · Post by **John Magnum** » Sun Oct 21, 2012 1:41 am

is the service a handjob

Ancient History · Post by **Ancient History** » Sun Oct 21, 2012 1:55 am

You laugh, but historically sexual favors were sometimes minted onto coins and tokens of different values to denote their cost.

Zaranthan · Post by **Zaranthan** » Sun Oct 21, 2012 2:05 am

If it's sci-fi, I assume there's a significant degree of mechanical automation? A galactic credit could represent an hour of manual labor, which nobody does anymore because any repetitive physical task can be automated. "Laborer" could be a popular insulting slang for "you/your family are really fucking poor."

Yes, there's a joke in here between "manual" labor and handjobs. My funny bone isn't ringing tonight, so I'll let somebody else write it.

On a side note, while you're considering what your fantasy economy is based on, the tricky bit really isn't pricing that basis unit. The tricky part is pricing a day's rations for a human being, since that's what people will compare with other economic systems. That said, 10 creds for a day's food and water dovetails nicely with the old 12-16 hour workday from an oppressive employer.

Sashi · Post by **Sashi** » Sun Oct 21, 2012 2:16 am

It depends on what kind of society you want it to be.

A galactic bureaucracy could have people trading Form Processing Credits, for real Kafkaesque experience you could have Credit Transfer Credits (and it costs one CTC to receive a payment of CTC's).

A technocracy might have FixIts (the platonic ideal of "maintenance service" on a single small item), or Computations (from when you paid people do to math on an abacus).

Some kind of grimdark military setting might trade Tours (30 days of combat service).

Archmage · Post by **Archmage** » Sun Oct 21, 2012 2:56 am

Ancient History wrote:You laugh, but historically sexual favors were sometimes minted onto coins and tokens of different values to denote their cost.

Excellent username/post synergy.

hyzmarca · Post by **hyzmarca** » Sun Oct 21, 2012 3:04 am

John Magnum wrote:is the service a handjob

Of course not. It's a blowjob.

Avoraciopoctules · Post by **Avoraciopoctules** » Sun Oct 21, 2012 3:29 am

My. I wonder how the ancients would have felt about how their cultural remnants end up being interpreted and then integrated into the societies of the future.

rasmuswagner · Post by **rasmuswagner** » Sun Oct 21, 2012 5:58 am

1 credit = 1 KWh of (electrical) energy. The economy is safe because power usually costs less than a credit these days.

Username17 · Post by **Username17** » Sun Oct 21, 2012 6:17 am

Services are an even worse thing to peg your currency to than commodities in a lot of ways. Because there really is not and cannot be a standard service. Whether it's a massage or a tax preparation, you have longer and shorter provisions of what is nominally the same service and you have higher and lower skill levels of the people providing the service.

I mean let's be honest, I would rather get a twenty minute blow job from a porn star than a 5 minute blow job from a diseased junky. I think that assessment is nearly universal. And so any kind of currency peg on services would forcibly equate those, and in turn it would destroy legal competition in the blow job industry.

Now what happens next is a question of how high you set the mandatory legal price for the blow job. If the nominal blow job exchange rate is enough to get February's Playmate of the Month on her knees for half an hour then you're going to drive all normal sex workers out of the legal economy. You're also going to see people hoarding currency and making a continuous run on trading it in for lip smacking. If you set your nominal blow job conversion rate to something that will get a quickie from a junky, then obviously any high or even moderately classed hooker is going to go black market immediately and almost no one will trade in their moneys for blow jobs at the official rate.

And in either case, the nominal rate you've set is the same. One blow job credit equals one actual blow job. Which means that the difference between people hoarding your currency and people spending it freely has to do with the perceived value and scarcity of the currency. Which has absolutely nothing to do with blowjobs and everything to do with the perceived strength of the issuing country and the number of credits in circulation compared to the actual amounts of desired economic activities. In short: you get exactly the same kinds of recessions from insufficient circulating currency and inflationary stagnation spirals from excess circulating currency that you get from a pure fiat scrip. It's just that by tying your fiat scrip to a specific service you get the following extra problems:

Whatever the current value of your scrip is, you've essentially forced all providers of the nominal service into the black market unless they are in a rather narrow band. And if no providers exist in that narrow band (as is quite likely after you've had a few rounds of inflation or deflation), then you've essentially made that service illegal in a really dumb way.
The government has forced itself to hire a bunch of service providers to stand around and not provide that service in order to keep the fiction of convertibility. And if the exchange rate ever becomes too favorable (by the currency inflating too much), there will be a run on service collection from the government. And if the government can't keep up with demand, the currency could collapse altogether.

At its best, you'd have a system in which blow jobs were heavily subsidized and available commercially only from government brothels. This would involve the government paying prostitutes more than customers paid the government to use their services. This subsidy would be a continuous hemorrhage of scrip into the economy from government printing presses, which would amount to a continuous (probably modest) expansion of the monetary base. That could potentially be stabilized, especially if you also had a central bank that was moderately hawkish on inflation.

But there's no reason to conceptualize this as a monetary peg to the service, because it is way to easy for prices to fall out of alignment with what the central bank can effectively stabilize. Remember that with a peg the price charged to Johns can't rise with inflation but the nominal price offered to the prostitutes has to. So increases in inflation make the service relatively cheaper (and increases the number of customers) and the required subsidy larger in both real and nominal terms. Very easy for a situation like that to get out of control, since the government has in effect promised to flood the economy with more real dollars the bigger a bite inflation has already taken.

-Username17

virgil · Post by **virgil** » Sun Oct 21, 2012 6:38 am

Zaranthan wrote:On a side note, while you're considering what your fantasy economy is based on, the tricky bit really isn't pricing that basis unit. The tricky part is pricing a day's rations for a human being, since that's what people will compare with other economic systems. That said, 10 creds for a day's food and water dovetails nicely with the old 12-16 hour workday from an oppressive employer.

You can have a single credit be the necessary nutrition & water to sustain a standardized adult human, or a certain amount of time's processing cycles from a human's brain if you want a kind of Matrix feel to it.

Korgan0 · Post by **Korgan0** » Sun Oct 21, 2012 6:57 am

Frank, I don't see how those problems persist if you just make the currency redeemable for a service with all the parameters defined, which is what I was thinking it was. If you can redeem one credit for exactly one five-minute oral sex performance by someone who scored a 75/100 on the National Oral Sex Examination (and no I don't have any idea how that would actually work), then I fail to see how that would price out any performers.

Username17 · Post by **Username17** » Sun Oct 21, 2012 7:14 am

Korgan0 wrote:Frank, I don't see how those problems persist if you just make the currency redeemable for a service with all the parameters defined, which is what I was thinking it was. If you can redeem one credit for exactly one five-minute oral sex performance by someone who scored a 75/100 on the National Oral Sex Examination (and no I don't have any idea how that would actually work), then I fail to see how that would price out any performers.

Let's say for the moment that you managed to single out a specific oral sex performer and set the price of that oral sex artist to the currency. Now people are still going to want to buy rice and beans, right? And those prices will be determined by supply and demand of rice and supply and demand of currency. And if the exchange rate of rice to sex acts through the intermediary of currency does not match the exchange rate of rice to sex acts directly - then either prostitutes will be unwilling to sell or johns will be unwilling to buy at the official prices.

And let's be real here: the chances of the rice to blowjobs exchange rate matching the official exchange rate are precious close to zero.

-Username17

K · Post by K » Sun Oct 21, 2012 7:18 am

Korgan0 wrote:Frank, I don't see how those problems persist if you just make the currency redeemable for a service with all the parameters defined, which is what I was thinking it was. If you can redeem one credit for exactly one five-minute oral sex performance by someone who scored a 75/100 on the National Oral Sex Examination (and no I don't have any idea how that would actually work), then I fail to see how that would price out any performers.

The porn stars go black market to trade cars and furs for blow jobs and the junkies go black market to trade sandwiches for blow jobs. Your ability to fix the value of the service basically doesn't exist because there are always going to gradations of quality that people will go to the black market to get.

This is why gold is such a popular thing to attach a currency to.... you really can melt that sucker down and prove exactly how many molecules of gold that coin has. The same cannot be true for services.

Judging__Eagle · Post by **Judging__Eagle** » Sun Oct 21, 2012 7:51 am

What if the "service" is a material, that only massive organizations like governments can gather?

Say.... sand grain sized pieces of black holes in a suitable containment unit, which people hook up to power their Citibloques, Arkships, or Quantum-Phase chambers?

Other, 'local', currencies are used for trading non-infinite energy (luxury?) items, like homeo-sandwiches, or tactile granite countertops.

While, the 'real' currency is how most people do things like move back and forth through 5th dimension space, power their gene-lines fortress-bloques, or half-ass it, and move their entire gene-line into 4th dimension crawling space arks (nano-sculpted asteroids).

The premise here being that the only thing that matters to truly organized sophont beings is the continuation of their memetics; and for some genetics. For some, being sedentary on a planet works fine; for others it involves regular trade across 5th dimension space (you have to keep pluck the flowers of the dead to keep your tiny clan suriving the ageless cosmos); while others have to completely ditch their current time and space b/c of dangers of different kinds.

Of course, individuals, and smaller irrelated groups, can earn themselves a way to travel wherever they want. Meaning "space pirates" is more regular criminals that waylay quantum travellers; and haul back the fuel unit to power their own vehicle, or Citi-Bloque through an other -100*C evening on a mineral rich gathering outpost.

rasmuswagner · Post by **rasmuswagner** » Sun Oct 21, 2012 7:53 am

K wrote: This is why gold is such a popular thing to attach a currency to.... you really can melt that sucker down and prove exactly how many molecules of gold that coin has. The same cannot be true for services.

The actual reasons advanced for gold-backed currency today are more like "Back in my grandfather's day WHAAARGRBL SOCIALISM i wanna live in a cabin and shoot at the [EDITED] and feds WHARGRL ANTICHRIST FEMA UN BLACK HELICOPTER economics is hard!"

There is no reason other than pants-on-head retarded tradition to use commodity-backed currency. Outside industrial uses, the value of gold is all fiat. And if your community won't use fiat currency, you're fucked in ways that commodity currency won't solve.

There is one "objective" value you can put on currency, though. "All economic activity will be taxed, no matter what the medium of exchange. Confederate Bux are the only legal tender for paying taxes".

jadagul · Post by **jadagul** » Sun Oct 21, 2012 7:58 am

hyzmarca: Frank's basically right that pegging your currency to a service causes all the usual problems of a commodity-backed currency with some extra ones as well. Honestly, the big lesson from the current economic crisis is that pegging your currency to anything is rarely a good idea, even if the thing is actually a well-managed fiat currency. Basically, a currency peg means you don't have any control of your monetary policy, so you sometimes have inflation and sometimes have deflation and you don't get to pick.

A service peg is also even more prone to bank runs than a commodity peg is, because at least with gold the bank can physically have a whole bunch of gold in the vault in the basement. You can't actually keep a stack of blowjobs in a safe and hand them out if someone comes in to redeem them.

Now, if you want to peg your currency to some service for flavor reasons and want to avoid this having much of an actual impact on society, what you do is peg it to some service that for cultural reasons used to be in demand and now literally nobody wants. So maybe you peg it to "one prayer litany by priest of religion no one follows any more." Or maybe the culture used to consider public self-flagellation a huge status symbol, so you can exchange one credit in exchange for a five-minute public whipping. Then in practice you treat the currency like a fiat currency because no one actually wants to "purchase" the "service" it's pegged to.

Prak · Post by **Prak** » Sun Oct 21, 2012 8:38 am

Actually, that's a decent thought if you want to tie your society to a theocratic background. One credit could have bought forgiveness for one basic sin, one prayer(/holy handjob) by a low level acolyte, an exorcism of a low level demon, etc.

And now it's basically fiat.

Korwin · Post by **Korwin** » Sun Oct 21, 2012 8:45 am

Best idea I think is the energy one. Either use Energy directly as currency or if you want to keep the service idea, use the 1 hour or minute or whatever of engery production of an standard generator.

You would have the problem of private energy producers I guess.
Is it Illegal or do they produce money, minus the taxes I suppose.

K · Post by K » Sun Oct 21, 2012 8:54 am

rasmuswagner wrote:
K wrote: This is why gold is such a popular thing to attach a currency to.... you really can melt that sucker down and prove exactly how many molecules of gold that coin has. The same cannot be true for services.
The actual reasons advanced for gold-backed currency today are more like "Back in my grandfather's day WHAAARGRBL SOCIALISM i wanna live in a cabin and shoot at the [EDITED] and feds WHARGRL ANTICHRIST FEMA UN BLACK HELICOPTER economics is hard!"

There is no reason other than pants-on-head retarded tradition to use commodity-backed currency. Outside industrial uses, the value of gold is all fiat. And if your community won't use fiat currency, you're fucked in ways that commodity currency won't solve.

There is one "objective" value you can put on currency, though. "All economic activity will be taxed, no matter what the medium of exchange. Confederate Bux are the only legal tender for paying taxes".

I didn't say that it was a good reason. It's just a reason that people like.

shadzar · Post by **shadzar** » Sun Oct 21, 2012 8:57 am

watch a movie called In Time ( http://www.imdb.com/title/tt1637688/combined ) and you will see services also dont work for a basis of currency.

currency really is an outmoded technology, as at any time the thing it is connected to could be devalued as has been mentioned already. as long as the possibility of barter or trade exists that doesnt involve currency the item backing the currency has less value.

Prak · Post by **Prak** » Sun Oct 21, 2012 9:02 am

In Time was an interesting, and marginally entertaining, complete fucking shitstorm of a movie and concept.

sabs · Post by **sabs** » Sun Oct 21, 2012 12:23 pm

1 Currency could be the cost of 100 joules of energy.

Lago PARANOIA · Post by **Lago PARANOIA** » Sun Oct 21, 2012 2:27 pm

sabs wrote:1 Currency could be the cost of 100 joules of energy.

Korwin wrote:Best idea I think is the energy one. Either use Energy directly as currency or if you want to keep the service idea, use the 1 hour or minute or whatever of engery production of an standard generator.

ramsuswagner wrote:1 credit = 1 KWh of (electrical) energy. The economy is safe because power usually costs less than a credit these days.

No. That's retarded. Especially for a science fiction setting. ... well, that wouldn't be retarded if you wanted to make a specific point about how backwards a supposedly advanced society is, like the Imperium of Man or the Ferengi. But as an unironic suggestion for a society that's supposed to be running on all cylinders? That's retarded.

Why do people have a problem with accepting fiat money? Fiat money is totally sweet, and by totally sweet I mean awesome. And it's not just gold bugs who freak out about fiat money, but you get well-intentioned idiots whining about a hydrogen/sustainable economy even though fiat money does everything people want to do with those specialized currencies only better. Is the idea behind fiat money really that hard for people to accept?

sabs · Post by **sabs** » Sun Oct 21, 2012 2:35 pm

I'm totally pro fiat money

but he wanted a non-fiat money for some reason. And in the future, everything probably works off of energy conversion of some flavor. So having the dollar equal to X amount of energy would be totally work in a distopia where energy is abundant but not free.