Within the Pioneer, the various departments pay crew members for their work and some crew members become independent entrepreneurs or traders of various kinds so money circulates although bankers are never mentioned when the various services are listed, e.g.:
"'...the doctors and lawyers and teachers and policemen.'" (p. 112)
But how much money can circulate between a mere seven thousand people, including "'...housewives, children and aged...'" (p. 114)? (Seven thousand is the spaceship's population at the time of this story.)
I have always found financial processes extremely difficult to follow beyond a very basic point:
material production;
barter as the simplest, most primitive, form of exchange;
cash as standardizing exchange and a vast improvement on barter;
banks as places to keep cash in;
banks as institutions that lend money at interest.
Banks make money by lending money that is not theirs and by lending more than is in their possession so that it is impossible for everyone to withdraw their deposits simultaneously. How does this system work? Sometimes it doesn't. How does it work in the Pioneer? Is monetary exchange necessary or helpful in such a small community? I don't know, frankly.
7 comments:
You need a standard of value; it's a massive convenience. On a spaceship, I'd expect it to be all-credit, done with biometric identification.
NB: when banks extend credit, they're effectively -creating- money.
There's an island in the South Pacific where the standard currency was giant rocks carved into donut-shapes. You owned part of the rock and could trade with it.
Money is an idea, not a thing.
Kaor, Mr. Stirling!
And Gresham's Law describes what happens when whatever is being used as a means of exchange is debased.
Ad astra! Sean
Sean: the circulating medium has to grow in synch with the economy -- money is a lubricant, which reduces frictional losses and makes everything move more smoothly.
You can over-lubricate a machine, or an economy. Under-lubricating is also a very bad idea.
Just as both excessive inflation and deflation are bad; in both cases because they screw up the signals from market pricing.
In point of fact, a -- mild, controlled -- inflation is probably best for the economy; it prompts useful behaviors.
Like investing money, rather than stashing it as some form of cash or burying a sock full of coins. It also makes it clearer where someone is actually managing to reduce real costs, rather than it being a product of monetary factors.
NB: Japan, since the late 1980's, has been -trying- to get price levels to rise, and largely failing.
That's because a declining, aging population is a profoundly deflationary influence, against which central banks strive in vain.
It's the economic equivalent of clinical depression; you can mitigate it, but not cure it.
Kaor, Mr. Stirling!
And I agree with your comments here. But I don't trust gov'ts being able or willing to manage merely mild inflation for long. Which is why I prefer a hard, stable currency with zero inflation.
And I'm enough of a gold bug to think it's a good idea if people would have even a small stash of gold and silver, just in case everything crashes!
Ad astra! Sean
Sean: take a look at what the 'gold standard' was actually like in the 1860's-1914 period.
It was not, to put it mildly, a period of stability.
The booms and busts were far worse than anything before 1929, and some of them were just as bad as the Depression proper.
You got inflationary periods (particularly during gold rushes) and then really painful deflationary ones, like the 1878-90 one, really only ended by the Witwatersrand gold discoveries.
By contrast, the period between 1945 and 2019 was the longest and most rapid period of rapid economic growth in human history.
Kaor, Mr. Stirling!
Meaning there cannot be any simple, easy solutions for handling our fiscal/financial problems? If so, I have to agree. That said, I'm still dismayed by the profligate irresponsibility of the US gov't since 2010. How much longer can the bunglers in DC keep on piling up debt before something catastrophically breaks?
Ad astra! Sean
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