What I learned from this video is that the US dollar is the most fictional currency ever created. Anything I create will definitely be more believable.
As someone with a degree of economics and who currently works in banking I'd like to add a few things. In ancient times the only utility value gold provided was that it was pretty and shiny. The concept of "worth" in a society is a social construct. In theory the most valuable thing is water, the human body fails without drinking it, crops die without it, sewers cannot function etc... but water is abundant and hard to transport. The evolution of currency as a tangible item evolves a lot throughout time. After bartering but before kingdoms were minting coins societies used items that were hard to replicate by the common person but also had an inherent utility value. Ancient Egypt used beer as currency at one point, Rome used salt. I can preserve food and drink beer, but I could also use those to further exchange in desired goods that bartering couldn't provide. Then came non-perishable currency with little utility value. In ancient Egypt copper coins were used because society agreed upon their value, and they were hard to replicate. Really think about it, what can I as an individual do with a coin... throw it at someone? Currency today is largely built on a promise that societies agree is value. Today currency in the US isn't backed by anything besides a promise that we all agree upon. Value too is interesting because it's eternally changing on a moment to moment basis(this concept is largely what the idea of economics is built on. It's the study of choice under scarcity). If I was going to sell you a gallon of drinkable water for $100 right now you probably wouldn't buy it. But if your were lost at sea that seems like quite the bargain.
spirit stones (ie energy) are a common hard currency eastern fantasy (directly related to the power system) it acts a higher level currency than other hard currencies and fiat currency in a system, more specifically everything else is a 'mundane' currency
A good currency is durable, recognizable, divisible, portable, and generally accepted. In many cases, the money may be culturally significant in depicting people, buildings, plants, animals or other things that are important to that society. A lot comes to mind in this discussion, like the use of salt as currency in times past, or the issuing of company tokens which could be used at the company store or traded in for real money later on. The idea that money could lose its value stokes a lot of ideas about creating conflict for characters to overcome.
Awesome, thanks! For those reading what I'm rambling about in the video is the Bretton Woods system, which lasted from 1944 to 1971. It rested both on the gold standard, and the strength of the U.S. Dollar (which we insisted on). en.wikipedia.org/wiki/Bretton_Woods_system
Working in finance was terrifying when you realized what a shell game it all is. I should do a video on Mortgaged Backed Securities, and Credit Default Swaps.
@@ChrisFoxWrites as a consumer, its not a problem. as long as everyone continues to agree its value is the same it remains stable. as long as the amount needed for goods doesn't change very much year to year it doesn't matter. the problem though might come if people or someone that has a lot of it decides to buy up all the supply of something. imagine a world where Sheets of toilet paper became more valuable because people need to use it. ;D but even then, as long as the supply chain can also make more to replace the void created in a timely manner the currency remains stable. the government Printing a few Trillion out of thin air then doesn't devalue the currency as long as people can continue to trade the established value for an equivalent set of good.
I had a world building problem in one of my works, magic is fairly common in the world and in it's system any simple mineral could be easily conjured by even an apprentice. In short precious metals weren't precious. The only limit on the magic system was a magicians time and energy, and the complexity of the material being made. My solution was to use an economy based on cowrie shells as a currency, en.wikipedia.org/wiki/Shell_money.
Great video, Thanks. What about escalation? Classic heroes journey. Youth leaves behind village knowing only bartering or small bits of currency. Travels to big city where a night in an inn is more than a horse. How do you make it possible to live in a world far beyond the youth’s means? Companions with wealth or become part of a guild? Or as disaster strikes or an economy fails would a society revert back to a previous method?
I like how I came to this video for advise on worldbuilding but instead I just learned about how debt works XD. Still, this was very informative Great job 👍
Question I'm hoping you can answer. I'm making a game+story from the point of view of a traveling merchant, so currency is very important to the story. Right now I currently have generic copper coins, silver coins, and gold coins. I would like certain kingdoms to have minted currencies. If a traveling merchant has gold minted currency from a different kingdom, but no access to a money changer, will it still hold most of its value since it is gold? What if it was a tax/toll collector? Would they accept gold currency minted from another kingdom for a fair discount? In the other direction, how much different is the value of 1oz of locally minted gold currency be from just 1oz of raw gold? Thank you for these great videos!
The foreign coin holds most of it's value. You'd bring your coin to a moneychanger, who would trade you the proper currency for a slight fee. Robert Jordan's Wheel of Time handles this pretty well. As for the difference between a minted coin and equivalent weight...they'd be worth the same to most people, but some wouldn't be willing to trade for raw gold IMO.
I can't conceive of how you'd have a society without those things. Star Trek only removed money, and still had to do some hand waving to make their setting plausible. It would be fascinating to read about if done right.
I'm having a hard time wrapping my head around the mortgage example you gave, since it's a pretty complex transaction. So the seller gets money from the bank, the bank gets collateral in the form of the house. You're saying that the money the bank gives to the seller is created from thin air, based on confidence in future payments of the buyer? (Which presumably is why credit rating is so important.) Do you have a relevant video to link to or book to suggest on this topic? This sounds really interesting.
You've got the concept down, it sounds like. The bank makes the money out of thin air, based entire on confidence that you will repay. If you do not, that's destruction of currency. I'm sure there are many videos specifically on it, but i don't know of one off the top of my head. If you do find one that you like please let me know!
Is it feasible to use lumps of coal as currency? I have this culture of gnomes who are pyrokinetics, and they live in a pretty hot climate. So, they can create fire from thin air and need no artificial heat to keep them warm. They have a massive cave system at their disposal, where large amounts of coal can be mined. But would it be practical for everyday usage as money?
Digital would be a form of fiat currency, like bit coin or credits from star wars, where we've only seen a series of episodes about it. ... What about a society that shares resources, it would work best on a local town but not on a big world or galatic government? Couldn't a story have multiple forms of currency?
Yes it can, but then the author has to be the bank, and juggle the exchange values. That's something that will quickly get tedious, unless that's the story you want to tell. I just finished writing up a measurement system for my world. Given that measurements are more poignant than currency, certain phrases come to mind, "Fuck you!" being among them. The light novel and anime "Overlord" introduced a currency issue. The Overlord ended up in another world, with a vault of gold coins. However, the world didn't use his coins, but they were still worth their weight in gold. It was one more reason for him to go out and work for a living. There's several amusing side stories that revolve around his money issue, most of it is self-inflicted, as those he is trying to pay, want for nothing already. It's one of those things that if you bring it up, you either have to drop it like a hot potato just to move on with the story, or go all in with it and let it dominate your story.
What I learned from this video is that the US dollar is the most fictional currency ever created. Anything I create will definitely be more believable.
As someone with a degree of economics and who currently works in banking I'd like to add a few things.
In ancient times the only utility value gold provided was that it was pretty and shiny. The concept of "worth" in a society is a social construct. In theory the most valuable thing is water, the human body fails without drinking it, crops die without it, sewers cannot function etc... but water is abundant and hard to transport.
The evolution of currency as a tangible item evolves a lot throughout time. After bartering but before kingdoms were minting coins societies used items that were hard to replicate by the common person but also had an inherent utility value. Ancient Egypt used beer as currency at one point, Rome used salt. I can preserve food and drink beer, but I could also use those to further exchange in desired goods that bartering couldn't provide.
Then came non-perishable currency with little utility value. In ancient Egypt copper coins were used because society agreed upon their value, and they were hard to replicate. Really think about it, what can I as an individual do with a coin... throw it at someone?
Currency today is largely built on a promise that societies agree is value.
Today currency in the US isn't backed by anything besides a promise that we all agree upon.
Value too is interesting because it's eternally changing on a moment to moment basis(this concept is largely what the idea of economics is built on. It's the study of choice under scarcity). If I was going to sell you a gallon of drinkable water for $100 right now you probably wouldn't buy it. But if your were lost at sea that seems like quite the bargain.
spirit stones (ie energy) are a common hard currency eastern fantasy (directly related to the power system) it acts a higher level currency than other hard currencies and fiat currency in a system, more specifically everything else is a 'mundane' currency
The Harry Potter currency system was pretty fun to read about.
You missed the fifth form of currency, post scarcity, when you have unlimited energy and can convert that to unlimited real goods.
A good currency is durable, recognizable, divisible, portable, and generally accepted. In many cases, the money may be culturally significant in depicting people, buildings, plants, animals or other things that are important to that society. A lot comes to mind in this discussion, like the use of salt as currency in times past, or the issuing of company tokens which could be used at the company store or traded in for real money later on. The idea that money could lose its value stokes a lot of ideas about creating conflict for characters to overcome.
FYI, on June 5, 1933, the United States went off the gold standard. And the United States left the silver standard on or about June 24, 1968.
Awesome, thanks! For those reading what I'm rambling about in the video is the Bretton Woods system, which lasted from 1944 to 1971. It rested both on the gold standard, and the strength of the U.S. Dollar (which we insisted on).
en.wikipedia.org/wiki/Bretton_Woods_system
"There's no money to back that loan"......🧐I knew it!
Working in finance was terrifying when you realized what a shell game it all is. I should do a video on Mortgaged Backed Securities, and Credit Default Swaps.
@@ChrisFoxWrites Please be gentle, my heart can only take so much.
@@ChrisFoxWrites as a consumer, its not a problem. as long as everyone continues to agree its value is the same it remains stable.
as long as the amount needed for goods doesn't change very much year to year it doesn't matter.
the problem though might come if people or someone that has a lot of it decides to buy up all the supply of something.
imagine a world where Sheets of toilet paper became more valuable because people need to use it. ;D
but even then, as long as the supply chain can also make more to replace the void created in a timely manner the currency remains stable.
the government Printing a few Trillion out of thin air then doesn't devalue the currency as long as people can continue to trade the established value for an equivalent set of good.
I had a world building problem in one of my works, magic is fairly common in the world and in it's system any simple mineral could be easily conjured by even an apprentice. In short precious metals weren't precious. The only limit on the magic system was a magicians time and energy, and the complexity of the material being made. My solution was to use an economy based on cowrie shells as a currency, en.wikipedia.org/wiki/Shell_money.
Great video, Thanks. What about escalation?
Classic heroes journey. Youth leaves behind village knowing only bartering or small bits of currency. Travels to big city where a night in an inn is more than a horse. How do you make it possible to live in a world far beyond the youth’s means? Companions with wealth or become part of a guild?
Or as disaster strikes or an economy fails would a society revert back to a previous method?
Barren Metal by E. Michael Jones is great book about currency in the light of the history of capitalism.
I like how I came to this video for advise on worldbuilding but instead I just learned about how debt works XD. Still, this was very informative
Great job 👍
So these advices can be used in a normal world setting, right?
Question I'm hoping you can answer. I'm making a game+story from the point of view of a traveling merchant, so currency is very important to the story. Right now I currently have generic copper coins, silver coins, and gold coins. I would like certain kingdoms to have minted currencies.
If a traveling merchant has gold minted currency from a different kingdom, but no access to a money changer, will it still hold most of its value since it is gold? What if it was a tax/toll collector? Would they accept gold currency minted from another kingdom for a fair discount?
In the other direction, how much different is the value of 1oz of locally minted gold currency be from just 1oz of raw gold? Thank you for these great videos!
The foreign coin holds most of it's value. You'd bring your coin to a moneychanger, who would trade you the proper currency for a slight fee. Robert Jordan's Wheel of Time handles this pretty well. As for the difference between a minted coin and equivalent weight...they'd be worth the same to most people, but some wouldn't be willing to trade for raw gold IMO.
Ever thought of writing a moneyless, classless and stateless spciety?
I can't conceive of how you'd have a society without those things. Star Trek only removed money, and still had to do some hand waving to make their setting plausible. It would be fascinating to read about if done right.
I'm having a hard time wrapping my head around the mortgage example you gave, since it's a pretty complex transaction.
So the seller gets money from the bank, the bank gets collateral in the form of the house.
You're saying that the money the bank gives to the seller is created from thin air, based on confidence in future payments of the buyer? (Which presumably is why credit rating is so important.)
Do you have a relevant video to link to or book to suggest on this topic? This sounds really interesting.
You've got the concept down, it sounds like. The bank makes the money out of thin air, based entire on confidence that you will repay. If you do not, that's destruction of currency. I'm sure there are many videos specifically on it, but i don't know of one off the top of my head. If you do find one that you like please let me know!
Very interesting
Just rewatching this, because people are asking me HOW THE CREDITS in Magitech Chronicles work...
Is it feasible to use lumps of coal as currency? I have this culture of gnomes who are pyrokinetics, and they live in a pretty hot climate. So, they can create fire from thin air and need no artificial heat to keep them warm. They have a massive cave system at their disposal, where large amounts of coal can be mined.
But would it be practical for everyday usage as money?
Coal seems like a great base, because it is hard and durable, but also has a practical use. =)
@@ChrisFoxWrites thanks!
Digital would be a form of fiat currency, like bit coin or credits from star wars, where we've only seen a series of episodes about it.
...
What about a society that shares resources, it would work best on a local town but not on a big world or galatic government?
Couldn't a story have multiple forms of currency?
Yes it can, but then the author has to be the bank, and juggle the exchange values. That's something that will quickly get tedious, unless that's the story you want to tell.
I just finished writing up a measurement system for my world. Given that measurements are more poignant than currency, certain phrases come to mind, "Fuck you!" being among them.
The light novel and anime "Overlord" introduced a currency issue. The Overlord ended up in another world, with a vault of gold coins. However, the world didn't use his coins, but they were still worth their weight in gold. It was one more reason for him to go out and work for a living. There's several amusing side stories that revolve around his money issue, most of it is self-inflicted, as those he is trying to pay, want for nothing already.
It's one of those things that if you bring it up, you either have to drop it like a hot potato just to move on with the story, or go all in with it and let it dominate your story.
bit coin is technically backed by scarcity and the energy cost to produce it so it actually costs something to produce
In our mythology, gold was used by aliens to keep themselves young.