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[forsaken1111]

I'm still a little fuzzy on this point. What do I get if I give back the coin to the minter?

Something of your choice (with a current price of one coin of that denomination) from the fortress stockpiles.

Self-referential self-deceiving gobbldygook, I say. "What's a coin buy?" "A coin's worth." Yeah, no shit it buys a coins worth, how much is a coins worth worth? The problem is the answer given does not promise to trade a set amount. It would be a clear promise if instead it were one bar of metal. Or one crop. Relying on the coin's definition to define it is somewhat messed up. It makes room for the size of the unit of measure change, thus destroying its value as a tool for measurement. Maybe not such a good thing.

That is how currency works. A dollar is not worth a set amount, it is worth whatever the economy says it is. A dollar's worth is a dollar's worth, whatever that happens to be. Minting coins from precious metals merely means the floor value of he coin is whatever that amount of metal is currently worth. If you have gold coins and your fortress has mountains of gold, gold is worth very little as it is quite common. If gold is scarce, with only a few bars in all the land, a gold coin is precious and worth quite a bit.

[AngleWyrm]

That's a bad definition. It amounts to saying "To be determined later" which is a lousy promise. Much better to state definitively that it is worth 1 ounce of gold. If gold then turns out to be common on the map, then the price of stuff can change without confusing the issue with ill-defined coin.

[irmo]

That's a bad definition. It amounts to saying "To be determined later" which is a lousy promise. Much better to state definitively that it is worth 1 ounce of gold. If gold then turns out to be common on the map, then the price of stuff can change without confusing the issue with ill-defined coin.

The coin is one ounce of gold, so it's obviously worth that. In a commodity money system, the only promise that the bank makes is that a one-ounce gold coin is actually one ounce of gold (that is, it's some level of purity and weighs exactly an ounce).

You seem to be insisting that it should also be fiduciary money--that the bank promises that (1) it's an ounce of gold, and (2) you can trade it in (to the bank, apparently?) for something specific like a copper bar. This requires the bank to hold the relative price of gold and copper constant, which is not really sustainable. It's been tried with real currencies (using gold and silver), and the inevitable result is that the real price of gold goes up, everyone melts down their gold coins and sells them as bullion, and then takes the silver to the mint and trades it for gold at the official exchange rate. Repeat until the mint is out of gold.

[AngleWyrm]

I can live with one coin is one ounce of gold. That works for me.

There would need to be some reversible reaction so that:
1 bar gold -> 50 coins
50 coins   -> 1 bar gold

Also, the price of the reaction should be exactly the price of a bar of gold in dwarfbucks. So if a bar of gold is 50 dwarfbucks, then the reactions are as listed above.

[forsaken1111]

That's a bad definition. It amounts to saying "To be determined later" which is a lousy promise. Much better to state definitively that it is worth 1 ounce of gold. If gold then turns out to be common on the map, then the price of stuff can change without confusing the issue with ill-defined coin.

I'm sorry, was this reply to me? Because I said exactly the same thing.

Minting coins from precious metals merely means the floor value of he coin is whatever that amount of metal is currently worth.

[Waparius]

So it looks like Toady's spending the next release on the Caravan Arc. It'll be interesting to see if any of these ideas wind up getting covered...

[AngleWyrm]

As it stands I can generally generate a world, pick a site with no real searching, and build a fortress that can produce anything and everything I could ever want, which makes caravans almost completely unneeded.

Dwarves are entirely too productive, compared to their needs. They consume drink, food, clothing(bugged), steel and furniture. And they output far more wealth than they could ever consume. Even if the caravans provided good trades for all that junk, the player would have mountains of steel.

Basically dwarves need higher consumption and lower production. Production can be lowered by making things take longer to be produced. Consumption needs some new things for dwarves to use up.

More furniture would be good, and allowing the trade of furniture as well. Consumption of finer goods such as bracelets and figurines, as well as cups and bowls(none) and silverware(none). The more a dwarf can collect and/or use up individually the better.

[Andeerz]

I agree.  But all of these things can be changed with simple changes of existing variables, or addition of new objects that work within the same framework: increase production time requirements, alter material requirements, alter consumption rates, add new stuff to produce, etc.  The frame work is already there.  Most of what it needs is balancing. 

It's wonderful to focus on discussing these things, as they do need work.  But I think there are other aspects of the economy that deserve more attention than they are getting presently.

From my limited knowledge about economic sort of things, the economy, the acquisition and consumption of resources, revolve around two ideas:
Ownership and value.

I think it is these two ideas that need to be addressed big time in the game, and (at the risk of sounding like an arrogant bastard) that Toady should focus on these in the Economy Arc fist and foremost.  You can't really trade what you can't own, and the impetus for trade is value.  Ownership is a huge determining factor (if not THE determining factor) in social stratification and government among other things.  And value motivates ownership, and the idea influences and is influenced by psycological and sociological stuff.  So, these ideas are key for not only trade and financial stuff, but could touch on many other important facets of the game.   

As it stands, ownership in the game is rather crude, and is not very good at representing certain complex ownership-related relationships.  For example, as things are now, you can't really have manorialism in the game, nor can you really have the complex interactions between guilds, governments, and other institutions, which had agreements about who owned what under which circumstances. 

Value as it is now is too arbitrary, and is pretty much just a place-holder at the moment.  Something is worth this many dorfbucks no matter what.  And what a dorfbuck represents is not defined at all.

I have some ideas about ownership and value as food for thought.  I'll get to value later as I have to think about this more and get back home to my notes and resources.

So... ownership:

What is ownership?  Wikipedia defines it as the state or fact of exclusive rights and control over property, which may be an object, land/real estate or intellectual property.  This is a nice operational definition. 

What determines exclusive rights and control?  A (perceived) consequence or threat of some sort is needed, imposed by either the person who owns an object in question or some other entity.  At the basic level, the consequence or threat can be physical (hit over head with hammer, imprisonment,etc.) or something else (moral obligation, realization of negative societal impact, ethics, peer pressure, whatever).  The consequence or threat can be real or simply perceived (think about bluffing and lying and superstition).  Who determines who has these exclusive rights?  Well, someone perceived as being in charge (in charge of what?  Again, this is a matter of ownership or sorts!).  From this stems complex agreements and treaties and governments and trade.

So, how would we model this in game, using the most distilled and fundamental factors that govern ownership so that things that depend on systems of ownership can be procedurally generated (governments, codes of laws, ethics, religions, any institution, personal property, etc.)?

Here's some ideas about ownership of an object that I farted out that might help.  The object in question could be anything (personal freedom, a chair, credit, whatever):

If something is owned by someone, there have to be the following:

An agreement on who can use and have it

Consequences for breaching the agreement
  -can be specific for different situations and people

Recognition (or non-recognition) of the agreement and consequences (perceived or real or both) by other parties
  -people can choose to respect these consequences or not, and if they don't, they can lay claim to the object and deal with the risks of doing so
  -this raises another idea: the idea of risk assessment... value plays a role here... but that's for another thread...

A way for this ownership to be communicated to others (without it being just instantly known by every entity in the DF world like it is now)

I could envision this being in the game somehow... the idea needs to be built upon, though!  Any thoughts?  I'll get to value later tonight hopefully...

[Andeerz]

Now... to expand on the "value" idea...

Self-referential self-deceiving gobbldygook, I say. "What's a coin buy?" "A coin's worth." Yeah, no shit it buys a coins worth, how much is a coins worth worth? The problem is the answer given does not promise to trade a set amount. It would be a clear promise if instead it were one bar of metal. Or one crop. Relying on the coin's definition to define it is somewhat messed up. It makes room for the size of the unit of measure change, thus destroying its value as a tool for measurement. Maybe not such a good thing.

It might be messed up, but it is how things work RL, and if we are going to have coins do what they did IRL in DF, we're going to have to understand this and model it. 

You raise excellent points, though.  The part I bolded highlights an especially important concept.  Ultimately, there has to be some way to define value in the game.  There needs to be some sort of static unit of measure of value somewhere.

It's important to understand this, though: although coins are essentially a tool that tries to provide this standard measure of value, ultimately, coins or any other form of currency (fiat or commodity moneys!) are commodities like anything else, and therefore their values are subject to the same things everything else is.

So, if coins can't be used as a static unit of value measurement, what can?  This question is absolutely key.  I think someone's going to have to invent an arbitrary value unit somewhere down the line, but I don't think currency is the level it should be done at.  I think setting coins with fixed value would make that aspect of the game all the more subject to exploit and meta-gaming.  Not to mention it just wouldn't be an accurate representation of coins.

Where should this arbitrary unit of value be introduced?  I think it should be introduced on the individual dwarf level.  The following quote says why: 

Everything is worth what its purchaser will pay for it.
        Publilius Syrus
        (~100 BC)

In other words, the value of something is subjective, its definition different from person to person depending on a variety of factors.  But what are those factors and how can we quantify value?

I've got some ideas that we could maybe build upon and serve as an example of what I mean by "factors" and how to quantify value:

For each item, each dwarf has a numerically represented perceived value.  The higher the perceived value, the higher the number for that item.  This item could be anything.  This number could then be used for calculating judgments made by dwarfs concerning how much to pay and with what, or how much to price something, or whether or not to agree to some agreement, or something like that.  This could affect things on an individual and larger level (supply and demand!).  There are several categories of value:

Sentimental
Utility/situational
Quality
Cultural/societal
(maybe others?)

Sentimental value would be affected by association with memories or other individuals (positive or negative), material preferences, personal beliefs... what others?

Utility/Situational value would be affected by necessity for daily life, immediate necessity (like life-or-death situation sort of immediate), necessity compared to what it's being traded for (if applicable)... what else?

Quality value would be affected by aesthetic appeal, workdwarfship, material... hmmm...

Cultural/societal/situational value would be affected by cultural norms, other peoples' perceived value of the item (especially important for currency!!!), social considerations (like if Urist wanted to buy the item just to spite Thikod, for example)... what else?   

All of these things could somehow be represented numerically maybe.  I dunno.  Perhaps this is a pipe dream, but I think this is sorta the way I'd go about things.

However, I am no sociologist, economist, nor psychologist.  Perhaps I should read up and do some research on the matter.  There might be some helpful stuff out there...

[jseah]

^Andeerz:
One more factor is how much money he has at the moment.  The more money a dwarf has, the more likely he is to pay a higher amount of coins (note that I avoid using the word "price")

Another is how much other people are paying for the same good.  If everyone is paying 1 copper for a plump helmet roast, no reason to pay more than 1 copper. 

[forsaken1111]

Another is how much other people are paying for the same good.  If everyone is paying 1 copper for a plump helmet roast, no reason to pay more than 1 copper.

But my friend, these are premium plump helmets grown in the deepest caverns, never exposed to so much as a glimmer of sunlight and ripened to the perfect point!

[AngleWyrm]

It might be messed up, but it is how things work RL, and if we are going to have coins do what they did IRL in DF, we're going to have to understand this and model it. 

You raise excellent points, though.  The part I bolded highlights an especially important concept.  Ultimately, there has to be some way to define value in the game.  There needs to be some sort of static unit of measure of value somewhere.

What coins do in real life is messed up; a penny was supposed to be x amount of copper, but then it got turned into something else that was worth less than x amount of copper, with the result that the copper was stripped out of the pennies, along with the promise of x amount of copper. Coins don't promise to have any metal content, nor do they promise to be redeemable for any absolute measure of goods; they have no worth as an instrument of value.

So I don't think we need to model what coins did in real life, because it was a slippery and deceitful path, full of trechery and greed. As designer, Toady has the enviable position of completely ignoring such things.

[jseah]

^Is that some kind of strange economic position?  Another one?  =P

Still, a 'gold standard' and merchantilist economic theory really apply very well to Dwarf Fortress.  It's also in period (I think)


That said, the 'gold standard' is only really propped up by the value dwarves/humans/elves attach to the gold in the coin. 

EDIT:
And I WANT my fiat currency and fractional reserve banking.  Nothing spells !!FUN!! like the rioters burning notes on the day of a currency crisis. 

[zwei]

Problem is that every single resource has infinite source and most items do not decay.

It does not matter whether production is slow or fast, eventually fortress will have huge surplus of masterpiece everything with masterpiece decorations.

Economy just breaks down in this setup.

[Rowanas]

I'd like to pick up on what a couple of people have said, which is entirely wrong.

Money used to be worth what it was, but nowadays coins can be worth less than the value of the metals they are made from. Take the penny for example. 1p is worth 1p, but turn it into scrap and sell it, and you'll make yourself 1.3 pence.