On Wed, 28 Apr 2004 18:49:30 -0700 (PDT), Philip Hart <philiph at slac.stanford.edu> wrote: > Perhaps someone with sufficient economics savvy to understand "fiat" > (which I best know as the beginning to a light-making spell) above > could comment on the fact that Zerika and Kana share a common currency. > At the end of _TLoCB_ she controls perhaps twice as much territory as K, > and I assume a proportionate ratio of resources. Two words on my admittedly limited understanding of 'fiat money' derived from long time spent slumming with lolbertarians, supply-siders, anarcho-capitalists, and the occasional metal-standard moonbat: 'Fiat', of course, is Latin, usually rendered as 'let there be'. In the phrase 'fiat money' it means money created by the will of the State: 'This is money because I, the Gummint, say it is.' The spell of fiat is explicitly inscribed on every note issued by the U. S. Treasury, in fact: "This note is legal tender for all debts, public and private." It is so because it asserts it is so, and the U. S. Gummint guards the power of making such assertions with great zeal. This process of fiat gives the State a great deal of power and is therefore of much discussion among those who concern themselves with the power of the State and its relationship to citizens. I do not pretend to lead us into those brackish and swampy grounds, full of treachery and hurt feelings. aside: Reading Paarfi, Quicksilver, and The Confusion in quick succession is the surest remedy for conciseness yet devised; Paarfi at his most mannered can match, but never surpass, Stephenson's merely accurate rendering of courtly circumlocution. This is, I imagine, how people whiled away the time without the Internet, at least when there wasn't a poisoning, plague, or bit of rapine imminent. I should clarify that my use of 'merely accurate' in the preceding refers only to my surmise that Stephenson is accurately representing the mannered inflections of 17th century Europe, and in no way a slur on his authorial Quality, which I shall not challenge here, save to note his already well-marked predilection for prohibiting the publication of the final chapters of his works, which he guards more zealously than ever a mummy did his Pharaoh's treasure, lest they be revealed to the terrifying gaze of the teeming Publick. NATHELESS. Back to fiat money, and I'm not talking about Lira, though lira are fiat money too, or doubly so. Because the value of the money is not pegged to anything in particular, its value shifts with the strength of the underlying economy of the state that backs it. In theory, any entity that could back money could issue it; IBM could issue currency backed by its assets and profit-generating potential, on as sound an economic basis as the dollar. In practice, that privilege is guarded by the full armed might of the State, save for the tightly circumscribed arena of the corporate bond, which, as a measure of debt, can sort of resemble corporate-backed currency if squinted at while drunk, in a dim room. > Can she drive his economy off the rails by messing with the money supply? > Of course Orb-based growth in Z's territory would surely lead to problems > for K - couldn't she simply drive the price of say horses or grain up > until K would have trouble operating? I suspect K would soon enough mint his own currency -- there are two states, with competing economies. Given the state of war between them, trade would be difficult/minimal/impossible, depending on specifics. Interesting question, actually -- what was the state of trade between the Confederacy and the Union during the US civil war? Surely some enterprising nerd has written a thesis on the topic, which is moldering in a Richmond library as we type. pe