Energy Economics

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weavermount weavermount's picture
Energy Economics

I'm going to throw a few random points out there and see what sticks.

Energy is the bottle neck on quality of life in EP. Even if you can recycle all the matter in a habitat however you want to turning refuse and waste into more food via fully automated processes takes energy. Orbital solar cells generates a lot of power, but breaking things down (sub-)molecularly takes a lot power as well. The computational power available in EP is also staggering. Even assuming that the watt cost of a calculation improves by 100s or 1000s of times that is also a very high cost. All the quantum tech would be a huge drain. Moving mass across the system is an epic drain. Etc. Given that energy will still be a serious, maybe the only, limiter on what people can actually do. So I could imagine energy being used as a "gold standard". I could see it even being used as the anarchism-corporate currency.

Arenamontanus Arenamontanus's picture
Re: Energy Economics

weavermount wrote:
Given that energy will still be a serious, maybe the only, limiter on what people can actually do. So I could imagine energy being used as a "gold standard". I could see it even being used as the anarchism-corporate currency.

"Life is merely an orderly decay of energy states, and survival requires the continual discovery of new energy to pump into the system. He who controls the sources of energy controls the means of survival." -CEO Nwabudike Morgan, "The Centauri Monopoly"

Although I am a SMAC fan, I think the energy currency doesn't work well despite the importance of energy. If you used energy directly as a standard, then a 1 credit bill would give you the right to get X Joules of energy from the originator. Which is rather problematic since energy is hard to store and demand often involves a promptness factor - when I turn on my particle accelerator and demand a gigajoule from the Bank of Extropia they might have a hard time delivering that. Having a power currency (1 credit can be exchanged for X Watts of energy) is even worse: now the bank has to supply me with that power indefinitely. Some intermediary version (1 credit corresponds to X Joules delivered at a rate of Y Watts within Z seconds of demanding it) becomes rather non-fungible as a gold standard, since there would be lots of kinds of credits (how many "slow mild" credits is a "fast intense" credit worth?).

Worse, the currency would be prone to serious inflation when new energy sources come online. If I open a huge new solar power array, the value of credits everywhere will go down slightly. It is like the effect of more gold on a gold standard economy. So the existing economic groups (not just the energy companies) would have a reason to try to prevent more energy sources from coming into existence, likely producing artificial scarcity. But this also applies to energy saving methods: inventing a way of running equipment on less energy has almost the same effect as adding a new energy source. So inventors would hurt the savings accounts of everybody and be discouraged by the main economic actors.

There is a reason fiat currencies (where the value is just what people want to pay for the currency) are standard these days. They have their own problems (just consider the current Greece/euro mess or Zimbabwe hyperinflation), but pegging to resources becomes increasingly problematic when technology moves fast. If you want a good standard it needs to be resistant to change and naturally limited.

This is incidentally why I don't think the inner system currencies of EP are pegged to qubits per se as stated in the book: it is too easy to build another qubit factory. But *distributing* entangled bits is hard and requires much coordination. So the real standard is actually *distributed qubit pairs*. I can imagine this coming about after the Fall since it is easier to run currency conversions using a standard than fiat currency when there is political chaos and great uncertainty about the future. The hypercorps decided on this standard, but know it will change as soon as things settle down (or qubit distribution starts to become too easy); then we will maybe get fiat currencies instead, backed by the Planetary Consortium, the Morningstar Federation and the others.

Extropian

Decivre Decivre's picture
Re: Energy Economics

From what I understand, the only mentioned faction that bases its currency on the qubit is Titan (specifically the Titanian Kroner). I'd imagine that various groups might base their currency on different factors. For instance, Consortium credits are likely based on their stock market (with credits being removed and added to circulation as the market rises and falls), while habitats near Gas Giants could base their currency on the production of antimatter. Groups like the Lunar-Lagrange Alliance may utilize Earth artifacts and materials as a standard for currency... or even as currency in itself.

Transhumans will one day be the Luddites of the posthuman age.

Help me get my gaming fix, if you want.

King Shere King Shere's picture
Re: Energy Economics

Some isolated "primitive" & resource scarce habitats may have drinkable water or fertile soil as a currency . More of a barter system than a currency system though.



"To find fault is easy; to do better may be difficult."
Plutarch

nick012000 nick012000's picture
Re: Energy Economics

Decivre wrote:
For instance, Consortium credits are likely based on their stock market (with credits being removed and added to circulation as the market rises and falls)

I'm no economist, but I'm pretty sure this is a Bad Idea, because it'll cause self-reinforcing loops. Bubbles will get massively inflated, super-inflation kicks in, then the bubble bursts and the economy falls fast and hard, and right when liquidity is needed, all the liquid currency disappears from the market and the economy tanks while your money becomes not even worth the bits it's stored in.

+1 r-Rep , +1 @-rep

Decivre Decivre's picture
Re: Energy Economics

nick012000 wrote:
I'm no economist, but I'm pretty sure this is a Bad Idea, because it'll cause self-reinforcing loops. Bubbles will get massively inflated, super-inflation kicks in, then the bubble bursts and the economy falls fast and hard, and right when liquidity is needed, all the liquid currency disappears from the market and the economy tanks while your money becomes not even worth the bits it's stored in.

A fiat currency today basically already functions like this. The value of the American dollar rises and falls based on the strength of its economy. The Consortium's stock market is its economy, so chances are it will be a direct gauge on just how potent the Consortium's currency is. The biggest difference is in how each of their stock markets are handled; the Consortium is directly controlled by the hypercorporations that the government was designed to support, which makes its stock market a more instrinsic component of its structure of government.

Transhumans will one day be the Luddites of the posthuman age.

Help me get my gaming fix, if you want.

nick012000 nick012000's picture
Re: Energy Economics

Decivre wrote:
nick012000 wrote:
I'm no economist, but I'm pretty sure this is a Bad Idea, because it'll cause self-reinforcing loops. Bubbles will get massively inflated, super-inflation kicks in, then the bubble bursts and the economy falls fast and hard, and right when liquidity is needed, all the liquid currency disappears from the market and the economy tanks while your money becomes not even worth the bits it's stored in.

A fiat currency today basically already functions like this. The value of the American dollar rises and falls based on the strength of its economy. The Consortium's stock market is its economy, so chances are it will be a direct gauge on just how potent the Consortium's currency is. The biggest difference is in how each of their stock markets are handled; the Consortium is directly controlled by the hypercorporations that the government was designed to support, which makes its stock market a more instrinsic component of its structure of government.

Yes, but the value of the dollar fluctuating is entirely different to the supply of the dollar fluctuating, which was what you suggested.

+1 r-Rep , +1 @-rep

Decivre Decivre's picture
Re: Energy Economics

nick012000 wrote:
Yes, but the value of the dollar fluctuating is entirely different to the supply of the dollar fluctuating, which was what you suggested.

Actually, the supply of the dollar does fluctuate. As money returns to the Treasury through federal and state tax, it does not necessarily go back out in equal amounts. Sometimes it does, sometimes it gets stored or destroyed, and sometimes they print more beyond what they received to put back into the economy. The amount of actual currency in circulation varies based on the state of the economy. In our economy, this generally occurs based on transaction trends... money being put in circulation during times when transactions occur more often (like Christmas) and being pulled out of circulation when they don't.

In that same vein, purchasing patterns within the Planetary Consortium will likely fluctuate based upon the movements of the stock exchange, since it's likely that every good and service is provided by some form of hypercorp. In that sense, times when the market slows and sales are down will likely lead to currency being pulled out of circulation, while times when the market is up and sales are booming will likely lead to currency being put back in. Currency will basically work the same as it does today, only it will actually be innately tied to the motion of the stock market (the only difference).

Transhumans will one day be the Luddites of the posthuman age.

Help me get my gaming fix, if you want.

Shrekgrinch Shrekgrinch's picture
Hmmmm

There is a reason fiat currencies (where the value is just what people want to pay for the currency) are standard these days. They have their own problems (just consider the current Greece/euro mess or Zimbabwe hyperinflation), but pegging to resources becomes increasingly problematic when technology moves fast. If you want a good standard it needs to be resistant to change and naturally limited.

You have bad info there. Don't worry, most economist do too. One expects the to be educated on the history of money, but they are not.

Modern gold standard currencies (as developed by the Bank of England in the 1840s or so and in use right up until the US closed the gold window on the dollar), did not use gold as money. Nor did they have much in the way of gold on reserve, actually. Redemption was really a form of signalling as well: When more people than usual came in to demand gold for their dollars, pounds, guilders, marks, etc. that signaled the monetary authorities to withdraw currency from circulation (by selling bonds) until such activity lowered back to normal. Likewise, if more people came in with gold to get currency, the monetary authorities would do the opposite (buy bonds on the marked with 'created' money). In both cases, the 'peg' is but a price point to direct how much currency was to be in circulation according to market demand for it, not by fiat. In both cases, it was the currency supply that was controlled, just as it is for fiat currencies.

Otherwise, all other attributes of fiat currency applied...like fractional banking credit, etc.

Nowadays, if we were to go back to a gold standard or any peg such as the CRB Index (a basket of various commodities including gold and silver), we wouldn't need ANY reserves. Why? Because of global information that allows for extensive private trading of such commodities. All the Fed would have to do is say, "Gold peg is at $2,000/oz" and monitor the market price of such every day, doing the above buying/selling of bonds when the price exceeds or dips above/below that price. In other words, they could operate it w/o any redemption at all. To keep the Fed honest, market prices would show if the dollar was going up or down in price to that peg. It would be obvious to all when the Fed dropped the ball.

Thus no 'wise men' (Keynesian idiots all) are needed on the Fed to determine the money supply. The market for money itself does. No messing with interest rates are involved, as well. The market decides that, too.

But yes...large and sudden introductions of commodities used as pegs can be a problem. Gold is stable because it is supplied completely terrestrially and only increases in supply by about 2% per annum. But if we mined just ONE NEA out there, a huge influx in supply similar to what happened when the Spanish brought in all that gold looted from the New World would cause a disruption. But that could be fixed by simply officially reducing the peg price in said pegged currency.

As for qubits used as a peg base in EP, I thought only Kroner were pegged in that fashion. The LLA and MC peg their credits to the PC credit, but I thought the PC credit was purely fiat like our currencies are today.