How do you create a monetary system?
I'm busy creating a monetary system for the world I'm running Kyler in right now. I've designed the different coins and how much goes into where, but I'm stuck with determining the value of one of these coins. I want the highest coin to be like really big money. Something regular Joe will probably not ever hold in his hands. Like a 500 euro bill.
Does anybody have any tips? Should I start by determining the price of a necessity, such as bread? Or should I start somewhere else completely?
I'll share what I have for now so we can use that as an example.
20 leaves into one flower. 20 flowers into a tree.
It are coins, or little plates with the symbols of it inscribed on it. The shapes change with the currency. 20 rounds into a square, 20 squares into a hexagonal.
There are also prism-shaped pieces with five sides. On each side there is one leaf/flower/tree. They are called ‘fivers’. One fiver stands for 5 leaves/flowers/trees.
The material would be a semi-precious stone, like Malachite or Amethist or something. A leaf and it's fiver would be made out of one material, the flower and its fiver out of another and the tree and its fiver out of yet another.
The tree-fiver is seriously a lot of money! I was thinking something akin to the 500 Euro bill.
Economic systems are usually a pain for me to create, so I usually find some way or another to brush them aside or gloss over them.
I would say, determine a base "cost of living" for poor guy, middle guy, and rich guy, including what they would consider necessity as opposed to luxury; I would say, rather than saying "a loaf of bread costs x" it might be less time consuming to say "they will need to spend x amount on food" and extrapolate the cost of a loaf of bread from this if the player asks. Then determine average pay rate for the classes. That's how I would do it, though you could alternatively work backwards into it by determining the pay rate first, or you could work into it sideways somehow I'm sure.
I agree with Kyler. Simpyl determine the overall cost of living in leaves/flowers/trees and then extrapolate from that how much a given item costs, varying it for market fluctuations.
I've only read part of the thread, but I wanted to post a link to Game Ideas Unlimited: Cash, because it discusses the nature of monetary systems in some detail.
Looking at your statement of the problem, Nikolaj, it seems to me that you have most of the answer. You want your "tree fiver" to be worth about the same as 500 Euros. (I admit I don't know how much that is accurately, but it's probably within 20% of $500 depending on the present currency exchange rates. But then, I've had $500 bills in the past, mostly when life was such that we cashed my wife's something-over-a-thousand-dollar paychecks (they were not weekly paychecks) and paid our bills with cash.) Let me see if I can do the math:
- Tree Fiver=500 E
- 20 flowers per tree, so Flower Fiver=500/20 E=25 E
- 20 leaves per flower, so Leaves Fiver=25/20=1.25 E
- This part is unclear:
It are coins, or little plates with the symbols of it inscribed on it. The shapes change with the currency. 20 rounds into a square, 20 squares into a hexagonal.
I am not understanding what "It" means in this context. It may simply be a number error on the pronoun, that you mean "they" or "these are coins" However, it seems logical to assume that the 20/20/20 ratio matching the ratio between leaves, flowers, and trees means that hexagons are trees, squares are flowers, and rounds are leaves. I will assume that.
- Since Five Trees=500 E, 1 Hexagon (Tree)=100 E
- Since Five Flowers=25 E, 1 Square (Flower)=5 E
- Since Five Leaves=1.25 E, 1 Round (Leaf)=0.25 E.
- That gives you this arrangement of coins:
- Tree Fiver 500E
- Tree Hexagon 100E
- Flower Fiver 25E
- Flower Square 5E
- Leaf Fiver 1.25 E
- Leaf Round 0.25 E
It looks like your smallest coin is about a quarter; that's probably sufficient, because if you've got deals where pennies matter you're looking at commodities trading and competition. With this guide, you can approximate the cost of most available objects by comparing the price to your own reality.
The more complicated issue is the economic realities of the world. For example, if you don't have refrigeration, does that push up the price on milk because it has to be brought fresh from the farm, or does it push it down because it has to sell quickly and there is an oversupply? Are beef products the sort of thing that are cheap when they're available (because if you kill the cow you have to sell most of it very quickly) but rarely available (there's not much money in raising beef cattle, so it's only available when milk cows get too old)? The culture, technology, magic, and other forces are going to impact prices in significant ways--but that's an individual item decision. In some places, everyone eats turkey most of the time because the things are ubiquitous and you have to kill them to keep from being overrun by them; in other places, turkeys are almost completely unknown, and only the very wealthy ever can afford to have when brought from overseas and slaughtered for a meal.
The material would be a semi-precious stone, like Malachite or Amethist or something. A leaf and it's fiver would be made out of one material, the flower and its fiver out of another and the tree and its fiver out of yet another.
This is good color, and makes good sense pragmatically. That is, as a Multiverser world it gives the coins themselves possible value when taken to another world, while making sense within the feel of the present one.
I hope this helps. Really, you did all the work--I just crunched the numbers.
--M. J. Young
It helps. Thank you! 25 cents really works as the small coin. I'm happy.
Now I need to decide whether or not they are self-sufficient or rely on buying their bread/meat/... One city would, I guess, the others might not. Not most likely. At least not primarily.
Without wanting to give too much spoilers here, one power in that world has the agricultural advantage, the others have other advantages. So food in one part isn't worth as much as it is in other parts. I'm wondering if income is affected by that. When I was in Ukraïne, people did not have enough money to live over here in Belgium, and prices where mostly equal for food. The only difference was that they had lots of land, so every Ukraïnian had a fair amount of garden which was used for growing foodstuff and keeping chickens/pigs/...
That's because land is very expensive in Belgium and relatively cheap in the Ukraine. And yes, the country that has the agricultural advantage would probably have cheaper food, if for no other reason than because the other countries have to pay the people who transport the food from the agricultural locations to their own people. That is--
Country 1, 50# Sack of Flour costs $5.
Country 2, does not have its own flour, buys 50# Sack of Flour in Country 1 for $5, puts it on a transport, pays the transport driver $2 to take it to distribution locations in Country 2, pays warehouse workers $1 to store and re-ship flour as needed, pays second shipper $1 to take to local retailers, pays local retailer $1 as his markup, 50# Sack of Flour costs $10. Now, assuming there aren't border guards to prevent such things, people in Country 2 could travel to Country 1, buy their own 50# Sack of Flour for $5, and bring it back to Country 2, but the expense of making the trip including time that could have been spent doing something else makes it worth paying the extra $5 to get the flour close to home.
That's without the possibility that Country 1 would tax exports of flour to finance its own national services, such as border patrol guards to prevent people from smuggling flour out of the country without paying the export tax.
--M. J. Young
Thank you. I suspected that, but it still helps. I'm not sure whether they would have taxes. I'd have to think that through once that becomes important.
Of course there are taxes--someone has to pay for the operation of government, or there wouldn't be countries at all.
The question is, what is taxed how? Does it impact anything in play?
That is, it's entirely possible that production is taxed and the taxes appear in the consumer prices indirectly, such that the average citizen never pays a dime directly to the government but the government gets a few cents on every dollar he spends. It's possible that all the taxes are at the borders--border crossing fees, import and export taxes, passport and visa expenses--and that there's enough international traffic that this pays for everything. It's possible that tax assessors come through once a year, look at everything you have, and tell you how much you owe and you've got a week to pay. Somehow the government collects money that pays for everything. The question thus is not usually whether there are taxes, but if there is a government do the taxes hit the player character anywhere?
Examples:
- In Sherwood Forest, the Shire Reeve sends his soldiers around to collect taxes. It's his job to meet a demand from Prince John, and he intends to do so without making enemies of any of the Norman nobles in his region, so his men gouge the holdings of the poor Saxons to get as much as they can. After all, their salaries depend on the Shire Reeve being able to send the demanded amount to the Prince and still have something remaining.
- In Terranova, the station management is the government. Since they own the station, everyone rents space from them, and that covers the operational costs of the station and its management. Taxes are invisible, but still quite present.
--M. J. Young
Right. I think I'll go for a yearly 10th or 5th (as it was sometimes in the middle ages).
Thanks for that.