Transaction

[dr-spangle]

10 Tonnes Enriched Uranium from CIS to Shireroth for the price of 20 posts

Signed Dr-Spangle of New-Empire.

[Aurangzeb Khan]

Noted with thanks.

[Andreas the Wise]

I'm sorry, did someone organise trade ... with a post based transaction ... without me or the Kaiser's approval?

[Kaiser Hasan I]

It has my approval.

[dr-spangle]

It was agreed between Hasan and I using MSN...

[Liam conToketi]

OMG! The CIS traded uranium?!?!

[Kaiser Hasan I]

I've been looking into Andreas' resource based economy and am experimenting with its application in international trade. Ardashir and I are attempting to see if it can be worked in conjunction with the vote-based economy or not, since he and I were the architects of its design. The upside is that the trade portion works, the downside is the lack of a universal currency value. The solution was presented that the "seller" in this case Spangle, was able to suggest the currency of payment, which in this case was post count.

[Andreas the Wise]

It has my approval.

Just checking.

And Hasan, I wouldn't say its a resource based economy. Merely trading is resource based. And what else is it going to be based on, really? It functions with vote, war or post economies ...

[Kaiser Hasan I]

Yes, but since there is no universal standard, a conversion has to be made. Consider that the micronations that use the vote economy do not hold ALL resources within their territories. That means that eventually, if resources are to be traded, they will have to deal with micronations that use a different economy. To achieve this, the vote based micronations would either have to have two parallel economies (impractical) or, work out a currency conversion. The trouble is, a vote based currency will always be worth more than what other currencies are pegged to. Without trying to provoke an argument, a Shirerothian erb will always be worth more than X number of posts unless those posts are actually paid. For example:


If Shireroth traded 10 erb to the CIS in exchange for a currency based on posts, that would mean the CIS is required to post a certain number of times in Shireroth. But to consider that 10 erb equals 10 votes, we would have to gage how much that is worth in CIS post-based money. I'd imagine, it would be worth quite a bit. So, if an erb is equal to ten posts, CIS would be posting in Shireroth more than their own forums to pay off their debt.


This conversion may not seem necessary now, but it eventually would be. And that is my point.


By the way, sorry for not notifying you of this experiment, it was sort of a last minute idea before I went offline.

[Andreas the Wise]

EDIT: I've written this post, thought its probably too confusing, so I'm going to rewrite it, but retain the old version in small font if it helps anyone ... it elaborates on some of the things I'll discuss.
And doing the experiment without contacting me was fine. You are Kaiser after all, if you can't do act on a decision without consultation once in a while what's the good of being all powerful?

I gather than that you and Ardashir are having trouble conceptualising how currency can be exchanged. I thought I'd addressed this in my paper and pm to you, but apparently not enough, so I'll try explaining it in a different way.
Vote currencies would have no 'voting' power outside of their country, correct? It would be foolish if, say, we pay Babkha 100 erbs, to allow them to influence our government, however much we respect them. So once they move outside of Shireroth, erbs are just another currency to be exchanged.
At the same time, even vote based economies can't realistically do a 1:1 exchange. What if Shireroth starts with about 500 erb in each Duchy plus 500 controlled by the Crown, and paid out for performing services, bounties etc? Let's say Babkha has less people involved (I claim no knowledge of details of the Babkhan economy or how many people are involved), and say there are only 8 citizens, but all can vote. Lets say each citizen starts with 100 Camels then. And the government has 200 Camels
For a Babkhan in this situation, another 100 Camels from the government makes a lot of difference. Now his vote is worth twice that of the other Babkhans. His views are more important. It now takes two other Babkhans to oppose him. But lets say a Shirithian Duke gets 100 erb from the Crown for writing a short story. It increases his vote, but not by a considerable amount. If the other Dukes still have 500 erbs, then whether he votes one way or another doesn't matter. Now there might be 1500 votes against 1100, but its still, essentially, 3 Ducal votes to 2. If they start trading, and we just do a flat "destroy the money in one economy, create it in the other and retain the value, because both are vote economies" at 1:1, then if Shireroth gives 100 erbs to Babkha, now it has a whole another vote, effectively, floating around in its economy. Whereas is Babkha gives 100 to Shireroth, it doesn't affect the Shireroth voting too much. You get the same principal (but smaller) in deciding how much money the government should have that doesn't affect voting, and thus how much the total amount in current circulation can fluctuate.
How then can Babkha and Shireroth exchange money? Well, lets assume that outside of the country, the voting power no longer holds. Now 100 erbs in Babkha does not swing their votes - it can just be used to purchase services. Well then, what makes sense for exchanging? Either exchanging based on the cost of common services (if the Babkhans pay 20 Camels for a story, and 10 for a Wiki article, and Shireroth pay 40 erbs for a story, and 20 for a wiki article, then exchange should be 2 erbs for 1 camel), or based on the amount in circulation (Babkha has only 1000 Camels that move around its economy. Shireroth has 3000 erbs. Understandably, Shireroth is willing to pay more erbs for a service than Babkhans will pay Camels - because there are more erbs to go around. People don't value them quite as highly. So it would make sense, if you chose this way, to trade 1 Camel for 3 Erbs.)
But hang on. If a Shirithian Erb cannot be used for voting outside of Shireroth, then why would a Babkhan want 3 erbs instead of 1 camel, unless he wanted to buy something from Shireroth. The money could be exchanged by deleting 3 erb from the Shireroth bank, and adding 1 Camel to the Babkhan bank, and so the Babkhan can be paid 1 camel instead of 3 erbs. But that gets dodgy - because if Shireroth keeps buying things from Babkha, soon the economic positions will reverse - Shireroth will have only 1000 erb in circulation, and Babkha will have 3000 Camels. We'd have to either re-evaluate the exchange rate every time, or work off the costs of goods and services (and, to be honest, I don't think we'll ever find a situation where it turns out that most Babkhan goods are sold for 1/2 the cost of a Shirithian good, say. They'll all be at different exchange rates. So going by amount in circulation makes more sense). So, this suggests, we can't do that. We have to exchange the money and keep it as erbs or Camels. So now the Babkhan Government will own however many Camels, and 3 erbs. The 3 erbs is of limited use to them, except if citizens want to buy Shirithian things - in which case, they can approach the government and exchange camels for erbs, go to Shireroth, buy the thing, and the money ends up back in Shireroth. But what if a citizen wants needs more than 3 erbs? The Babkhan government can't create erbs, so they have to go to all the bother of finding someone in Shireroth who will trade them more erbs and wants camels - and that'll be hard. Solution? What if, when they start the trade agreement, Shireroth and Babkha swap a large amount - Shireroth gives Babkha 300 erbs for their bank, and Babkha gives Shireroth 100 Camels for their bank ... and then Shirithian and Babkhan citizens can exchange money happily with their bank when they want to buy goods or services from the other economy, and, if one bank runs low, they just approach the other one and exchange money again. True, if a nation is consistently importing more than they're exporting, they'll just keep losing money - but that just confirms what we'd think in real life - that the practice is unsustainable, and they'll have to start importing a lot less until they can get their imports up.

Woah, that ended up really really long. But I hope that explains, with practical examples, how exchange could work. "But wait," you say, "this was between two post based economies. And it assumed citizens could buy goods and services from one another. Didn't you suggest that in trading with Gralus, until our economies are both up and running again, we just trade resources and not goods and services? And Gralus isn't vote based, is it?" The answer is, in my opinion, it doesn't matter. See the part in the example where we said that actually giving votes to the foreign nation was a bad idea, and that making it worth votes in their nation too at a 1:1 rate is a bad idea? What did we decide? That outside Shireroth erbs have no voting value, that 1:1 trading didn't work, we had to use other methods of exchange (either on equivalent goods or on amount in circulation), and finally, that deleting money from circulation and creating it in the other nation actually seemed rather dodgy, and so instead it just became an amount of money the government held? That end result actually works EXACTLY THE SAME with exchanging with non-post based economies. Even within Gralus, where we'll probably have a War Based economy (and that IS pegged to something) and a Post-Based economy in different countries within the Confederation, I've suggested we exchange in the same way - banks trade a whole bunch at the start based on amount in circulation, and then individual citizens approach their local bank to work it out. Forget about Post Based economies as having money tied to posts. Just think of it all as money, which, outside it's home economy, has its only value in exchange. Finally, to the question "what if we aren't trading goods and services, and so we have no actual need for the erbs/NCUs in the other country". Well, we do - because if the balance of trade changes the next month, and instead of Shireroth paying Gralus erbs, Gralus has to pay Shireroth, Shireroth will want erbs, yes? So we'll pay to them from erbs first, and from NCU's only if we have to pay more, and vice versa. If, in the end, one nation consistently imports more than the other, but makes up the excess from exports to other countries, it solves itself out in what Hasan described as the "second economy" - the International economy. If Shireroth is trading with any nations other than Gralus, that Gralus is also trading with, then Shireroth can give those extra NCUs they have to, for example, USSRAT, who need to buy more from Gralus than Gralus buys from them, and it all evens out ...

And remember how closely I, as both Minister for Trade here and President of Gralus there can work with my counterparts? I assure you it will be no difficulty to keep the actual difference between our trading at an absolute minimum and ensure no government ends up with a whole lot of currency from the other.

I hope that explains better how it would work, and that exchanging with an economy of the same type doesn't necessarily make things any easier (unless they both are unclosed post based economies, in which case creating money in one and destroying it in the other makes no difference, and they do have easily equivalent income per post, but those sort of economies aren't as sound as closed ones anyway, and since Shireroth is neither unclosed nor post based, we won't worry about that ...)

And my old post, which probably will just confuse you ...
I think I pm'd you a way to manage to exchange ... but if not, the problem you raise is only a problem if you make it so. Most of the time post based economies ignore that they're pegged to posting ... that is, most people would never consider doing what you've done with Spangle - you posting 20 times on his forum. You can just as easily exchange based on purchasing power, or money circulating in the economy. For that matter, I've always assumed erbs that leave our economy don't count for votes - so once they leave, they are just another currency. The value they are pegged to is nothing to the people outside Shireroth that you're giving them to.
If value is your only problem then for Gralus you can exchange with Toketi's War Based economy, where money has a very real value - one troop in SNARL. Some would say that's worth more than 1/20 000th of a vote, or whatever amount of erbs we end up having ...
This, oddly enough, fits in with what I've been doing in uni about Marxist thinking. He talked about all items having a use value and an exchange value. Use value is what they're used for, Exchange Value is what other commodities you can get for them, so to speak. Their use values are qualitatively different, and so you can't exchange based on use value. He said you should exchange like for like. So, for example, if in Shireroth the government will pay 20 erbs for a short story, and in Gralus the government will pay 100 NCU, then you could exchange 1 erb for 5 NCU. It doesn't make sense to say that the erb is worth more because it has a vote attached to it because the vote has no meaning outside of Shireroth ... but maybe I'm misunderstanding that bit.

On the two economies bit, I suppose you could think of it as such, if you take it as every nation has an internal economy, and is part of the international trading economy. But arguably there's just as much problem saying how much is 10 NCU worth to Ocia, since they don't get money for posting, just for doing jobs. Or how many Australian Dollars are worth a US dollar? Since micronations are too small to rely on market forces of supply and demand, it makes sense to exchange like for like - and so when the currency is not 'pegged' to the same thing, work on similar purchasing power, or a similar amount of currency in circulation.

[dr-spangle]

Two questions now...

One for Andreas, One for Hasan maybe...

Question for Andreas: Have you ever heard of haggling? It's the simplest* form of trading since time began, even in the modern age prices are basically recorded haggling, companies raise a price, they look at how sales went down, they lower it to make more profit... same with currencies...

Question for Hasan perhaps? I'm not all that sure: Has the transaction been completed, I'm not all that sure what's happening?



*Apparently that's correct spelling, I'm not sure...

[Andreas the Wise]

Yes Spangle, I have. And everyone I've offered to that too said it's too confusing.
So I'm going with the "companies offer a price, see how sales go, change it" approach ...

[dr-spangle]

That is haggling practically...

It's the same form of trial and error

[b3n|<3r|\|]

*flashbacks of Scott's journal and the Life of Brian ensue*

Haggling sounds fun. To watch.

[Andreas the Wise]

That is haggling practically...

It's the same form of trial and error

Ok, haggling IS in the system then

[Kaiser Hasan I]

Hmm never did post in CIS did I? I'll have to do that.

[Aurangzeb Khan]

I posted IIRC.