Andreas on May 03, 2013, 04:35:26 pm
Ah, who am I kidding, you all probably know this one, but it's a hoot anyway:
The theory of interstellar trade:
http://www.princeton.edu/~pkrugman/interstellar.pdf

wdg3rd on May 04, 2013, 01:41:17 am
Yeah, I remember it, though I forget where.

Someday I'll have to dig up a copy of my "The Economic Case for Polygamy".  Since it was for an English class, there wasn't any math in it (and I was a math major at the time so the only figures were from my own checkbook along with my wife's and cohusband's).
Ward Griffiths        wdg3rd@aol.com

Men will never be free until the last king is strangled with the entrails of the last priest.  --  Denis Diderot

myrkul999 on May 04, 2013, 08:51:35 am
Someday I'll have to dig up a copy of my "The Economic Case for Polygamy".  Since it was for an English class, there wasn't any math in it (and I was a math major at the time so the only figures were from my own checkbook along with my wife's and cohusband's).

Oh, please do! I'd love to read that.

Tucci78 on May 06, 2013, 08:26:17 pm
Ah, who am I kidding, you all probably know this one, but it's a hoot anyway:
The theory of interstellar trade:
http://www.princeton.edu/~pkrugman/interstellar.pdf

An economeretrician gets cutesy.  Feh.  Reminds me of a gag "scientific" article I'd written as an undergraduate about "The effects of defenestration on the mating behavior of feral rats."  

Undertake the studied intervention from the seventh floor and all you get from your subjects is a tendency to spatter and clot.  

Proof that Krugman was then - as he is now - a friggin' mundane.  That was the schmuck writing in 1978, well after Heinlein had published in 1973:

Quote from: Lazarus Long
Interstellar trade is economics stripped to basics. You can't make money by making money because money isn't money other than on its planet of issue. Most money is fiat; a ship's cargo of the stuff is wastepaper elsewhere. Bank credit is worth even less; Galactic distances are too great. Even money that jingles must be thought of as trade goods - not money - or you'll kid yourself into starvation.

   This gives the sky merchant a grasp of economics rarely achieved by bankers or professors. He is engaged in barter and no nonsense. He pays taxes he can't evade and doesn't care whether they are called "excise" or "king's pence" or "squeeze" or straight-out bribes. It is the other kid's bat and ball and backyard, so you play by his rules - nothing to get in a sweat about. Respect for laws is a pragmatic matter. Women know this instinctively; that's why they are all smugglers. Men often believe - or pretend - that the "Law" is something sacred, or at least a science - an unfounded assumption very convenient to governments.

   I've done little smuggling; it's risky, and you can wind up with money you don't dare spend where it's legal tender. I simply tried to avoid places where the squeeze was too high.

   By the Law of Supply and Demand a thing has value from where it is as much as from what it is - and that's what a merchant does; he moves things from where they are cheap to where they are worth more. A smelly nuisance in a stable is valuable fertilizer if you move it to the south forty. Pebbles on one planet can be precious gems on another. The art in selecting cargo lies in knowing where things will be worth more, and the merchant who can guess right can reap the wealth of Midas in one trip. Or guess wrong and go broke.

   I was on Blessed because I had been on Landfall and wanted to go to Valhalla in order to go back to Landfall, as I was thinking of marrying and raising another family. But I wanted to be rich enough to be landed gentry when I settled down - which I was not, at the time. All I had was the scout ship Libby and I had used and a modicum of local money.

   So it was time to trade.  

   The trade routes for a two-way swap show minimum profit; they fill up too quickly. But a triangular trade - or higher numbers - can show high profits. Like this: Landfall had something - call it cheese - which was a luxury on Blessed - while Blessed produced - call it chalk - much in demand on Valhalla...whereas Valhalla manufactured doohickeys that Landfall needed.

   Work this in the right direction and get rich; work it backwards and lose your shirt.

   I had worked the first leg, Landfall to Blessed, successfully, having sold my cargo of - Now what was it? Durned if I remember; I've handled so many things. Anyhow, I got such a nice price that I temporarily had too much money.    How much is "too much"? Whatever you can't spend before you leave a place you are not coming back to. If you hang onto that excess and come back later, you will usually find - invariably, so far as I recall - that inflation or war or taxes or changes in government or something has wiped out the alleged value of fiat money you may have kept.

   As my ship was scheduled to load and I had placed in escrow with the port authority the price of her cargo, what I had left over was burning a hole in my pocket with only a day to get rid of it, that being the time until my ship was to be loaded - I had to be on hand for that; I was my own purser and have an untrusting disposition.

   So I took a walk through the retail district, thinking I might buy some doodads.

[Emphasis added.]

Can you imagine a quasiKeynesian like Krugman acknowledging the invidious effects of government "legal" counterfeiting on the media of exchange in which he's conducting his elaborate senseless ritual calculations?

Now, an Austrian School economist might manage a better appreciation of time preference effects (including the impacts of time dilation if you can't gosh-wow around it by way of some sort of superduperdrive) as well as transportation costs, but a cement-head like Krugman?

Impossible.
« Last Edit: May 06, 2013, 09:02:15 pm by Tucci78 »
"I is a great believer in peaceful settlements," Jik-jik assured him. "Ain't nobody as peaceful as a dead trouble-maker."
-- Keith Laumer, Retief's War (1966)

wdg3rd on May 07, 2013, 01:58:02 am
Someday I'll have to dig up a copy of my "The Economic Case for Polygamy".  Since it was for an English class, there wasn't any math in it (and I was a math major at the time so the only figures were from my own checkbook along with my wife's and cohusband's).

Oh, please do! I'd love to read that.

Unfortunately, the easiest way to dig it up will probably be deep hypnosis.  In the 35 years since I wrote it I've moved rather more than three times.  Along with that polyandry breaking up, the open monogamy that got me through the 80s ending in peaceful divorce and the lady I spent the last couple decades with dying on me last year.
Ward Griffiths        wdg3rd@aol.com

Men will never be free until the last king is strangled with the entrails of the last priest.  --  Denis Diderot

myrkul999 on May 07, 2013, 09:37:15 am
Can you imagine a quasiKeynesian like Krugman acknowledging the invidious effects of government "legal" counterfeiting on the media of exchange in which he's conducting his elaborate senseless ritual calculations?

A more recent novel, Year Zero, by Rob Reid, highlights an interesting fact: Rare metals are rare everywhere. Gold, Platinum, etc, these things would hold their value even across interstellar distances.

Quote
“Nick,” Carly said, “you don’t know a thing about astrophysics, do you?”

“It wasn’t a huge subject of mine at law school, no.”

“Well, if it was, you’d know that the common heavy elements are all created in supernovas, which are distributed fairly evenly from galaxy to galaxy. That makes the noble metals similarly rare—and similarly precious—everywhere.”

As if that explained a thing. “What are noble metals? And why do I care?”

Silver, gold, iridium, platinum, and so on. Since they’re similarly rare and precious everywhere, they’re the natural basis for exchange rates throughout the cosmos—just as they have been throughout much of your own history. And since the various hard currencies of Earth already buy certain amounts of these metals on your global spot markets, we can’t set exchange rates for your money arbitrarily. They’re set by your metal prices and by ours.”



Someday I'll have to dig up a copy of my "The Economic Case for Polygamy". 
Oh, please do! I'd love to read that.
Unfortunately, the easiest way to dig it up will probably be deep hypnosis.

Damn, that's a shame. Oh well, if you come upon it, or it comes to you in a dream, Do feel free to share it with us. :)

Tucci78 on May 07, 2013, 04:27:30 pm
Can you imagine a quasiKeynesian like Krugman acknowledging the invidious effects of government "legal" counterfeiting on the media of exchange in which he's conducting his elaborate senseless ritual calculations?

A more recent novel, Year Zero, by Rob Reid, highlights an interesting fact: Rare metals are rare everywhere. Gold, Platinum, etc, these things would hold their value even across interstellar distances.

Quote from: Rob Reid
“Nick,” Carly said, “you don’t know a thing about astrophysics, do you?”

“It wasn’t a huge subject of mine at law school, no.”

“Well, if it was, you’d know that the common heavy elements are all created in supernovas, which are distributed fairly evenly from galaxy to galaxy. That makes the noble metals similarly rare—and similarly precious—everywhere.”

As if that explained a thing. “What are noble metals? And why do I care?”

Silver, gold, iridium, platinum, and so on. Since they’re similarly rare and precious everywhere, they’re the natural basis for exchange rates throughout the cosmos—just as they have been throughout much of your own history. And since the various hard currencies of Earth already buy certain amounts of these metals on your global spot markets, we can’t set exchange rates for your money arbitrarily. They’re set by your metal prices and by ours.”

Both you and Mr. Reid are abysmally wrong.  

The here-and-now monetary values of the noble metals ("Silver, gold, iridium, platinum, and so on") are not so much due to their absolute rarity as to their relative scarcities.

And that's only in our local stellar neighborhood.  Ceteris paribus, in parts of any galaxy where the heavy elements are generally more abundant (matter getting "recycled" by way of recurring supernovae) it can be expected that the metals commonly employed as transactional commodities in a division-of-labor economy - the monetary metals - would be found in volumes greater than on Terra.

But we don't have to go deeper toward the galactic core.  Sadly out of print (and not available to my hand at the moment) is the Rosinante trilogy (1981-82) written by Alexis Gilliland, set largely in our solar system's asteroid belt.

On the basis of still-prevailing appreciations of many planetesimals' composition, Mr. Gilliland speculated on the application of zone refining techniques - in microgravity and microTorr - to big friggin' masses of metallic ores, theorizing (pretty solidly) that even if those rocks assayed out as relatively crappy sources and were primarily exploited to get the raw materials to make structural components for the fabrication of habitats, ships, and so forth, just sort of incidentally the processes would result in tons (and tons and tons and tons) of refined silver and gold and osmium and palladium and platinum and stuff like that there.

More than enough to catastrophically collapse the monetary metals markets back on Earth, which Gilliland worked into The Pirates of Rosinante (1982) as a plot element.  

So if we're talking "rare everywhere," for precisely what values of "rare" and what values of "everywhere" are we speaking?
« Last Edit: May 07, 2013, 04:34:20 pm by Tucci78 »
"I is a great believer in peaceful settlements," Jik-jik assured him. "Ain't nobody as peaceful as a dead trouble-maker."
-- Keith Laumer, Retief's War (1966)

myrkul999 on May 07, 2013, 05:06:11 pm
So if we're talking "rare everywhere," for precisely what values of "rare" and what values of "everywhere" are we speaking?

Well, in the story, they're looking to erase the hideously huge amount of debt resulting from a mind-bogglingly large number of copyright violations which occurred when aliens discovered our music in the late 70's... so even allowing for variations in rarity, there aren't enough "noble metals" in the universe to pay it all off.

Tucci78 on May 07, 2013, 05:35:41 pm
So if we're talking "rare everywhere," for precisely what values of "rare" and what values of "everywhere" are we speaking?

Well, in the story, they're looking to erase the hideously huge amount of debt resulting from a mind-bogglingly large number of copyright violations which occurred when aliens discovered our music in the late 70's... so even allowing for variations in rarity, there aren't enough "noble metals" in the universe to pay it all off.

I think that if you wanted a fictional exploration of commerce between an unsuspecting Earth and an interstellar multispecies alien civilization you'd be better off reading Greg Costikyan's 2001 novel First Contract.

But while a story predicated on debt resulting from the alleged violation of intellectual property rights might be humorously entertaining, it sure as hell couldn't succeed as anything remotely resembling speculation about the laws of economics.

Or (for reasons stipulated above) the laws of physics.
« Last Edit: May 07, 2013, 05:37:22 pm by Tucci78 »
"I is a great believer in peaceful settlements," Jik-jik assured him. "Ain't nobody as peaceful as a dead trouble-maker."
-- Keith Laumer, Retief's War (1966)

kunkmiester on May 24, 2013, 04:56:33 pm
I had the thought that while rare, precious metals aren't quite as rare as they are on planetary surfaces.  Thus you'd get some massive inflation, but if you're expanding into the solar system, you'd deflate again, though probably not even close to earth bound supply levels.

Another thing is that short a Norton the Robot hyperdrive, interstellar travel is bloody expensive, no matter how you go about it.  Even precious metals probably wouldn't be precious enough to bother with, forget about shipping wheat or iron.  Only the most extreme luxury goods, people, or intellectual work would be worth shipping.

Tucci78 on May 24, 2013, 07:38:24 pm
I had the thought that while rare, precious metals aren't quite as rare as they are on planetary surfaces.  Thus you'd get some massive inflation, but if you're expanding into the solar system, you'd deflate again, though probably not even close to earth bound supply levels.

How are you defining inflation and deflation?

Inasmuch as the monetary metals aren't being employed in our present international fiat currency central banking clusterfuck of a world economy as money-of-account in measuring the value (and cost) of goods and services, it would seem impossible to speak of large amounts of the noble metals coming into the commodities markets as being inflationary or deflationary in their influence.

True, those central banks with their Harkonnenesque heart plug control of the currencies forced upon the productive by government thugs' "legal tender" laws do retain the fiction of gold reserves, but that's a Fort-Knoxian deception that has grown ever more transparent since the "Nixon shock" of 1971.

Another thing is that short a Norton the Robot hyperdrive, interstellar travel is bloody expensive, no matter how you go about it.  Even precious metals probably wouldn't be precious enough to bother with, forget about shipping wheat or iron.  Only the most extreme luxury goods, people, or intellectual work would be worth shipping.

Good observation, and a concept well-considered in speculative fiction for decades (to my own memory, at the very least since George O. Smith's Venus Equilateral stories).
"I is a great believer in peaceful settlements," Jik-jik assured him. "Ain't nobody as peaceful as a dead trouble-maker."
-- Keith Laumer, Retief's War (1966)

kunkmiester on May 25, 2013, 03:26:28 am
Change in value of the currency in relation to the market.  Print more dollars, inflation.  More gold in the market, inflation.

Right now, per capita, gold for example has a set value, due to it's scarcity.  We've even done the math on the amount of recoverable gold on the planet and that influences the value.  Extraterrestrial gold however, isn't in this supply.

When it's first introduced, it'll have a massive inflationary effect, pretty much killing most of the scarcity value of gold since we'll likely not have expanded much beyond earth, but the thousands of tons of it out there is now considered in the supply.  Like the per capita number of dollars flaoting around, this will have an inflationary effect, especially if gold is the main trade standard.

In say, a thousand years, when we have properly colonized the solar system, we'll have had a very very slow deflation, as more people are born and the per capita supply goes down.

Tucci78 on May 25, 2013, 07:10:56 am
Change in value of the currency in relation to the market.  Print more dollars, inflation.  More gold in the market, inflation.

Only if gold (or any of the other precious metals) are being used in the considered economy as money.

Quote from: Wiki-bloody-pedia
"Money is a matter of functions four, a medium, a measure, a standard, a store."

If by dint of government thuggery people in a polity are not allowed to use gold as money (vide supra), then an increase in gold reaching the commodities markets can no more be said to cause "inflation" than might an increase in the amounts of rare earth elements - or pork bellies, or frozen concentrated orange juice - coming available.

Right now, per capita, gold for example has a set value, due to it's scarcity.

*Loud Rude Buzzer Noise!*  Precisely wrong.  Right now - "per capita" be damned - the currency values of gold futures ("paper" gold) is being concertedly depressed while what we might call the "street price" of gold placed in the private individual's possession is not only high but increasing, and is likely to continue that increase despite the absolutely unsustainable induced bear market in this particular commodity.

Gold does not have "a set value" in terms of fiat currency units because central banks have been dumping their "legal counterfeit" into the world markets as a matter of government policy all over the world. 

The only relatively "strong" fiat is found in polities where the governments are a bit less Gadarene about "quantitative expansion" than are their foreign colleagues.  Places like Switzerland, New Zealand, and Australia, for example.  But even there, legal tender laws prevail, and the politicians perpetrate this "one form of taxation which even the weakest government can impose upon its people."

How does one speak of "set value" for any physical commodity when the valuation is perforce undertaken in terms of currency units which are themselves a preposterous tissue of lies?

We've even done the math on the amount of recoverable gold on the planet and that influences the value.  Extraterrestrial gold however, isn't in this supply.

Yet.  It's out there, and unless the governments continue successful in their increasingly precarious connivances to keep private individuals from exploiting the resources known to exist outside the Earth's gravity well, it's coming into the hands of Homo sapiens in much the same way that copper and tin did to close out the neolithic age.

When it's first introduced, it'll have a massive inflationary effect, pretty much killing most of the scarcity value of gold since we'll likely not have expanded much beyond earth, but the thousands of tons of it out there is now considered in the supply.  Like the per capita number of dollars flaoting around, this will have an inflationary effect, especially if gold is the main trade standard.

But - as mentioned - gold is not "the main trade standard."  There are government goons with guns doing their sweaty, murderous best to prevent that.

And you're thinking in terms of "thousands of tons" of gold "out there," are you? 

Orders of magnitude error.

In say, a thousand years, when we have properly colonized the solar system, we'll have had a very very slow deflation, as more people are born and the per capita supply goes down.

Which is the only correct statement you've made thus far.

If, of course, gold by that time has become money again.

And deflation is bad precisely...why?
"I is a great believer in peaceful settlements," Jik-jik assured him. "Ain't nobody as peaceful as a dead trouble-maker."
-- Keith Laumer, Retief's War (1966)

Sean Roach on May 25, 2013, 07:50:33 am
Right now, work done by an unskilled highschooler pushing fast food is more valuable today than work done by a highly skilled craftsman or a middle level manager from 60 years ago.  If that craftsman had squirreled away some of his earnings as cash, their value today would likely be less than minimum wage.  So money, today, performs very poorly as a store of value.

On the reverse. With deflation, the work of a menial 60 years ago could be more valuable than the work of a professional today.

I'd hardly say either situation is optimal.

Slow deflation would encourage saving, again, and probably wouldn't destabilize commerce the way slow inflation has.  It would mean you could actually save for retirement, instead of gambling, in a fixed game, on futures and stocks just to stay in the same place.

Of course, for that to work best, there'd also have to be a constantly growing workforce, which a fixed money supply and slow deflation assumes.  Someone would have to still do the work of today for the wages of yesterday.

Arguably better than the system we have now, anyway.



And deflation is bad precisely...why?

 

anything