Hard money in traveller.

[Ursus Latex]

Hard money makes no sense in Traveller. It doesn't even make sense today, except for private use. No company pays its employees in hard currency in the western world (at least none I know of), and to compare with Traveller:
The classic traveller is a guy with what equal a modern small freighter. He is buying and selling on own risk (quite unbelievable today, but that's how Traveller works, since it is somewhat 17/18th century here). I couldn't imagine a small freighter paying 3d6 tons of radioactive material in cash...

Today hard currency is a luxury our goverments have to make us people feel more comfortable. You don't need it, in the moment our power runs out it's worth sh*t. In Traveller it is even worth, since the Imperium is 2 years apart, not just a millisecond per bank-computer.

UL

 

[aramis]

precious metals, but most especially gold, have always been prized for hard currencies. Always will. Specie currencies have always been the recourse of frontier areas.

That being said, however, softer currencies (paper, symbolic tokens, etc) have been used almost since the dawn of currency, if not causing the dawn of currency.

The truly soft moneys (Electronic funds, checks, etc) have grown out of currency and merchant houses.

So, since the metal itself is of both commercial and artistic value, gold coins will probably remain a medium of exchange for a long time. Even now, some gold coins are circulated, albeit not with face values, in payment of debts.

And UL is confusing paper monies with the truly hard currencies of precious metals. I suspect many local coins have high denominations in traveller due to being made of Lanthanum (which is used to make jump drives), Gold, and probably somem other non-radioactive metals.

That cash, however, represents a promise of value made by the imperium. It makes perfect sense in a setting where goods can move faster than information. They are hard to forge (TTA sets some really high standards, IIRC forgery 3+ to even attempt a credible forgery; can't find it to check), and require specialized, expensive, and trackable equipment.

Then again, I've held $10,000.00 in cash. It's fairly convenient.

Forgery will occur. Even truly hard currencies get debased and/or clipped. it is, however, simply a matter of faith: is the general perception that the issuer is:
1) capable of making good on repaying the value
2) capable of keeping forgeries down to a minimum
3) capable of enforcing its will in the areas accepted
4) capable of disbursing cash in sufficient quantities and with sufficient speed to get the flow started

The Imperium, probably by accepting only Imperial Credits as payment for the Imperial Taxes, and paying only in imperial credits, usually in cash. This is, in fact, part of how the US made the Federal Dollar the currency of choice: you had to pay your taxes in US dollars.

The forgery issue affects all currencies, most especially electronic ones. SOme have argued that electronic currencies are in fact the most subject to both fraud and forgery, as electronic money is easy to fake...

The ability to enforce its will over the areas in which it is intended to be spent affects both forgery and creating demand. If a government can say "You will only pay us in Zlotniks, and you can only get zlotniks from us or our minions... and the penalty for failure to pay the assessed tax is ...", if you can't live up to the threat, your currency is meaningless too. If you make that threat, and live up to it (See also the Whiskey Rebellion), your currency will be accepted, for fear of the alternative.

If you can't get sufficient cash to the place of payment, then it's meaningless as well, as you then have the issue of scrip or promissory. Neither is as well received as a primary currency.

Cash is no luxury. Credit cards, checks, and electronic payments are luxuries... ones which you pay for by otherwise usurious interest rates on due amounts, annual fees (both consumer and merchant), and % of sale fees to merchants, and lack of interest paid on deposited amounts. All those fees are to make up for the much-higher-than-cash forgery/fraud/deceptive-practice losses and high rates of default.

 

[kafka47]

Keeping in mind, this is a T4 forum, hard cash would be limited to those worlds not encompassed by the expanding Imperium. The Imperial Credit would certainly have to contest with the domestic world's currency and those of any Pocket Empires. Therefore, we are in a situation like we are in Russia rather than the Advanced OECD countries where payments are still largely done in cash (including salaries & pensions).

The diffusion of a cash economy that we associate with modernity would have taken a back step with the Long Night as many would not trust credit after the Antares pulled a fast one brought down the Rule of Man.

I could also see the case to be made for wanting to carry cold cash simply because it forms the basis of an expansion of trade. Dealing with a credit based economy is highly unstable in M:0.

 

[aramis]

Even more confusing is that the unit of cash is called the Credit.

Simply put, if the imperium charges Cr1 per person as tax, the imperium need only do at most GCr100 with any given world... (90billion people). Most will be FAR LESS.

now, lets assume, for the moment, that the 3I comes knocking at earth tomorrow. GCr6 is owed in one year. the fleet pays Cr100/ton for seawater, provided we pump it. Pays Cr30 per ton of wheat. Pays KCr1 per ton for raw metals. Pays KCr5 per DVD. Very quickly, the US alone could take A huge whack out in one day.

After a few years, someone decides not to pay the Imperial tax in CrImps... and the IN takes all the satellites out 4 weeks after the tax was forfeit. And adds the costs of ammo to the bill. THen they start cutting mints. then power plants.

Very quickly, the promise to pay in CrImp needs lease offers on land for a starport, so there is income. People then work at the starport (paid in CrImps), and the government then starts asking to be paid in CrImp so that it can pay the tax...

next the government demands payments of all fees in CrImps... to catch the now circulating CrImps.

Sooner or later, it ecomes the medium of exchange even for local elmonits.

 

[RainOfSteel]

Originally posted by Aramis:


And UL is confusing paper monies with the truly hard currencies of precious metals. I suspect many local coins have high denominations in traveller due to being made of Lanthanum (which is used to make jump drives)

Lanthanum coinage?

The Travellers of the future are made of tougher stuff than we!

From www.webelements.com:

Lanthanum compounds are encountered rarely by most people. All lanthanum compounds should be regarded as highly toxic although initial evidence would appear to suggest the danger is limited. Lanthanum salts may damage the liver. The metal dust presents a fire and explosion hazard.

 

[RainOfSteel]

Originally posted by Aramis:
The Imperium, probably by accepting only Imperial Credits as payment for the Imperial Taxes, and paying only in imperial credits, usually in cash. This is, in fact, part of how the US made the Federal Dollar the currency of choice: you had to pay your taxes in US dollars.

I could not agree more. The Imperium IMTU most definitely requires payment of taxes in Credits.

 

[aramis]

Lanthanum billets of specified size inside clear plastic outer shells...

Seriously, tho', anything particularly expensive and useful will have a demand and thus a "Specie" value.

 

[Maynard]

The Imperium, being at root a Feudal system, I just assumed that the currency was called the 'Credit' because it is in essence a 'letter of credit' on the Emperor's treasury. It would most certainly be backed by something 'hard', and in any case, the U.S. has gone off and back on to the gold standard at least twice that I know of, going off the standard under Nixon or Ford, I can't remember which, which isn't long ago, and certainly doesn't mean we won't go back on it some time in the future.

Gold is great as a currency, especially in our world today; it is the only almost universal currency, worth something nearly anywhere, unlike dollar bills, so I don't find Sophia's arguments all that bad.

In the Hard Times book, many worlds do indeed revert to hard specie. The book gives values of

0.2 Credits per 50 grams of copper
10 credits per 30 grams of silver
300 credits per 30 grams of gold

IF the economic rules for tech level and starport are applied to the credits side of the values, then you get a enough of a variation in buying power versus quantity to make the ruduments of a new banking system viable.

 

[Ursus Latex]

But the gold-standard is very, very prone to manipulation. inflation in our history was a tremendous problem, especially because the feudal lords allways eroded gold coinage for personal benefit. In Traveller it is even worth. The Imperium is huge, a lot huger than Earth was for the sailing ship cultures of ancient age. And gold can be found on every planet. But the Imperium is also populated in a way unimaginable to us. With worlds of tens of billions of people. That doesn't leave space to transfer gold off the planet to be used as coinage anywhere else. THat would big ass hurt the economy of a hive world with 60 billion people. Worlds like this usually are mega city worlds with a huge economic output. Like our world, but ten times more densly populate. Think of it, we didn't leave gold standard for fency reasons, it is called evolution and though some states still have gold standard, most don't.
The Imperium isn't a feudal state as our medieval "states". It is a feudal corporation, one of the greatest corps on Sylea became the womb of the Imperium, it's CEO crowning himself to be a new Imperator. Feudals might like gold, but it's poison for corporations, since it is fixed, rather slow to move and you can't cover up the whole Imperium'S GDP by gold. Earth GDP is 51.48 trillion Dollar, we can't even cover that... No way.
Hard curreny is insufficent, the only hard currency is the coin you can only change in Sylea (solar?).

UL

 

[aramis]

The gold standard will be barely above the value for industrial processes... as a stable value, at least. In terms of value to a given society outsides it's artistic and aesthetic value, it has some inherent technological and industrial uses (Specifically low-corrosion electrical contacts), and thus has some inherent value. So it has a floor amongst spacefaring races... just not equal to our current, aesthetically driven value.

(There is supposedly more gold per person now in mortal hands than at any point in history, and less per person in circulation than in most of history. I have doubts about the assertion, made during a modern marvels program, but don't doubt that gold per capita in circulation is declining.)

Also, I agree that hard currency vis-a-vis coinage is unlikely to be the basis. The issued currency, however, is not coinage, and with note starting at Cr5, and going up, and 500 bills being 1kg, and about a liter, minimum value per liter is KCr2.5; this represents some value in taxes which when the note is surrendered is counted. Now, if that tax rate is set by a rate of production coupled to population, rather than local currencies or some specie value, we quickly wind up with a currency which is a useful (not perfect) medium of exchange, as each world has a specific need for a set rate, and thus worlds with higher production rates per capita need to charge more tax per worker... It also would encourage shipping undesirables elsewhere, in order to lower tax burdens.

 

[Maynard]

Yes, the various worlds would merely shift it around at the bank, not ship it back and forth from world to world. This wouldn't be necessary in a supposedly controlled and stable economy like the Imperium. It's only use like this would be in the frontier trade with extra imperial worlds. The Imperium would merely use paper currency for normal distribution and trade, and most of that would be electronic currency.

Many worlds will mostly use the currencies of the nearest Hi Pop worlds, which are the dominant markets, and use Imperial Credits as a yardstick, or reserve.

Note it doesn't have to be gold, but any agreed upon substitute. This would be part of being accepted under Imperial protection when a world joins.

There is going to be some kind of hard standard used to inflate or deflate the Credit as necessary; otherwise there would be no controlled economies. I read somewhere where Norris and the Imperium in general regulate it to around a 3% growth per annum.

Just like real banks, the reserve of whatever is the standard is always less than the actual value of currency going around. Given the long term stability of the imperial Credit, that reserve can be far smaller than in an uncontrolled laissez faire type economy, which always inflates and collapses in very short order, and always requires government rescues and bailouts.

 

[Chuck Anumia]

Would the Sector or Subsector Dukes be involved with regulating the intrest rates?

 

[jcrocker]

Originally posted by cweiskircher:
Would the Sector or Subsector Dukes be involved with regulating the intrest rates?

You'd kind of doubt it - state governors, mayors etc don't have a lot to say about it now. Here-and-now, any nation that tried to have different official interest rates in different parts of the country would be regarded as a bananna republic. Could a 800 kg gorilla like the 3rd Imperium get away with it?

 

[Maynard]

I ran across a reference to worlds having their currency printed on higher tech wolrds, and sometimes an imbalance developing requiring the exchange of currency, so the Imperial Credit is indeed a seperate currency from a given worlds, and thus people can speculate in various currencies. I'll try to find the specific reference and book a little later, but canon at least supports different currencies and exchange of specie.

This also implies worlds can set their own interest rates, allowing for greater or smaller off worlder investments and loans a swell. Cool.

 

[aramis]

If the imperium sets the credit to some specific labor-hours-by-trade table, and some standard references for bulk materials, and only pays bids at or below scale rate, the credit's long term value will tend not to inflate; the local currencies (canon in several sources) would then tend to fluctuate based upon local variance in the goods, especially if a tax-in-CrImps Hydraulic Despotism sets in... The Imperium can thus regulate the CrImps in circulation by adjusting tax levels and/or spending levels, to increase or decrease the exchange of work-for-the-3I for Taxes-to-prevent-retaliation-by-the-3I. More work than tax, mild inflation; more tax than work, deflation. Simple in theory; in practice, localized swings could be excessively violent: the T&C rules indicate this localized volatility and overall stability.