Erik Tiber Posted September 4, 2014 Posted September 4, 2014 Hi, this is my first post on the forum. So I was looking through the wiki looking up lore when I came across the page on the economics page. http://aurorastation.org/wiki/index.php?title=Economy I'm currently taking classes in this, so I thought I could offer some useful input. Note that I've only taken one year of classes so far, so I'm still a layman. However, we did learn basic macroeconomics and microeconomics, so I do have a good grasp of the basics. The union of Sol credit is the primary interstellar currency, used by traders and corporations the galaxy across. Whereas most currencies are based on the worth of a specific mineral, such as gold, or silver, the Credit is based on fusion energy, a single credit represents a megawatt of fusion energy. As the amount of energy being produced, even in times of turmoil, is nearly always stable, this allowed the Credit to garner a reputation as a highly reliable currency. The bolded sections interested me. Historically, nations switched from gold-standard currencies to fiat currencies because gold-backed currencies frequently suffered from deflation. This is far worse than deflation, as it can seriously hurt demand and long-term growth in an economy by making debt more expensive, discouraging people from borrowing money from banks, and discouraging consumption. If loans are more expensive, then there will be less investment spending, thus less economic growth. Same with demand. If consumers expect prices to fall, they will hold off on buying goods, which will lead to more deflation in a vicious cycle. If you want to see the effects of deflation in modern times, look at Japan. Fiat currencies can work in a variety of situations, and even the Somali Shilling functioned as a fiat currency without a government for several years. Fiat currencies also make it far easier for countries to engage in monetary policy. Thus, since civilization has already recovered, I see no reason why the various governments would not return to the far superior system of fiat currencies. Also, due to the amount of energy being produced being stable, this makes the Union of Sol credit even more deflationary. The amount of energy being produced being relatively constant also implies a lack of economic growth, which conflicts with the idea that humanity is expanding. There was also some parts I found sorta questionable regarding the Earth's population explosion early in the timeline, but I have no idea how open you guys are to suggestions regarding the lore, so I don't want to step on any more toes.
Gollee Posted September 4, 2014 Posted September 4, 2014 Interesting, it was Skull, Sam, me and a number of others that put together the currency, and none of us are economic experts. To do with the amount of energy being produced, that was a typo on my part, that was meant to be the amount of growth per year is stable and rising.
Erik Tiber Posted September 4, 2014 Author Posted September 4, 2014 Interesting, it was Skull, Sam, me and a number of others that put together the currency, and none of us are economic experts. To do with the amount of energy being produced, that was a typo on my part, that was meant to be the amount of growth per year is stable and rising. Oh, thanks for clearing that up. Well, it certainly can seem intuitive that these currencies would be more stable, and the mistake is pretty common. I'm not an expert myself, just a Freshman economics major, so I'm just a novice myself. In this case, the Union of Sol is a stable, long-lasting power, so the Sol Credit could be common for the exact same reason that the USD is. It may even be a type of interstellar reserve currency. In that case, if a given government is unstable and people don't feel comfortable using the local currency, the locals may just adopt the Union of Sol credit, (has happened in Somalia to a degree) or the local government might just peg their currency to the Union of Sol Credit (this is what Zimbabwe did, IIRC).
incognitojesus Posted September 4, 2014 Posted September 4, 2014 Erik...I..I have to take economics this year. C-Can I just forward you my homework and then you can complete it for me? /me nids.
Erik Tiber Posted September 4, 2014 Author Posted September 4, 2014 Erik...I..I have to take economics this year. C-Can I just forward you my homework and then you can complete it for me? /me nids. Sure thing! I'm only taking 12 credit hours anyway.
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