Peripheral Code ruling on magical creation of silver

[DIREWOLF75]

Today, in real life, when a big company makes, say, a new manufacturing plant in a small town and thus pumps money into a small local economy, the result is not hyperinflation.

Extremely NOT comparable. The money spent still has a "real" background and there is almost zero localisation of effects because longrange transportation is the norm today.
That was exactly why i earlier said that you can get away with it if you´re at a major trading hub(or if the covenant itself spends its cash nonlocally).

I understand the idea of hyperinflation. I just fail to see how a covenant can be big enough to have this effect.

Because covenants are usually not placed in areas of dense population. Making the influx of cash automatically a major part of the local economy. And a small economy cant handle that much extra cash.
If you´re sited next to a large town or inside a city, then its likely going to be fine.

The result is higher local wages, an increase in population, the growth of local contractor-industry to support the manufacturing plant, the growth of local cafes and recreation industry, and possibly a bit of status-seeking-competition between the existing local politicians and the newly arrived company executives. Sure, a bit of inflation will occur, but that's not the same thing as hyperinflation.

As i mentioned already, why dont you take a look at what happened with goldrush economies?
The major difference being that here you´re having less of the benefits since the big spender is just one single entity rather than a big bunch of them, spreading the spending more evenly.

Higher wages, yup. Increase in population, yup. Those two alone will greatly affect food prices, and that all by itself will be enough to kickstart serious inflation. It´s something that HAS happened many times in history already, places where a goldrush have caused a boom, followed by famine and extreme inflation, sometimes followed by the town more or less becoming deserted, despite being a perfectly viable place to live before the boom economy.

Yes, but this wasn't because the nobles feared destroying the local economy through hyperinflation. This was because there were no shops in the frontier for the noble to purchase stuff from, i.e. there was no local economy of significance.

Yes and no. Even when there was a local economy, you didnt go there just with cash, and yes it was(at least in part) because there was fear of shredding the economy.

In fact, exactly the same applies to a covenant. If a covenant built in a frontier region creates silver to buy mundane supplies (like food) or more esoteric supplies (like glassware for labs), then the actual silver will be spent in distant places in relatively large economies. Money for food will be spent in some regional distribution and storage centre (i.e. a local town). Money for exotic items may be spent on the other side of Mythic Europe --- perhaps Venice for glassware.

Oh, as long as enough of the cash isnt spent locally, its just fine.

[Richard_Love]

@DIREWOLF75

Today, in real life, when a big company makes, say, a new manufacturing plant in a small town and thus pumps money into a small local economy, the result is not hyperinflation.

Extremely NOT comparable. The money spent still has a "real" background ...

The money has no local background. It can have come from the other side of world, or via loans, it may as well have arrived via magic.

@DIREWOLF75

I understand the idea of hyperinflation. I just fail to see how a covenant can be big enough to have this effect.

Because covenants are usually not placed in areas of dense population. Making the influx of cash automatically a major part of the local economy. And a small economy cant handle that much extra cash.

What exactly do you think the covenant is purchasing from a small, isolated local economy, with all this silver?

The lonely forest woodcutter has only got so much wood to sell the covenant. And the covenant has only got so much need for wood.

You can't purchase what isn't available.

@DIREWOLF75

As i mentioned already, why dont you take a look at what happened with goldrush economies?

The problem with goldrush economies is that the gold runs out. It is also still a question of scale. A covenant just isn't that big.

[Timothy_Ferguson]

@The Baron

Oh, reprinted in HoH:TL p.87. It IS per resident. My mistake.

Edit. Unless residents only refers to resident magi, which covenants seems to imply

I was trying to tighten up the number, given that in Covenants we allow for covenants with literally thousands of residents.
I'd note, though, that this -isn't- the Stonehenge ruling. What it actaully says is "rulings in many Tribunals". Stonehenge have a loose policy, compared to these other (unspecified) tribunals.

[Timothy_Ferguson]

@Richard Love

@Cuchulainshound

Now, the Tribunals don't care about "game balance" but about the inflation of local economies ...

I'm not sure that Tribunals would really care about that either, or would realistically think of it as being an issue. Afterall, if the local economy tanks the magi can still keep ahead by making more silver...or by using magic to directly create whatever they are wanting to buy with the silver...or using ReMe to ensure that they get what they want.

What Tribunals think is one of those aesthic questions. IMO, some idiot has done most idiot things at some point and so magi have seen most forms of stupidness before. Keeping ahewad of rising prices by minting more silver, IMO, cannot work.

Sure, they can just make the stuff they want, that's never been the point of the limit.

I think that a more realistic care for a Tribunal is not wanting to be seen to be "too wealthy". If magi appear very wealthy, then nobles will want loans, and then nobles will inevitably want to suppress / destroy covenants in order to avoid paying back the loans.

See, to me, that's OK too.

[Timothy_Ferguson]

@Richard Love

@gerg

@Richard Love

I'm not sure that Tribunals would really care about that either, or would realistically think of it as being an issue. Afterall, if the local economy tanks the magi can still keep ahead by making more silver...or by using magic to directly create whatever they are wanting to buy with the silver...or using ReMe to ensure that they get what they want.

It says explicitly on page 57 of Covenants that Redcaps notice inflation and that Quaesitors may care about it.

I know it says that. I just question how realistic that is ... and as I said, 'being seen to be very wealthy' seems like a bigger and more immediate concern for magi (to me).

It is -very- easy for magi to destroy the monetary system of Mythic Europe. In 1220, its more robust, but before about 1168, then Europe is facing a silver drought. No new, large, stable mine had been discovered since 980 (Goslar). Total production in Europe more than doubles when Freiberg is founded (begins 1168, takes time to cycle up) and it only produces about 4 tonnes a year, arguably. Goslar had been dwindling steadily for about a century, and bankers in Europe really did discuss what to do when there simply was no silver left to be shipped East.

In 1220, Jihalva is discovered, and it's also a big new source, and a few more come on line in the late C13th, but until the discovery of Freiberg, which is the -only- large stable mine in Europe. Remember, in 1167, the total production of silver in the entire continent of Europe is arguably as low as -four- tons, and most of that comes from Bohemia. Now, there are other estimates that range higher, but it does give you some idea of the reason why making silver's not trivial. The infrastructure of Europe's not good enough to spread this silver evenly, so if you are in Ireland and you make 100 pounds of silver, there's simply no way you can spend it in a short time without it changing the price of silver locally.

[Timothy_Ferguson]

@Richard Love

@DIREWOLF75

I'm not sure that Tribunals would really care about that either, or would realistically think of it as being an issue. Afterall, if the local economy tanks the magi can still keep ahead by making more silver...

That would be an exceptionally bad idea....

Maybe.

It really depends on the extent. If the magi just set themselves up to be "slightly wealthier than the neighbouring nobles", I can't really see how that will cause the economy of Mythic France, say, to collapse.

If that's all you want to do, you don't need to make silver to do it, which destroys the system of exchange. You can make wine, or cloth, or carved chairs or custard.

Sure, maybe they find that over a few hundred years the silver isn't going as far as it once did, and so they need to do their ritual once every seven years, instead of once every ten years, and perhaps the local region is a bit wealthier than it otherwise would be. But that's not exactly hyperinflation. Covenants are simply not that large.

You seem to be grossly overestimating how much silver circulates in a kingdom. As an example, Peter Spufford points out that mints were roving things, and silver only becomes available in sufficent quantities for people to make permanent buildings working as mints far later than you might expect. In Venice for example the first permanent mint is built in 1278. Outside Italy, in the West, there are only two major purpose built mints we know about in the C13th. (Paris, 1250ish and London, in the 1270s).

That is, there is so little silver in medieval Europe that if your covenant has silversmiths who are employed making coins, and they don't roam around the countryside, you have more silver free to hand than anyone else. The French mint roamed around being shared between the guys allowed to make coins. The cities of the Baltic sea shared a romaing mint, which eventually settles down in Antwerp after the game period.

It should have much the same impact as any other wealthy noble moving into the area.

Wealthy nobles express their wealth in consumables. Silver is only slightly consumable.

To have a real, immediate, obvious impact on their local economy the magi need to be throwing around enormous amounts of silver.

This simply isn't true: silver is a problem, because its the currency.

The more immediate and dangerous problem (and which will be a problem at much lower levels of apparent wealth) is that the 'neighbouring nobles' will have issues about the arrival of these vulgar, nouveau riche scholars. This, rather than some sort of economic analysis, seems like a much more believable problem for magi to be worried about.

[/quote]

[Timothy_Ferguson]

@YR7

Really, having an extra silver mine in the area is not going to set off massive inflation. The same goes for a covenant magically creating silver.

Respectfully, in real life it did, so I don't see why it wouldn't in Mythic Europe.

I have to say, that generally I find such "realistic" economics boring - I much prefer to deal with high fantasy and adventure, and leave the petty economical concerns to the background. As such, I tend to ignore the Peripheral Code ruling. If a covenant wants to take care of its economic needs this way - fine. Whatever. I don't really care.

Fair enough, that's a valid play choice.

[Timothy_Ferguson]

@Richard Love

What exactly do you think the covenant is purchasing from a small, isolated local economy, with all this silver?

The lonely forest woodcutter has only got so much wood to sell the covenant. And the covenant has only got so much need for wood.

You can't purchase what isn't available.

Richard, having a lot of money, with no goods to chase, is the very definition of what causes hyperinflation. If you have a lot of money, and there is nothing much for you to swap it with, then because money is only worth what you can buy with it, your money is now worth a lot less, per unit, than it was before you had heaps of money. That's price hyperinflation.

@DIREWOLF75

As i mentioned already, why dont you take a look at what happened with goldrush economies?

The problem with goldrush economies is that the gold runs out. It is also still a question of scale. A covenant just isn't that big.

I think Direwolf is not refering to the collapse at the end when the gold runs out, he's refering to the middle bit where gold is worth so little in the towns where it is mined that throwing chunks of it at exotic dancers as a tip, which occured on most Australian gold fields, seemed like a sensible purchase to the men doing the throwing. At Sovereign Hill in Australia, the guy with the water tank on a cart was paid in grains of gold for weekly supplies of water. In a system where there are no goods to buy, metals fall in value to a remarkable degree.

[DIREWOLF75]

I think Direwolf is not refering to the collapse at the end when the gold runs out, he's refering to the middle bit where gold is worth so little in the towns where it is mined that throwing chunks of it at exotic dancers as a tip, which occured on most Australian gold fields, seemed like a sensible purchase to the men doing the throwing. At Sovereign Hill in Australia, the guy with the water tank on a cart was paid in grains of gold for weekly supplies of water. In a system where there are no goods to buy, metals fall in value to a remarkable degree.

Very much so indeed.
The time when the economy has gone so insane that its become an almost standard joke for cartoonists(gold nugget for a glass of water style exaggeration)...
Australia was another good example as well, as it also had a large degree of "remoteness".

What exactly do you think the covenant is purchasing from a small, isolated local economy, with all this silver?

Anything it doesnt pay 2-5 times as much to get imported? Like say, a lot of food? Buying food will very rapidly affect everyone in the area as everyone will have to raise prices to still get food themself.

[Birbin_again]

@Timothy Ferguson

@YR7

Really, having an extra silver mine in the area is not going to set off massive inflation. The same goes for a covenant magically creating silver.

Respectfully, in real life it did, so I don't see why it wouldn't in Mythic Europe.

As I read in the medieval Europe there was too few precious metals. The situation became more serious in later centuries. Much precious metals were used to buy Eastern luxury goods so they left Europe.
People mined tons of gold and silver every year so I don't think some magically created silver would cause much problems.
Inflation started after the arrival of the huge quantity of silver and gold from the New World. You may check the amounts on the net.

Anyway as you wish in your saga.

[Halancar]

Remember, in the XIII century Europe was not one global economy, but a lot of separate economies with very weak links between them. I don't think a few hundred pounds is going to make a notable difference to the economy of a trade city like Venice or Constantinople, but if these same pounds show up in Scotland or rural Germany, it would take years and years for it to trickle away and for the local economy to readjust. The peasants wouldn't even suffer, because they would still mostly use barter; but local nobles, and the local bishop, would feel it, as there whole fortune will be wiped away, and they are the one who are going to make trouble for the magi.

And if every covenant in Mythic Europe casts one silver creating ritual (or worse, a gold creating ritual), we are looking at tons and tons of the stuff...

[Cuchulainshound]

The question of "would it" or "wouldn't it" aside, I'm a bit dubious as to the economic acumen and insight of the time - I'm not sure that such understanding of a relatively new concept ("a currency-based economy") would even exist.

@Timothy Ferguson

This simply isn't true: silver is a problem, because it's the currency.[

T - But really, is it? The currency, that is.

My knowledge of historical economics is weak (read "almost non-existent"), but wasn't most of Europe still on a barter economy? I thought there was still a large barter system across the vast majority of Europe, and coinage was commonplace only in urban areas (which comprised only maybe 10%-15% of the population, depending) and merchant-scale transactions - and even then, barter was the norm, and coinage the exception. And that the universal shift from barter to coin was part of the "renaissance" (a vaguely defined era, admittedly), starting maybe circa 1300 - no?

If(?) this is so, then I'm not sure how a significant influx of silver could avoid having a noticeable impact, if not immediately then at least over a number of years of continuous addition to the system.

Also, found this: http://www.newsfrombree.co.uk/m_econ.htm - just the first section is relevant here. Don't know how accurate it is, but it sounds good, and brings up the issue of limited and fixed production of finished goods, which usually are self-balancing with local demand. If a covenant is not producing their own X good, but suddenly starts buying it locally, that would most likely inflate prices, as every X-craftsman is suddenly being paid (slightly better?) to meet covenant demands rather than pre-existing local demands - and it becomes a seller's market, and prices rise as buyers compete for the limited production. It would take quite a while for new X-craftsmen to be trained in to that area, or (if prices jumped enough and local laws allowed), craftsmen would be abandoning outlying areas to migrate in - and we have a different but related problem.

In the end, I find that Economics, like so many other "soft sciences", is ultimately one of opinion and indicators rather than hard "proof" and irrefutable cause-and-effect. If Economists (of which we are... none?) wouldn't agree, no reason to expect StoryGuides to, and that's fine. And here there are many, many variables and unknowns that are at best rough estimations and at worst blind guesswork.

Sometimes a clearcut answer is too much to expect, and the best we can achieve is the process of discussing the question, and each settling on our own personal conclusions. 8)

[DIREWOLF75]

The question of "would it" or "wouldn't it" aside, I'm a bit dubious as to the economic acumen and insight of the time - I'm not sure that such understanding of a relatively new concept ("a currency-based economy") would even exist.

Heh... fordham.edu/halsall/sbook1j.html
Read some of that, like regulations on money trading or how well aware of different coins being "up to standards".

My knowledge of historical economics is weak (read "almost non-existent"), but wasn't most of Europe still on a barter economy?

Not in 1220 no. Yes barter trading was normal, but few completely lacked coins or went by without any coins passing their hands.

I thought there was still a large barter system across the vast majority of Europe, and coinage was commonplace only in urban areas (which comprised only maybe 10%-15% of the population, depending) and merchant-scale transactions - and even then, barter was the norm, and coinage the exception. And that the universal shift from barter to coin was part of the "renaissance" (a vaguely defined era, admittedly), starting maybe circa 1300 - no?

The renaissance myth strikes again!
That description is probably close to real in the EARLY medieval times, but not in the 13th century.
Have tried to find more exact sources but from what i can tell, the change towards currency-economy started in the 9th century with the increased trade thanks to a more "stable" situation around the mediterranean.
Exactly how far the shift had gone by end of 13th century i´m still trying to find.

What i could find was that at least in England, the Saladin tithe in late 12th century mostly brought the area back to currency rather than barterbased economy. And since England tended to be on the tailend of development i guess that means most other places came to that position earlier. And in the case of Spain, Italy and some other more tradeinfluence areas, earlier still.
en.wikipedia.org/wiki/Saladin_tithe

If(?) this is so, then I'm not sure how a significant influx of silver could avoid having a noticeable impact, if not immediately then at least over a number of years of continuous addition to the system.

Actually, adding cash to a barterbased economy is worse... Rather than (just) inflation you may get outright disruption of normal trade.

And no, clearcut it most certainly isnt.