You gotta have cash even in the future, otherwise you can't buy anything. Utopian socialist paradises excluded of course.

Traditionally, the unit of currency in science fictional futures is called the "credit", sometimes reduced to "cred". Abbreviations include "Cr" or "cR". This is the futuristic equivalent of a dollar, Euro, or whatever. Using metric, one megacredit is a cool million credits. One kilocredit is a grand or "one-large". One hectocredit is a "C-note". Credit was probably invented by John Campbell in 1934, but was popularized in E. E. "Doc" Smith's LENSMAN series.

And there are a few examples of science fictional socialist utopias where money is obsolete, e.g., Star Trek. Good luck with that.

You can find an amusing list of the names of various fictional currencies here. And equally amusing slang terms for money here.

  • In SPI's RPG Universe and Star Trader, the unit of currency was the "Tran" or "transaction", where 1 Tran was equal to about $500.

  • In Karl Gallagher's Torchship the unit of currency is called Keynes or "Keys", named after Keynesian Economics.

  • SPI's Star Force had "LaborCredits".

  • In Philip E. High's The Prodigal Sun money was literally hours of work.

  • EVE Online has a little more complex a take on things. The currency, known as ISK (Inter-Stellar Kredits), is not so much a global currency as it is a global exchange currency. Planetary economies and sometimes individual planetary nations almost all have their own currencies, ISK was merely setup as an exchange medium to manage the obscene amounts of money being used at the interstellar level

  • In The Great Explosion by Eric Frank Russell, the planet K22g is a post-money utopian society, but they still have a medium of exchange. They use favor-exchange based on "obs" (obligations). This might explain the value of the poker chips you see in all those Star Trek poker games.

  • In John Morressy's Del Whitby series, the unit of currency was the cash-cube. These were cubical coins of precious metal which would stack into neat rectilinear piles.

  • In Diane Duane's My Enemy, My Ally, the Romulan's currency is in the form of chains of precious metal.

  • In John Brunner's Intersellar Empire series, the currency is in the form of rings of preciouis metal.

  • In Frank Herbert's novel DUNE, the Fremen's currency is based on liters of water, symbolized by metal rings. They tie the rings in strips of cloth so as to not make noise when they are sneaking up on an enemy.

  • In the simulation game High Frontier, the unit of currency is "the most valuable thing in the universe", namely water. Water can be used for reaction mass, as a source of hydrogen and oxygen, radiation shielding, and a host of other uses. The unit is a 40 metric ton tank.
    Understand that this means water that ain't at the bottom of Terra's gravity well. Martians don't need Terra's water, there are easier places to get it.

  • In Kim Stanley Robinson's Red Mars Trilogy, calories of heat were used as the basis of the Martian economy.

  • I am somewhat dubious about the Quasi Universal Intergalactic Denomination. Apparently it is intended to be safe in the space environment and will survive the space environment. This means it is constructed out of a space-qualified polymer, emit no toxic fumes, has no sharp edged, be resistant to high temperatures, and not use a magnetic strip like a credit card since cosmic radiation will render them inoperative.

  • Of course nowadays most people use credit cards and PayPal.

This war, like any space conflict prior to the development of instantaneous unlimited-distance teleportation, is being conducted at very long range. This automatically means very high cost. This last word is to be taken, throughout this article, as a measure of traction of available effort, not some supposedly absolute unit like the dollar, the ruble, the Scrooge, or anything else which can have its quantitative meaning reduced indefinitely by inflation.


      Malcolm was right in guessing that no one would challenge his figures, or deny the feasibility of the scheme, but a kindhearted senior administrator took it upon himself to lecture young Makenzie on the political and economic facts of life. He learned, with remarkable speed, about growth curves and forward discounting and interplanetary debts and rates of depreciation and technological obsolescence, and understood for the first time why the solar was backed, not by gold, but by kilowatt-hours.
     “It’s an old problem,” his mentor had explained patiently. “In fact, it goes back to the very beginnings of astronautics, in the twentieth century. We couldn’t have commercial space flight until there were flourishing extraterrestrial colonies—and we couldn’t have colonies until there was commercial space transportation. In this sort of bootstrap situation, you have a very slow growth rate until you reach the takeoff point. Then, quite suddenly, the curves start shooting upward, and you’re in business.
     “It could be the same with your Titan refueling scheme—but have you any idea of the initial investment required? Only the World Bank could possibly underwrite it….”
     “What about the Bank of Selene? Isn’t it supposed to be more adventurous?”
     “Don’t believe all you’ve read about the Gnomes of Aristarchus; they’re as careful as anyone else. They have to be. Bankers on Earth can still go on breathing if they make a bad investment….

     But it was the Bank of Selene, three years later, that put up the five megasols for the initial feasibility study. Then Mercury became interested—and finally Mars. By this time, of course, Malcolm was no longer an aerospace engineer. He had become, not necessarily in this order, a financial expert, a public-relations adviser, a media manipulator, and a shrewd politician. In the incredibly short time of twenty years, the first hydrogen shipments were falling sunward from Titan.

From IMPERIAL EARTH by Arthur C. Clarke (1975)

The following currencies are perilously close to being trade tokens, since they are issued by a corporation instead of the government.

  • In Andy Weir's novel Artemis, the lunar colony is officially Kenya Offshore Platform Artemis, property of the Kenya Space Corporation (KSC). The unit of currency is the KSC "Slug" (symbol "ğ" or g with breve). This is slang for "soft-landed-gram" or SLG. One slug is the price KSC charges to deliver one gram of payload from Kenya spaceport to a soft landing at Artemis colony, Luna. They are more like a pre-purchased credit service from KSC. Since Artemis colony is not a nation as such, they use slugs for money.
    From a practical standpoint, this makes KSC a bank and the slug a useful medium for criminals to do money laundering.
    In the novel the current (about 2070 CE) exchange rate is $1 US = 6ğ or 17¢ US = 1ğ.
    This imples a payload delivery price of $170 US (2070 CE) per kilogram, which is towards the optimistic side.

  • In the Micronauts series of comic books, the evil Baron Karza has a monopoly on lifespan prolongation technology (the "Body Banks"). He issues his own currency called "Life Credits", with which a person can purchase extended lifespan. The underclass waste all their credits in gambling institutions, and can sell personal organs and other body parts in exchange for more life credits. The aristocracy is firmly under control of Karza, since they know he literally has the power of life or death over them.

  • In the Battletech universe, a common unit of currency was the C-Bill, redeemable for a certain amount of data transmission on Comstar's FTL communications network. Other noble houses issued their own currency, but the relative worth fluctuated wildly with the fortunes of the issuing house. Mercenaries prefered to be paid in C-Bills because it was relatively stable. 1 C-Bill (3025 CE) = $5 US (1986 CE).

  • In Damon Knight's Idiot Stick, aliens arrive and want to hire humans to do some construction labor using alien tools. They are paid in "Happy Caps", which look like plastic soap bubbles. When you touch one, the charge enters you and you experience a few seconds of intense happiness. The happy cap loses its charge in the process and becomes worthless. Entrepreneurs in near-by New York start marking prices not only in dollars ($), but in HappyCaps (Hc).

      As Kelly had expected, the onset of war brought on terrible inflation in the outer system. The new Republic had voted to create a unit of currency, the Federal greenleaf, but had bungled the conversion from old, Interlocking Directorate greenleaves to the new form. The cloudships, who had served as traveling banks for all the worlds other than Jupiter, had withdrawn in fright to the Oorts, taking all the ready cash with them. They claimed that all of the money was still available in virtual form in the merci (internet) banks—but, as had been a problem for centuries, biologically based people tended not to believe in greenleaves when they couldn't hold them in their hands. Free converts (non-biologically based people who have uploaded their minds into the internet) were more sensible people, in general. But the necessary encryption and key exchange that caused the more logical free-convert population to trust in virtual currency inevitably added to the cost of trade. Several of the merci banks (all controlled by the cloudships) responded by holding up transactions so that escrowed funds could earn back in interest the transaction cost of funneling money here and there. As a result, the outer-system economy slowed to pregrist growth levels (much like "pre-internet growth levels").
     To add to the problem, several local governments in need of ready cash—notably the Callisto conglomerate of Jupiter and New Miranda's Town Meet—had responded by going on minting sprees. Decades of value and trust were lost in an e-day, as these governments spent their new funny money on procurements. Within moments, the market was savvy to what was going down, and prices rose like mercury on Mercury. The next day, the currency was devalued by an astonishing half. By the end of an e-month, inflation was at 1,000 percent per week. It wasn't just free fall—it was an accelerating plummet.

     Quantum computers, with their ability to resolve problems through the superposition of many billions of simultaneous results, rang the death knell for public key encryption systems. Even the original quantum computer—the primitive Sturgeon-Sterling 77 with its 250-quantum-bit CPU—could represent more pieces of information in a second of time than there are atoms in the universe.
     But long before quantum computers were fully developed, cryptographers were exploiting quantum effects to encrypt data. This breakthrough occurred in the late twentieth century on Earth, and it involved the mathematicians and scientists Stephen Wiesner, Charles Bennett, and Giles Brassard. They based their thinking on a quantum paradox (or, in another way of looking at the matter, a quantum opportunity) pointed out by the mathematician Werner Heisenberg: "We cannot know, as a matter of principle, the present in all its details."
     In what was originally an obscure, unpublished paper, Wiesner came up with the odd idea of "quantum money." This was a greenleaf note that used the spin and spin-orientation of a series of trapped photons as a serial number. Quantum money could not, in principle, be counterfeited. A counterfeiter has to measure these serial numbers, and then duplicate them.
     He can determine either the orientation of the photon's spin or the value of the spin itself—but never both. The bank, on the other hand, has a list of serial numbers matched with photon polarizations. It knows whether to measure the spin or the orientation of the spin when determining if a bill is genuine. It doesn't need the other information, which is lost in the measurement.

From SUPERLUMINAL by Tony Daniel (2004)

      As civilization has advanced, the pack-bond (the tribe, the extended family) has been broken. This is the root of the widely diagnosed "anomie" or "alienation" or "existential anguish" about which so many social critics have written so eloquently.

     What has happened is that the conditioning of the bio-survival bond to the gene-pool has been replaced by a conditioning of bio-survival drives to hook onto the peculiar tickets which we call "money".

     Concretely, a modern man or woman doesn't look for bio-survival security in the gene-pool, the pack, the extended family. Bio-survival depends on getting the tickets. "You can't live without money," as the Living Theatre troop used to cry out in anguish. If the tickets are withdrawn, acute bio-survival anxiety appears at once.
     Imagine, as vividly as possible, what you would feel, and what you would do, if all your sources to bio-survival tickets (money) were cut off tomorrow. This is precisely what tribal men and women feel if cut off from the tribe; it is why exile, or even ostracism, were sufficient punishments to enforce tribal conformity throughout most of human history. As recently as Shakespeare's day the threat of exile was an acute terror signal ("Banished!" cries Romeo, "the damned use that word in Hell!")
     In traditional society, belonging to the tribe was bio-security; exile was terror, and real threat of death. In modern society, having the tickets (money) is bio-security; having the tickets withdrawn is terror.

From PROMETHEUS RISING by Robert Anton Wilson (1983)


Money Functions

Money has four functions:

  • Medium Of Exchange: a way to avoid the double coincidence of wants problem inherent in the barter system. Or "he wants two coconuts for that shirt but all I got is this mango."

  • Common Measure Of Value (or Unit Of Account): a way to set a standard price tag on market value of goods, services, and other transactions. This is essential to allow commercial agreements that involve debt. The loan officer ain't gonna give you a loan for that used car if you are using the barter system. It is too hard to figure the car's value in tiger-skins.

  • Standard Of Value (or Standard Of Deferred Payment): using money to settle a debt sometime in the future. As Wimpey says "I'll gladly pay you Tuesday for a hamburger today"

  • Store Of Value: So you can bank your money, with the expectation that when you withdraw the money it is still worth something. This doesn't work with the Banana Standard, put a banana in a bank box and you will be dismayed to find in a few years it has turned into worthless moldy goo.

Medium of Exchange

Note that while Planet A and Planet B may both internally use a barter system instead of money, they might use arbitrary money (a nonstandard medium of exchange) when trading between each other. Using a medium of exchange avoids the problem of ensuring there is a double coincidence of wants, which is a problem inherent in the barter system.


Floyd the guitar player lives in a culture that uses barter. At his job at the local bar, he is paid with booze and food. Unfortunately Floyd's landlord will not accept booze and food for the rent. In this case there is no coincidence of wants: Floyd wants his apartment for the month but the landlord does NOT want booze and food.

However, in a happy double coincidence of wants, IF Floyd's landlord happened to be throwing a party and wanted some guitar music, and Floyd wanted his apartment for the month, the barter system works.

The point is that a double coincidence of wants does not happen very often, which makes the barter system rather awkward and impractical. If however you create some arbitrary money-like medium of exchange, you can avoid the whole mess. It also avoids the problem of when one of the things you are bartering has a shelf-life or is seasonal.

Medium of exchange include government money, trade tokens, and script.


(ed note: The poor woman goes to the lamp shop, hoping to purchase a lamp.)

      Snuffers in hand ready to douse the time-candle and the rest, the owner of the shop appeared in a tallow-stiff smock. Shaven, his red jowls glistened as though he sweated the very fabric of his wares. He was poised to fawn, expecting one of the gentry who came by ordinary to view his stocks late in the evening, they being readier than the common sort to brave the dark, what with their covered carriages and palankeens.
     But that lasted a mere eyeblink. Here was only some nondescript poor woman, likely hoping to trade some useless odds and ends against a lamp instead of purchasing one with honest currency.
     "What is it you want?" he demanded.
     "What would I come here for but a lamp?" the woman snapped, and added from the corner of her mouth, "Be silent, Nelva!"
     The little girl complied, but her eyes remained enormously round as she gazed from one to another of the shining lights.
     "Here!" went on the woman, slapping coins on the counter. "Three good coppers, as you see—what's more the rims aren't clipped! We need a lamp to eat our supper by. The one we had is broke, and do I set Nelva here close enough by the hearth to see by fire-flame smoke makes her weep and salts her dish with tears. For the bairn's sake, give me the best you can."
     She planted her hands on her hips and stood back. Taking up the coins, Master Buldebrime studied them. As claimed, they were properly round and gave back to the time-candle the proper reddish sheen. He bit one, shrugged, and turned to a shelf of his cheapest lamps.
     "This is the best I can do," he said, selecting one. "Take it or leave it."

(ed note: Walking home from the shop in the dark, the woman lights the lamp. It immediately smokes over its chimney blacker than a barn door. The lamp is apparently defective.)

     "What's worst of all," she added as she carried the flame to the twisted wick, "he took coin from me for it—not a mere bucket of ewe's milk, or some trifle we could spare! And it does this! Sir!"—rounding on the traveler—"do you not think it criminal, to take advantage of a poor soul thus?"

From DREAD EMPIRE by John Brunner (1971)

Many assume that before currency existed, people would trade goods through a barter system. This idea was created by 18th century Europeans hypothesizing about how markets worked before a state regulated currency. But in reality, we have no historic or anthropological evidence that this ever occurred. None at all, even in isolated societies that don’t have money for their internal exchanges.

Let’s think about it for a minute. If you make hats for a living, you need to barter your hats for food. But if you’re a skilled haberdasher, making a quality hat will take you a day or two and use lots of materials. To survive, you need to find someone who doesn’t already have a hat and is willing to trade you several days worth of food for it. And it better be something that won’t spoil, since you can’t trade part of a hat for a single meal.

To make another hat, you need to find a cloth maker that either doesn’t have one of your hats or is well off enough to collect them. Once you’ve made hats for all of your suppliers, you’ll need to start making your own cloth and hat pins, etc. That means making a hat takes even more time. A haberdasher’s trip to the market soon looks like a run to CostCo!

As we can see, barter is impractical for supporting any degree of workforce specialization. Maybe you could make it work for absurdist fiction held together by logic similar to Terry Prachett’s Disc World. But the rest of us need something a bit more practical.

Small Communities and Mutual Obligations

Once we leave the imagination of Enlightenment thinkers and enter the real world, we see a few different stages of development for economic exchanges. On the smallest scale, we have systems of mutual debts. My hunting went poorly one day, so you share some fish with me. On another day fishing is scarce, so I share part of a deer with you.

This is often called an egalitarian society, characterized as not having individual ownership. When you look below the surface, however, you find it is a series of mutual obligations. If I’ve received help from you in the past, I am obligated to return the favor when you need it, and vice-versa.

The process starts because friends and family are reluctant to let each other die of hunger. Once this system of mutual debts takes root, the threat of ostracization perpetuates it. If everyone in your small community knows that you don’t fulfill your obligations, they won’t be willing to help you.

Trade and Accounting of Debts

An economic system of obligations requires a level of trust that is difficult to maintain on a larger scale. If a merchant trades with a large number of people on a frequent basis, they won’t trust everyone to repay informal obligations. To overcome this obstacle, people created ways of accounting for the value of goods and debts owed.

The concept of monetary value was introduced through units of standard goods. In ancient Sumeria, long before the shekel was a minted silver coin, it represented a weight of grain. As an early agricultural society, taxes collected from farmers and wages paid to workers were in grain. Shortly thereafter, the value of goods was priced in accordance to those payments. If one shekel was about 10 grams of barely, then an item priced at 100 shekels was worth one kilo of barley.

While goods were priced and some physical objects like coins may have circulated, the primary currency was credit. I owe you for the hat you made; you owe me for some eggs and milk, etc. Debts were recorded as a value tied to a commodity such as grain. Your trustworthiness was measured by your ability to repay your debts in a timely manner, rather than your willingness to share when your neighbors were in need.

This system for converting value helped traders make large one-time exchanges of goods. This was especially convenient for the farmers that actually grew the grain! But since exchange was based on credit, trust was still essential, and debts were still tied to the idea of personal obligations.

Normalizing Physical Money

Money as we know it comes into play when there is a state. If you are the head of an early state, the most important resource is still food. You can pay your soldiers in grains, or you can make coins out of available metals. Declare a measure of this coin as equal to a shekel of barley, and you have currency. As an all powerful head of state, your people understand your credit is good and accept the coinage as payment from soldiers and other workers. They know that they can go redeem the coin for grains to eat.

It’s still all about trust, but so long as trust in the state’s ability to repay coinage is preserved, people accept the currency. Personal obligation and virtual credit diminish significantly. If I don’t know you well, I can simply demand coinage, in which case I am taking the credit of the state instead of gambling on the trustworthiness of your credit. Building relationships becomes unnecessary as long as everyone has currency backed by the state. The relationships and obligations between you and I are replaced with relationships and obligations between you and the state. As a result, large scale markets can form and trade takes off.

Government Money

Government money that is of the type "commodity money" is typically in the form of a coin made of a valuable mental. Historically coins were disc shaped because that's what you get when you roll out a measured ball of precious metal and flatten it with a stamp bearing the King's face (the precious metal is called "specie").

If the money is of the type "commodity-backed money", the coin is made of some relatively worthless but durable metal. Paper or electronic money would be more convenient, but governments have to gradually educate their citizens that money doesn't have to make a jingling noise.

Coins are convenient to carry, especially if they have a hole in the middle for stringing. You should mill the edges to prevent crooks from engaging in the crime of coin clipping (this does little to stop the crime of "sweating" coins). Though nowadays most US commodity-backed coins are composed of such worthless metal that the milling is purely decorative or as a aid to the visually handicapped (well that comment did not age well. In 2007 the US Treasury issued a prohibition on the melting of pennies and nickles. Industrial growth in China and India has sent the price of copper skyrocketing since 2003. So the raw material value of the metal in pennies and and nickles is higher than the face value of the coins).

Gold coins are generally composed of a gold alloy (Coinage Gold) because pure gold is too soft to hold up to the stress of being used as a coin (and makes it too easy for criminals to clip or sweat the coins).

In modern times, a popular popular choice for silver-colored coins is the alloy cupronickel, due to its corrosion resistance, electrical conductivity, durability, malleability, low allergy risk, ease of stamping (metalworking), antimicrobial properties and recyclability. Cupronickel is not for commodity money, the alloy is relatively valueless.

In low-tech places, coins are manufactured by hammering or casting. In more modern-day tech settings, coins are machine-struck. In futuristic data-driven societies, physical coins are obsolete and instead virtual coins are used. Indeed, as previously mentioned, physical money may actually be illegal since the Police State cannot trace physical money transactions.

In medieval times there were so many currencies that merchants had to carry coin pan balances in order to determine the worth of a given coin.


(ed note: this is from actual real history)

      As the monastic communities spread northwards in the seventh century (about 300 years after the fall of Rome, during the dark ages), they took Capella’s book with them into a world very different from Carthage in its splendid decay. Dark Age Europe was a land of darkness indeed, of almost impenetrable woods in which roamed wild animals: boar, bear, wolves and men too violent to live in the tiny clusters of huts scattered through the forest. Roman administration had been replaced by small kingdoms of barbarians, but their writ did not extend far beyond the bounds of their encampments among the ruined cities. They lived as isolated as did the forest communities.

     Between the hamlets the Roman roads crumbled under the onslaught of bracken and bush. With no movement from one place to another, there was little point in maintaining them. The dwindling members of the population subsisted on what they could grow in the forest clearings, or ‘assarts’, as they were called, which poked like hesitant fingers into the shadows of the forest. Only the well armed, or those protected by spiritual courage, ventured into the woods.

     Gradually, however, as the forest was pushed back, the small communities grew, and by the eighth century some were loosely linked in the manorial system. The manor was a totally autonomous entity, seldom covering more than a few square miles, its illiterate serfs ruled by an equally illiterate lord, whose duty it was to protect his manor in return for payment in kind. There was no money. The manor had to be self-sufficient, as no help could be expected from elsewhere. Life expectancy at the time was about forty years.

     Several hundred such small manors might be held in sway by one overlord, administering them as he saw fit. All transactions were conducted in terms of land: ownership, tenure or rent. Each man paid his debts in acreage, produce or service (because there was no money). Only the seasons changed. The routine of daily life was an unvaried cycle of sleeping, eating, working and sleeping again (and rising out of the social class you were born into was unheard of). The mental horizons of even the most inquisitive were limited by the forest wall. Customs, clothes, dialect, food and laws, all were local. And there was no way of knowing if things were any different elsewhere, for a small community might be fortunate to see one visitor a year.

     In the eighth century the barbarian invasions halted for a short while, during which time, with extraordinary speed, Europe made a cultural recovery. After a century of predominantly Scandinavian violence, the Norsemen settled in northern France, and the disruption began imperceptibly to tail off. The weather improved. Slowly, like moles coming up from below ground, people began to emerge from hiding. Ninth-century improvements in agricultural techniques, such as the mouldboard plough, the harness and the horseshoe, made it easier to open up the forest for arable land, and as assarting increased so too did the food supply and the population.

     Thus began the first cautious stirrings of commerce, as each hamlet with a surplus went in search of buyers. Markets were set up in the lee of ruined Roman town walls, or at monastery gates. Merchants began to travel small distances to barter goods. The discovery of silver at Rammelsberg, in Saxony, at the end of the tenth century put a tiny amount of coin into circulation. Small towns, which we would now call villages, grew up around the market-places, following the contours of the land. The houses were built in terraces for warmth and the streets were curved to blunt the effect of the wind.

     But the philosophical viewpoint at the time of the resurgence of the cities in the tenth and eleventh centuries left their citizens ill-prepared for the new problems now demanding solution. There was no concept of progress. In the early Middle Ages men were aware only of the greatness that had been lost. ‘We stand on the shoulders of giants,’ they said. The past held all that was great and glorious. It was the source of all authority. The purpose of any intellectual activity was not to question this past world, but to add respect for it.

     Into this backward-looking, ritualistic, rigidly structured life, the growing economic forces at work in the new towns brought stress. As the trade in surplus goods increased, merchants found that the raw materials they needed were controlled by feudal lords who neither understood nor cared about commerce. Transportation of goods through their lands was both dangerous and costly. Alternative sites for commerce had to be found and the towns seemed to offer the best alternative.

     Free from the feudal bonds of the countryside, the urban dweller was envied by his peasant counterpart. ‘Stadtluft macht frei’ (the air of the town makes you free), they said in eleventh-century Germany, because after a statutory period of residence there a serf would automatically become a freedman. Soon enough the townspeople, with their economic strength and their craftsmen supported by the general surplus, began to demand from kings and emperors those statutes which would reinforce their freedom in law. Merchants who had no place in the feudal pyramid pyramid of serf, knight, priest and king now had the money to buy social status (allowing them to rise out of the social class that they were born into, what a concept!).

     As the aristocrats began to commute their serfs’ dues from service to cash, money began to weaken the old social structure. Ambition began to express itself in outward show. ‘It is too easy to change your station now,’ complained the Italian, Thomasin of Zirclaria. ‘Nobody keeps his place!’ (meaning he was upset that people can rise out of the social class that they were born into. Oh Noes!) The word ‘ambition’ took on common usage for the first time.

     The new supply of cash brought a critical change in the position of the monarch. Until now, his ability to raise revenue had been limited by the nature of the feudal contract between him and his baronial vassals. These contracts had been drawn up at a time when there was little or no cash, and dues were paid in military service or certain forms of aid. Moreover, the king had not been able to by-pass his aristocrats and speak direct to their vassals because in doing so he would have infringed their rights. This inability to raise revenue had hampered central government, but the increasing cash in circulation now strengthened the king’s position, enabling him to raise taxes whenever he chose without upsetting the old land-and-service contract.

     Money also made longer journeys possible. As the forest roads became more secure, craftsmen and especially builders were encouraged to travel. Architectural styles spread and became more uniform. It was at this time too that anti-Semitism, previously rare, began to increase. Money-lending, which was forbidden by the Christian Church, was permitted under Jewish law, and the Jews, prevented from owning land, turned to the new business currency. Many of them grew rich and were resented.

     With all this urban growth, the population increase brought by economic improvement, and the secularisation of much social power through the effect of money, the earlier, apathetic view of the world began to change. The old ways were no longer adequate. This was most acutely felt with regard to the lack of good law and of people qualified to administer it.

     As merchants travelled further they increasingly came upon unfamiliar practices and customs which complicated their activities. Trade could not be carried on under the archaic arbitrary decision-making of the feudal barons. The growing power of the centralised monarchies demanded an instrument of their will capable of uniform and universal application. Without the King’s Law there could be no central government. Towns needed local legislation to codify the freedoms they had taken for themselves in the early years. Merchants needed standard laws on tax, customs duties and property ownership.

From THE DAY THE UNIVERSE CHANGED by James Burke (1985)

(ed note: ecu is economic-indexed credit unit. Sort of a futuristic Euro)

     Cantrell leaned forward at his desk to examine the plaster models that would eventually be reproduced an order of magnitude smaller as the one-, five-, and ten-ecu pieces issued by the Bank of Rosinante.
     "The bas relief of the Rosinante, Inc., logo is fine for the tails of all three coins—"
     "Reverse,” said Mordecai Rubenstein.
     "Whatever,” agreed Cantrell. “But it will do anyway. For the heads, the obverse if you insist, Galileo is fine for the one ecu, and Newton is excellent for the five, but I don't like the right profile of Einstein on the ten. Could you give me a full face, perhaps?"
     "You had remarked that you liked the Karsh portrait,” Mordecai said, reaching into his case to remove another plaster model, “but for coins, the profile is really the best. This is the Karsh Einstein, done in maximum relief. Beautiful, but look at the hologram in coin size.” He banded over a hologram showing the two Einstein coins, full face and right profile, side by side. Cantrell studied them for a while, and set them aside.
     "I see what you mean,” he conceded. “We'll go with the right profile."
     "Why is there a wreath of thirteen stars around the heads?” asked Marian.
     "For the six purlins, four caps, two sides, and one asteroid of Mundito Rosinante,” replied Mordecai, grinning. “I'm not one to be sentimental about the old regime, ma'am."
     "Of course not, Mordecai,” she said, “but coins travel, and we wouldn't want to give anyone the wrong impression, would we?"
     "What do you suggest?” asked the old machinist.
     "Your designs are very handsome,” said Cantrell. “Why not use the astronomical signs for the seven planets, separated by the six stars, as the wreath? That way you minimize the design change, and avoid using the thirteen stars of the old regime."

(ed note: the "old regime" is the former United States of America. Symbols of the regime, such as thirteen stars, are politically explosive.)

     “The coins. Do you want them in the NAU cupronickel sandwich?"

(ed note: cupronickel is a popular choice for silver-colored coins, due to its corrosion resistance, electrical conductivity, durability, malleability, low allergy risk, ease of stamping (metalworking), antimicrobial properties and recyclability)

     "No,” said Cantrell, “use pure nickel. The stuff is for local use only, and the less it looks like real money, the better."
     "Good enough,” agreed the old machinist. “A nickel coin is a lot prettier. Do you want to check the final designs?"
     "No, I trust your good taste. Oh, and look — take off that motto, ‘In God We Trust.’ Put on something like 'Fiat Lucre,' ‘Let There Be Money,’ instead."

From THE REVOLUTION FROM ROSINANTE by Alexis Gilliand (1980)

     “Meanwhile, we're going to need money, no matter what we decide. Set up a mint to run off that stash of bullion Vong turned in. Coinage gold, ten-percent copper, with one ounce of fine gold per coin.” He hesitated a moment. “Use the Rosinante logo on the reverse, milled edges, of course."

(ed note: Coinage gold is a gold alloy. It is used because pure gold is too soft to use as a coin.)

     "What do you want on the obverse?” Rubenstein asked. “A dead politician?"
     "No,” said Cantrell. “They turned up a bronze of Ceres in the Aegean Sea recently."

(ed note: the gold bullion was obtained from the mines of the asteroid Ceres)

     "A few kilometers north of Melos,” Skaskash said. “The Greek and Italian governments are arguing over who it belongs to. We have a holograph on file, at the request of Mr. Bogdanovitch."
     "The Ceres de Milo?” asked Rubenstein. “That would be good—hell, that would be outstanding. The right profile with the wreath of grain. I'll have the plaster mockup ready in a couple or three days. Do you still want the ‘Fiat Lucre’ motto on it?"
     "'Let there be money'?” Cantrell grinned. “Why not?"

     "You were cool to the idea of coining gold when I suggested it,” she said. “What made you change your mind?"
     "Maybe the Ceres de Milo,” said Cantrell. “That is one great head, and the name ‘Ceres d'Or’ is pure magic.”

(ed note: d'Or means Gold)

     "Why not put the bars of gold in the vault and issue paper and plastic like civilized people?” he asked.
     "Charles, Charles.” Marian shook her head. “We are in such trouble that I can't even worry about it any more. Who in hell would be dumb enough to take our paper?"
     "The militia, the union, the fleet...” Cantrell looked blank. “We haven't had any trouble."
     "Our citizens take our paper because they don't have any choice,” Marian said. “It buys what they need, and for the future, they hope for the best. But the Japanese from Yamamoto-Ceres I, for instance. What can they do with it? We want them to work for us, but they must figure that we are only temporary. So we mint gold coin to pay them with. It may be awkward, but that's their problem."
     "Right,” Cantrell said. “They have banks to stash it in."
     "Are you going to do something about the banks?” Skaskash asked. “They are part of the Japanese establishment, after all."
     "I'm going to leave them the hell alone.” Cantrell took a sip of coffee. “Maybe deposit a million or two ounces of gold bullion so they can issue some of our paper for us."

From THE PIRATES OF ROSINANTE by Alexis Gilliland (1982)

(ed note: In the comedic medieval fantasy world of Terry Pratchett's Discworld, Sergeant Colon enlists new recruits for the Ankh-Morpork city guard. If you are not a craftsperson, a sequin is commonly 9 millimeters in diameter. Apparently the Ankh-Morpork government is on the gold standard, and has massively debased the coins.)

'Now, they've got to take the King's Shilling,' said Corporal Carrot.

'Right. Yes. OK.' Colon fished in his pocket, and took out three sequin-sized Ankh-Morpork dollars, which had about the gold content of seawater. He tossed them one at a time to the recruits.

'This is called the King's Shilling,' he said, glancing at Carrot. 'Dunno why. You gotta get give it when you join. Regulations, see. Shows you've joined.'

From MEN AT ARMS by Terry Pratchett (1993)

(ed note: Moist Von Lipwig has been given the job of re-vamping the mint. He is being shown around the facilities for manufacturing coins.)

      “Tell me,” said Moist, “why bother with goldish coins? Why not just, well, make the dollars out of gold?”
     (Supervisor Shady answered) “Very fast way to lose gold, sir!”
     “Did you get a lot of clipping and sweating?”
     “I’m surprised a gentleman like you knows them names, sir,” said the foreman, taken aback.
     “I take a keen interest in the criminal mind,” said Moist, slightly faster than he’d intended. It was true. All you needed was a talent for introspection.
     “Good for you, sir. Oh, yes, we’ve had them tricks and a lot more, oh yes! I swear we’ve seen ’em all. And painting an’ plating an’ plugging. Even recasting, sir, adulterated with copper, very neat. I swear, sir, there are people out there that will spend two days scheming and fiddling to make the amount of money they could earn by honest means in one day!”
     “No! Really?”
     “As I stand here, sir,” said Shady. “And what kind o’ sane mind does that?”

     Well, mine, once upon a time, Moist thought. It was more fun. “I really don’t know,” he said.
     “So the city council said the dollars were to be goldish, mostly navy brass, to tell you the truth, ’cos it shines up nice. Oh, they still forge, sir, but it’s hard to get right and the Watch comes down heavily on ’em and at least no one’s nicking the gold,” said Shady.

     (Bent asked Moist) “Incidentally, sir, I of course know that the depraved would clip slivers of metal from a coin, but what is ‘sweating’?”
     “For the really depraved, I’m sorry to say,” said Moist. “You have a leather lining in your pocket, you put your gold coins in there, and you, well, you jingle them as often as you can. The gold dust builds up. Small profits but fairly safe, and some people just can’t help wanting to jingle.”
     “I will treasure the image,” said Bent gravely.

From MAKING MONEY by Terry Pratchett (2007)

Trade Tokens

Sometimes you will see traders using Trade Tokens. These are basically money that is not issued by a government, but instead by a private company, group, association or individual. From the 17th to the early 19th century these were used by merchants because the local government was not up to the task of issuing enough coins to allow business to operate. Nowadays you generally see them in the form of casino chips, in video arcades, and car washes. But a hypothetical interstellar trading company might issue their own trade tokens if there were no local government in the trade area, or at least one single government recognized by all the trade planets.


     The secretary inspected his fingernails and said, "Listen further, then. The general would not waste his men and ships on a sterile feat of glory. I know he talks of glory and of Imperial honor, but it is quite obvious that the affectation of being one of the insufferable old demigods of the Heroic Age won't wash. There is something more than glory hereand he does take queer, unnecessary care of you. Now if you were my prisoner and told me as little of use as you have our general, I would slit open your abdomen and strangle you with your own intestines."
     Devers remained wooden. His eyes moved slightly, first to one of the secretary's bully-boys, and then to the other. They were ready; eagerly ready.
     The secretary smiled. "Well, now, you're a silent devil. According to the general, even a Psychic Probe made no impression, and that was a mistake on his part, by the way, for it convinced me that our young military whizz-bang was lying." He seemed in high humor.
     "My honest tradesman," he said, "I have a Psychic Probe of my own, one that ought to suit you peculiarly well. You see this—"
     And between thumb and forefinger, held negligently, were intricately designed, pink-and-yellow rectangles which were most definitely obvious in identity.
     Devers said so. "It looks like cash," he said.
     "Cash it is — and the best cash of the Empire, for it is backed by my estates, which are more extensive than the Emperor's own. A hundred thousand credits. All here! Between two fingers! Yours!"
     "For what, sir? I am a good trader, but all trades go in both directions."
     "For what? For the truth! What is the general after? Why is he fighting this war?"
     Lathan Devers sighed, and smoothed his beard thoughtfully.
     "What he's after?" His eyes were following the motions of the secretary's hands as he counted the money slowly, bill by bill. "In a word, the Empire."
     "Hmp. How ordinary! It always comes to that in the end. But how? What is the road that leads from the Galaxy's edge to the peak of Empire so broadly and invitingly?"
     "The Foundation," said Devers, bitterly, "has secrets. They have books, old books — so old that the language they are in is only known to a few of the top men. But the secrets are shrouded in ritual and religion, and none may use them. I tried and now I am here — and there is a death sentence waiting for me, there."
     "I see. And these old secrets? Come, for one hundred thousand I deserve the intimate details."
     "The transmutation of elements," said Devers, shortly.
     The secretary's eyes narrowed and lost some of their detachment. "I have been told that practical transmutation is impossible by the laws of nucleics."
     "So it is, if nuclear forces are used. But the ancients were smart boys. There are sources of power greater than the nuclei and more fundamental. If the Foundation used those sources as I suggested—"
     Devers felt a soft, creeping sensation in his stomach. The bait was dangling; the fish was nosing it.
     The secretary said suddenly, "Continue. The general, I am sure, is aware of a this. But what does he intend doing once he finishes this opéra-bouffe affair?"
     Devers kept his voice rock-steady. "With transmutation he controls the economy of the whole set-up of your Empire. Mineral holdings won't be worth a sneeze when Riose can make tungsten out of aluminum and iridium out of iron. An entire production system based on the scarcity of certain elements and the abundance of others is thrown completely out of whack. There'll be the greatest disjointment the Empire has ever seen, and only Riose will be able to stop it. And there is the question of this new power I mentioned, the use of which won't give Riose religious heebies.
     "There's nothing that can stop him now. He's got the Foundation by the back of the neck, and once he's finished with it, he'll be Emperor in two years."
     "So." Brodrig laughed lightly. "Iridium out of iron, that's what you said, isn't it? Come, I'll tell you a state secret. Do you know that the Foundation has already been in communication with the general?"
     Devers' back stiffened.
     "You look surprised. Why not? It seems logical now. They offered him a hundred tons of iridium a year to make peace. A hundred tons of iron converted to iridium in violation of their religious principles to save their necks. Fair enough, but no wonder our rigidly incorruptible general refused — when he can have the iridium and the Empire as well. And poor Cleon called him his one honest general. My bewhiskered merchant, you have earned your money."
     He tossed it, and Devers scrambled after the flying bills.
     Lord Brodrig stopped at the door and turned. "One reminder, trader. My playmates with the guns here have neither middle ears, tongues, education, nor intelligence. They can neither hear, speak, write, nor even make sense to a Psychic Probe. But they are very expert at interesting executions. I have bought you, man, at one hundred thousand credits. You will be good and worthy merchandise. Should you forget that you are bought at any time and attempt to ... say ... repeat our conversation to Riose, you will be executed. But executed my way."
     And in that delicate face there were sudden hard lines of eager cruelty that changed the studied smile into a red-lipped snarl. For one fleeting second, Devers saw that space fiend who had bought his buyer, look out of his buyer's eyes.

From FOUNDATION AND EMPIRE by Isaac Asimov (1952)


Scrip is an even more localized form of trade tokens. You often see this in old time mining or logging camps. The employees were not paid in money, but instead in company scrip. The company scrip could only be spent in the company store. Due to this Truck system, the employees more often than not wound up owing their soul to the company store. In more recent times, scrips take the form of company gift cards and community scrip.


In a bid to lessen the blow of COVID-19, the town of Tenino has started issuing its own wooden dollars that can only be spent at local businesses. Will it work?

Wayne Fournier was sitting in a town meeting when he had his big idea. 

As the mayor of Tenino, Washington (population: 1,884), he’d watched the pandemic rake local businesses. Residents couldn’t afford groceries. Long lines snaked outside the local food bank. For more than a month, the downtown area looked almost abandoned.

To bring back the economy, Fournier needed to act. “We were talking about grants for business, microloans, trying to team up with a bunch of different banks,” he tells The Hustle. “The big concern was, ‘How do we directly help families and individuals?’” 

And then it hit him: “Why not start our own currency?”

The plan came together fast. Fournier decided that Tenino would set aside $10k to give out to low-income residents hurt by the pandemic. But instead of using federal dollars, he’d print the money on thin sheets of wood designed exclusively for use in Tenino. His mint? A 130-year-old newspaper printer from a local museum.

Fournier’s central idea is pulled straight from Tenino’s own history. During the Great Depression, the city printed sets of wooden dollars using that exact same 1890 newspaper printer. Within a year, the wooden currency had helped bring the economy back from the dead.

By reinstating the old currency now, Fournier has accidentally become part of a much bigger movement. With businesses worried about keeping the lights on and people scrambling to find spending money, communities have struggled to keep their local economies afloat.

So they’ve revived an old strategy: When in doubt, print your own money. 

Today, these so-called local currencies might help small communities recover from the economic fallout of COVID-19.

Tenino’s big bet

Fournier isn’t your cookie-cutter politician. A firefighter since the age of 18, he first gained local notoriety for a series of Banksy-style guerilla art projects that took a jab at local leaders.

Soon after he revealed himself, he won a spot on the city council; four years later, in 2016, he became Tenino’s mayor.

To hear Fournier tell it, until COVID-19, the community had been on the upswing. 

Fournier was working on plans to create 150+ new agricultural jobs. But Tenino’s businesses — which are locally owned and run on small margins — weren’t built to weather a lockdown.

“There’s a lot of them that have already said they’re not going to reopen,” says Fournier, “[and] the ones that have been hanging on are going to need a boost.”

The city is also poorer than the rest of Washington state. “We have a higher rate of kids in our school district that receive free and reduced lunch,” says Fournier. “There’s a higher rate of folks who are in poverty.”

Fournier’s local currency program works like this: Residents below the poverty line can apply to receive money from the $10k fund that Tenino has set aside. Fournier says they also have to prove that the pandemic has impacted them, but “we’re pretty open to what that means.”

Once they’re approved, they can pick up their stipends, printed in wooden notes worth $25 each. The city is capping the amount each resident can accrue at 12 wooden notes — or $300 — per month. According to Fournier, each note features a Latin inscription that means, basically, ‘We’ve got this handled.’ (habemus autem sub potestate)

The spending comes with a few restrictions: Residents can’t use the money to buy cigarettes, lottery tickets, or alcohol. The currency is designed for the essentials, including food, gas, and daycare. Almost every business in town accepts the wooden notes, and twice a month, they can submit redemption requests to the city to turn the notes into cash.

But why print the money on wood? Why not just give residents $300 worth of federal dollars? 

The answer is simple: By creating its own local currency, Tenino keeps the money in the community. As Fournier puts it, “Amazon will not be accepting wooden dollars.”

“The money stays in the city. It doesn’t go out to Walmart and Costco and all those places,” says Joyce Worrell, who has run the antique shop Iron Works Boutiques for the past decade. Worrell sells clothes, jewelry, and — in an outdoor garden that adjoins her shop — an assortment of furniture. These days, she’s added masks and disinfectants. 

Closing down business these last few months, Worrell says, was “a catastrophe for a lot of us.” But she has rallied around the wooden currency as a way to revitalize the local economy — after all, it worked for the city once before. The currency hasn’t woven its way into her store yet, but she’s expecting it soon.

“A lot of the people in our city work for places that hire low-wage help, part-time help, so they’ve been out of work this whole time,” Worrell says. “This shows that we’re doing something as a community to really step in and help.”

The origins of the ‘wood standard’ 

In Tenino, wooden currency goes way back. 

Originally home to the Nisqually tribe, outside settlers first arrived in Tenino in 1851, when a gold rusher from Maine established a farm alongside the nearby Scatter Creek. In 1872, the Northern Pacific Railroad added a new station in Tenino, and for a time, the city was the northernmost stop on the West Coast.

By the mid-1900s, the world knew Tenino for three things: its lumber business, its quarries, and its wooden currency.

The legend of the wooden currency started in December 1931, when Tenino’s only bank closed shop. The Great Depression was ripping through the country and countless townspeople lost their savings. Most had to stretch the little money they had to pay for groceries, rent, and other essentials. 

A local newspaper publisher named Don Major pitched a solution: With the bank gone, Tenino could invent its own currency. The officials agreed, and Major printed a series of notes — 25 cents, $1, $5, $10 — on rolled Sitka spruce. He and two local doctors agreed to back all of the currency themselves. By January 1933, the town had printed $6.5k worth of wooden money. 

Tenino wasn’t alone in this experiment. During the Great Depression, local currencies saw a golden age. Hundreds of municipalities, business associations, and worker co-ops started issuing scrips. One estimate suggests as much as $1B worth of scrip circulated in the US in the 1930s.

Cash-strapped businesses soon relied on local currencies to pay their employee salaries. One exemplary story came from the publisher of the Springfield Union in Massachusetts, who started paying employees in his own scrip in the 1930s. 

The idea: Employees could spend that scrip at businesses that advertised in the newspaper who sent it back to the Union in exchange for ad space, closing the economic loop.

Banks in Chicago started accepting Tenino’s wooden money. Washington Senator C.C. Dill bragged about it to Congress. The Los Angeles Times declared, “Money Now Grows on Trees.” Tourists from as far as India came to Tenino to grab a piece of their own wooden currency. Demand grew so high that collectors started paying $2.50 for a single wooden quarter — a 10x markup.

As Fournier puts it, “It went 1930s viral.”

On January 1, 1933, when businesses in Tenino stopped accepting the wooden currency, US newspapers proclaimed that the town had gone “off the wood and back to the gold standard.”

Can local currencies really save the economy? 

Take a look around the globe, and you’ll find local currencies everywhere. Amid the economic fallout from COVID-19, small-town leaders have struck on the same idea as Fournier:

  • The town of Castellino del Biferno, Italy — population 550 — started printing a local paper currency nicknamed the “Ducati” in late April to stimulate commerce. 
  • Mexico’s Santa María Jajalpa sent out about $2k worth of a local currency, called jajalpesos, to help poor residents buy vegetables, chicken, and tortillas locally. 
  • The Brazilian city of Maricá is making extra money off of a digital local currency known as the mumbuca. Mumbucas are so omnipresent — even city officials receive their salaries in mumbucas — that businesses pay the local government a 2% fee to accept them. That money is funneled into no-interest loans that are offered out to members of the community.

In the US, the local currency movement is more fractured. Plenty of currencies — like Ithaca HOURS (Ithaca, New York) or Bay Bucks (Traverse City, Michigan) — made a splash for a decade or so before petering out.

One of the most successful ongoing experiments is called BerkShares, a paper currency founded in 2006 through the nonprofit Schumacher Center for New Economics. Over 400 businesses in Great Barrington, Massachusetts accept BerkShares, and the money is backed through a network of community banks. 

Susan Witt, who heads the Schumacher Center, says that this current economic collapse has only highlighted the value of a currency like BerkShares.

Her organization has received a number of requests from municipalities across the country hoping to set up their own currency systems on the BerkShares model; two of them are considering possible next steps.

“It is a very grim time for small businesses. Many won’t survive,” says Witt. “A currency, managed locally, is an elegant tool to address local needs.”

But can local currencies really boost a local economy? The past holds a few clues. 

Take the Austrian town of Wörgl, which launched its own schilling in 1932. To keep residents spending, Wörgl appended a 1% monthly fine when residents held onto the notes. By 1933, each Wörgl schilling had circulated 463 times — more than double the circulation rate of Austria’s national currency. Wörgl’s unemployment dropped by 25%, even while unemployment continued to balloon throughout the rest of the country.

Anecdotes like this point to the potential of community currencies — but teasing out a definitive relationship between community currencies and economic resilience is complicated, according to Marek Hudon, a professor of economics at the Free University of Brussels (Belgium). 

“There are many shops saying that they have new clients thanks to community currency,” Hudon says, but “it’s extremely difficult to make a causal relationship to this local currency and a real macro-economic impact.”

Hudon co-authored a 2015 review of community currency research and found that about half of “community currencies” (an umbrella term that includes local currencies like BerkShares or Tenino’s wooden dollars) had no measurable macro-economic impact.

But the study also found that in a subset of cases, local currencies could “act as cushions against external economic shocks.” And while their impact may not be widely felt, local currencies are “significant for a small but substantial part of the population”: the economically marginalized.

Francis Ayley, the creator of Life Dollars in Washington state, told The Hustle about a struggling Bellingham woman he knew who borrowed roughly $9k worth of Life Dollars. After 2 years, backed by credit from the community, the woman landed on her feet and started paying back her commitment.

“If she’d gone to the bank and said, ‘Can you lend me $10k for the next 2 years?’ they would have laughed and said, ‘Of course not,’” says Ayley.

Tenino’s wooden dollars are different from many local currencies in that it is temporary: The money will lose its value soon after the town declares an end to its COVID-19 state of emergency. 

While the Tenino project might be less ambitious than some of its counterparts, that doesn’t mean its benefits won’t be felt. Fournier says he’s approved at least half a dozen applications for the wooden currency so far and has another dozen to review. 

It’s too soon to know exactly what the project will bring. But on a recent Thursday, Fournier sounded optimistic. The money has started trickling into local stores, and many businesses are posting photos of the currency to Facebook.  

The project has driven enough local excitement that the Tenino Chamber of Commerce is interested in making the wooden dollars a permanent fixture of Tenino — even after the pandemic passes.

“We’ll run out this program,” Fournier says, “and then we’ll look into having our own city currency.”


It is an act of criminal malfeasance that the United States’ federal government has not eased the tremendous fiscal pressure on states and municipalities, enabling them to prioritize public health and long-term economic wealth over immediate maintenance of tax revenue. Misgovernance of the United States presently rises to the level of war crime.

A recent article by Rohan Grey, aptly titled Monetary Resilience, highlights one way this national misgovernance might be circumvented. Municipalities could issue complementary currencies:

[S]ome of the more historically successful complementary currencies explicitly adopted the fiscal logic of public monetary regimes, anchoring their value in the acceptability in payment of local taxes, fines, or other legal obligations. This anchor reduced the local currency’s degree of autonomy and independence from the public monetary system, but in exchange provided it with greater legitimacy and stability with respect to its underlying value.

Such an approach allows local currencies to emerge organically from below, and then receive public support from above through the granting of tax-receivable status. This dynamic, in turn, points towards the possibility of an alternative hierarchy of money, in which banks and other private financial institutions responsible for shaping and directing investment are replaced by nested community currencies, operating in accordance with common principles of ecological, economic, and social justice.

Grey here envisions municipalities blessing or adopting privately founded complementary currencies, but there is no reason why local governments couldn’t start up such currencies themselves. Suppose a municipality issued basically a gift card with which certain taxes and fees could be paid at a discount. In particular, suppose that only business taxes and fees are granted this discount, but gift card balances are sold just to individuals and in limited amounts. Suppose that local businesses can apply for “merchant accounts” with respect to these gift cards, accepting payment from customers in gift card dollars just as they might from a debit card. Businesses would be eager to receive this local scrip, at least until this revenue is enough to cover all of their tax obligations eligible for the discount. They would encourage customers to pay in the scrip, whether by sharing the tax discount directly, or by offering other inducements. The overall demand inspired by the tax discount would be more than consumer facing business’ tax obligations. These businesses’ local suppliers will also prefer to be paid in scrip, and will share inducements with business customers, creating demand beyond each firm’s own tax bill. Municipalities themselves can creatively design inducement for residents to maintain balances in scrip. Perhaps residents get 10% off museums, public transit, etc if they can demonstrate a threshold balance, with a scan of a QR code on an app. There could be some (modest) VIP amenities for high balances. Perhaps balances pay interest on themselves, at a rate lower than what municipalities have to pay to float bonds but higher than what ordinary consumers earn in bank savings accounts. To put a floor under its value and limit consumer risk, municipalities could stand ready to buy back the scrip, at a discount or with a moderate transaction fee to discourage redemption. However, the city’s tax and amenity schedule would be the fundamental driver of scrip demand.

Importantly, municipalities would retain control (by their management of merchant accounts) over to whom this scrip might be paid. Complementary currencies are historically deployed in the service of localism, of encouraging circular flow within a local economy rather than “leakage” into a more global economy. Municipalities have every interest in encouraging this sort of localism, which already they do to a certain degree via PR campaigns and small business subsidies. Should chains or national vendors have access to the local tax discount that receipt of the scrip enables? That would be a local government choice.

But besides the localism, the existence of these scrips would create a new option for municipalities, increasing fiscal resilience. During periods of great need, municipal governments could encourage an increase in the float of the currency, by adjusting the tax and amenity schedule, and also by appealing to community and local pride. These currencies could serve as small scale echoes of the “war bonds” that helped finance World War II.

There are lots of reasonable objections to this idea. Most obviously, in the United States, there is a Constitutional question. The Constitution grants Congress to power “[t]o coin Money, regulate the Value thereof” and explicitly prohibits states from “coin[ing] Money; emit[ting] Bills of Credit; mak[ing] any Thing but gold and silver Coin a Tender in Payment of Debts”. I am not enough of a lawyer to address this question fully, but two centuries later, states and municipalities emit all kinds of debt securities that are transferable with much less restriction than those described here to finance their operations. Our “complementary currencies” do not propose any new unit of account. Each local scrip would be denominated in US dollars. As Grey describes, these are “currencies” in the same way bank deposits might be “currencies”. They plug into the existing hierarchy of money for whose zenith the Constitution prescribes a monopoly. They do not compete with or seek to supplant state money.

More substantively, is localism a good thing? Localism is arguably what contemporary national monies were designed precisely to oppose. The proudest accomplishment of modern monetary systems is that bank monies trade at “par”. Payees in Pittsburgh accept funds from Paducah Bank in Kentucky as if they were the same as funds from Citibank in New York, reducing financial frictions to commerce at a distance that once upon a time were profound. But that achievement serves also as a kind of solvent, weakening once preferential ties between specific individuals and businesses, reshaping humans, in their roles of buyer and seller and investor, into creatures more like the abstract optimizers of neoclassical economics. “Civil society” is the name we give to dense, particular, reasonably stable networks of humans who interact and collaborate over time periods that outlast a mere transaction. Precisely because contemporary monetary systems work as designed, allowing each individual to optimize their choices as though the world is always new and every counterparty interchangeable, they undermine civil society, whose development and stability are founded on advantages that come from repetition and trust. Once upon a time, we all formed social networks as an inevitable side-effect of commerce. We visited the same few grocers and hardware stores. Our rolodexes filled with travel agents and insurance agents, people who, yes, were trying to sell us stuff, but who were also human experts we could phone up and chat with as a matter of course. Those kinds of “professional networks” are now decidedly upscale. For the rest of us there is Amazon and Expedia. We gained something in price and selection, but what did we lose?

As with most economic phenomena, the best solution is probably an interior one. A world without economic specialization and trade at national or even global scales would be much poorer than the world we have come to inhabit. Our forebears were right to seek to overcome the “natural” constraints on commerce across vast chasms of geography and trust. At the same time, there are real positive externalities to local commerce and exchange, in human community and civil society, and also (as we are painfully learning) in resilience. We should not abandon the hard-won institutions that enable large scale commerce, but we should supplement them with Pigouvian subsidies of localism and its extratransactional virtues. Where economies of scale and agglomeration render widely dispersed commerce genuinely superior, we should take advantage of that. But where such economies are small, or the advantages of scale are due to market power more than genuine efficiencies, we should encourage localism. The municipal complementary currencies proposed here tilt the scale towards localism, but probably too little. In our current world, big dominates, largely not due to inexorable efficiencies, but thanks to monopolized network effects and other forms of market power that we should work to oppose. Subsidies to localism create incentives to help do that.

To me, the most cutting critique of this proposal is that it is too little, too late. The United States is in a crisis, states and municipalities are throwing human bodies on the flame to sustain a trickle of tax revenue. Standing up institutions like this would take time, and managing them well, to promote useful commerce and achieve a fiscally meaningful float, would take much more time. I don’t know that we even survive in any form under which proposals like this don’t become utopian and archaic. As a human I feel like a tremendous failure, because I have ideas about how the world should be run, maybe even some good ones, but I have failed to develop and communicate them with the urgency that might have contributed, at least a small amount, to saving us. I hope I have another opportunity, that we all do.

National politicians of every party and stripe: Please provide fiscal support to states and localities now, and encourage them to prioritize public health and long-term prosperity over immediate-term economic activity. Please.

Update: Nathan Tankus has an excellent, much more historically informed, piece on tax-receivable, municipal crisis monies!

Update II: Not unusually, I was not particularly well-read on this idea before I deigned to write about it. In addition to Nathan Tankus’ excellent piece, please see Marshall Auerback on a US-centered discussion tax-receivable municipal currencies, and Paul Katz and Leandro Ferreira for a discussion of the remarkable town of Maricá, Brazil, and the use of its longstanding digital municipal currency, the mumbuca. (I’ve appended an old-school related link box below, and may add any other links that I come across without further updates here.)

Update III: John Evans suggests a reference to perhaps the most famous municipal money experiment, the “Miracle of Wörgl“. During the Great Depression, the Austrian town of Wörgl stimulated its economy by issuing not just a local scrip, but one subject to demurrage, meaning the value of the scrip declines the longer it is held, encouraging quick expenditure. This idea, which remains popular among economists today, is most famously associated with Silvio Gesell.


(ed note: Lucas Trask is trying to re-civilize a colony world that has fallen back to about horse and bow-n-arrow technology)

"The first order," Trask said, "is that these people you have working here are to be paid. They are not to be beaten by these plug-uglies you have guarding them. If any of them want to leave, they may do so; they will be given presents — and furnished transportation home. Those who wish to stay will be issued rations, furnished with clothing and bedding and so on as they need it, and paid wages. We'll work out some kind of a pay-token system and set up a commissary where they can buy things."

"Discs of plastic or titanium or something, stamped and uncounterfeitable (at least unconterfeitable by the medieval tech-level of the natives). Get Alvyn Karffard to see about, that. Organize work-gangs, and promote the best and most intelligent to foremen. And those guards could be taken in hand by some ground-fighter sergeant and given Sword-World weapons and tactical training; use them to train others;, they'd need a sepoy army of some sort. Even the best of good will is no substitute for armed force, conspicuously, displayed and unhesitatingly used when necessary.

"And there'll be no more of this raiding villages for food or anything else. We will pay for anything we get from any of the locals."

"We'll have trouble about that," Valkanhayn predicted. "Our men think anything a local has belongs to anybody who can take it."

"So do I," Harkaman said. "On a planet I'm raiding. This is our planet, and our locals. We don't raid our own planet or our own people. You'll just have to teach them that."

The labor-guards, a score in number, were relieved of their duties, issued Sword-World firearms, and given intensive training. The trade-tokens, stamped of colored plastic, were introduced, and a store was set up where they could be exchanged for Sword-World items. After a while, it dawned on the locals that the tokens could also be used for trading among themselves; money seemed to have been one of the adjuncts of civilization that had been lost along Tanith's downward path.

From SPACE VIKING by H. Beam Piper (1963)

Monetary System

There are three basic monetary systems: Commodity money, Commodity-backed money, and Fiat money.

Two of the most important money-based jobs performed by the government controlling the money in question are Money Creation and Monetary Policy.

Unless all the planets you trade with are members of the same interstellar government, or there exists some sort of interstellar money-changing organization, the money used on one planet is worthless on another planet.

If you have a group of planets that share a common currency, for the planets sake it is vitally important that they share a common fiscal policy.

The ongoing Eurozone crisis has been made much worse by the fact that while the Eurozone has monetary union (i.e., one currency, the Euro) it does not have fiscal union (e.g., different tax and public pension rules). This ties the hands of European leaders, making the crisis almost impossible to solve. When the Eurozone was proposed, the various nations were persuaded to surrender their currency, but reluctant to surrender control of their fiscal policy (give up their national sovereignty? Never!). The proponents figured to get around the problem by doing the Eurozone union in two stages, which in retrospect was an insanely bad decision.


In north-western Turkey, not far inland from the Aegean Sea, stands a mountain known in ancient times as Mount Tmolus, from which two rivers fall, one the Pactolus, the other the Hermus. Several factors combine to make these two rivers important in history. The gradient they follow is shallow, so they flow slowly; as they cross the coastal plain they fan wide and smooth, carrying loads of deposit brought down from Tmolus in the form of fine grains of soil mixed with gold, which are winnowed from the slopes of the mountain by the action of wind and temperature change, and washed away by the waters. According to the Greek historian Herodotus, writing in the fourth century B.C., these two rivers had for centuries been known as the richest source of panned gold in the world. Two thousand seven hundred years ago they lay within the boundaries of the kingdom of Lydia, and in one of them some unknown prospector, probably in the employ of the king, made one of the most fundamental discoveries in the history of mankind.

At the time, the standard method for retrieving and smelting the gold dust was through the use of sheepskins. The grease in the skins would trap the tiny particles of gold, and when the skin was fully laden it would be hung on a branch to dry, then thrown into a furnace where the heat would incinerate the animal material, leaving the gold lying in blobs among the fine ashes. It may have been this use of the sheepskin that gave rise to the myth of the Golden Fleece sought by Jason and his Argonauts. Be that as it may, the gold blobs were melted into blocks, or ingots; in this form they were used as a replacement for goods and as payment for services — a practice which goes back as far as the third millennium B.C. in Mesopotamia and Egypt, where the value of the ingot of gold (or copper, or silver) was determined by weight. The limitations of such a system are obvious. The ingots were bulky and difficult to transport. They could only be used for payment on a large scale such as took place between one state and another, or for settling accounts with mercenaries at the end of their period of service.

The discovery made by the man panning for gold in the Pactolus changed things at a stroke. Apart from fine grains of gold, the river also contains small, flat pieces of a flinty stone, black in colour, whose proper geological name is schist. The first reference to the use of schist is by Herodotus, who says that the Lydians cut the top surface of the stone flat, leaving it matt. If gold were rubbed on this matt surface it would make scratch marks. Pure gold would leave yellow marks, gold mixed with silver, white ones, and gold mixed with copper, red marks. The stone could thus be used to assay the quality of the gold, and its common name has passed into our language as a metaphor for evaluation: the touchstone.

The effect of this accidental discovery, made some time in the eighth century B.C., was to be immense. It gave the rulers of Lydia, probably starting with King Gyges (685 B.C.), the ability to ensure a standard quality to their precious metal, for the touchstone shows to even the most inexperienced eye a difference in quality of the smallest percentage. It had been the custom for centuries in the Babylonian and Egyptian empires to stamp ingots with some mark giving authority to the value of the metal, although such marks did not necessarily make the ingots more freely exchangeable, since they probably meant no more than that the man who issued the ingot would accept it back at the same value for which he had offered it in the first place. However, with standard quality metal made possible by the touchstone, and forgery easily detected by the same stone, the mark of the king's mint was now evidence of purity, weight and acceptability.

The need for smaller units of exchange took matters a step forward with the production of the Western world's first coin, the Lydian stater. Within a hundred years a set of coins, each one a fraction of the stater, had been issued. When Croesus of Lydia introduced the first standard imperial coinage in 550 B.C. Lydian money was already known for its high and unchanging standard. Other cities and states followed: Miletus, Phocaea, Cyzicus, Mitylene and Ephesus each founded official mints, and gradually their money began to be used and accepted outside the bounds of their own market-places, as monetary unions, like that between Lydia and Mitylene, were established. By the time of the Athenian Empire, in the fifth century B.C., money from Athens was accepted in most parts of the eastern Mediterranean.

As the use of coinage spread, it had two fundamental effects. The first was political: money issued by a central mint had a unifying effect on the users. The mark of the government on the coin was present in every transaction. Its presence defined the boundaries of governmental authority, and its value mirrored the health of the economy and the political stability of the country. The second effect of coinage was a consequence of the first. As the states developed and prospered, trade between them increased, and the use of coinage permitted more selective buying and selling of more diverse cargoes. Markets became more varied, and more widely scattered. It could be said that the introduction of the Lydian stater triggered the growth of trade in the Mediterranean because coinage made possible much more flexible trading methods.

From CONNECTIONS by James Burke (1978)

(ed note: this is from a satirical fantasy novel by Terry Pratchett. It is about microscopic people who live among the threads of a living-room carpet. The Dumii are like the imperial Romans, their capital city is "Ware." Pismire is a philosopher.)

Outside it, separated by a wall of sharpened hair stakes, was Merchants’ Ware, the city most people thought of as the real city. Normally its narrow streets were crowded with stalls, and people from all over the Carpet. They’d all be trying to cheat one another in that open-and-above-board way known as ‘doing business’. All sorts of languages could be heard, often very loudly. Ware was where people came to trade.

The Dumii had built their Empire with swords, but they kept it with money. They’d invented money. Before money, people had bought things with cows and pigs, which were not very efficient for the purpose because you had to feed them and keep them safe all the time and sometimes they died. And suddenly the Dumii turned up with this money stuff, which was small and easy to keep and you could hide it in a sock under the mattress, which hardly ever worked with cows and pigs. And it could be cows or pigs. Also, it had little pictures of Emperors and things on it, which were interesting to look at. At least, more interesting than cows and pigs.

And, Pismire had once said, that was how the Dumii kept their Empire. Because once you started using Dumii money, which was so easy and convenient and didn’t moo all night, you started saving up for things, and selling things in the nearest market town, and settling down, and not hitting neighbouring tribes as often as you used to. And you could buy things in the markets that you’d never seen before — coloured cloth, and different kinds of fruit, and books. Pretty soon, you were doing things the Dumii way, because it made life better. Oh, you went on about how much better life was in the old days, before there was all this money and peacefulness around, and how much more enjoyable things were when people used to get heavily-armed in the evenings and go out and make their own entertainment — but no-one was anxious actually to go back there.

Economic imperialism!” Pismire had once said, picking up a handful of coins. “A marvellous idea. So neat and simple. Once you set it going, it works all by itself. You see, it’s the Emperor who guarantees that the money will buy you things. Every time someone hands over or accepts one of these coins, it’s a little soldier defending the Empire. Amazing!”

No-one understood a word of what he meant, but they could see he thought it was important.

From THE CARPET PEOPLE by Terry Pratchett (1992)

There is an old Streinveldtian fable about a man who tried to trick Toke, the death-god. The man demanded one million credits worth of precious metals. Toke gave it to him — all in one piece, a massive mountain of glittering brilliance (Commodity money).

At first the man was delighted, he danced in happy circles around his towering treasure; all too soon, however, he realized what a terrible trick Toke had played on him. This solid boulder of copper and silver and gold was too big for him to move — but he couldn’t leave it where it was. He didn’t dare leave it alone long enough to go after the tools necessary to break the metal into smaller pieces; somebody else might come along and discover it. He might come back to find others hammering and chopping and picking away at his fortune; he had no way to prove that this mountain of metal was actually his. But he couldn’t stand there with it and guard it forever —

At last, in krieing frustration, he summoned Toke again and demanded that the death god take away this cursed burden and instead give it to him in a form that he could carry. Toke smiled and snapped his fingers. The looming fortune vanished. In its place was a million-credit note (Commodity-backed money).

That should have pleased the man — but it didn’t. He had his fortune concentrated all in a single scrap of paper; but now there was no way for him to spend it.

Who could change a million-credit note? If he took it to a bank, they might take it away from him; he still had no way to prove that it was his. That the treasure was now in such a portable form made it even easier to steal than the mountain of gold.

He summoned Toke again. This time, the man demanded that the money be both portable and definitely identifiable as belonging to him. Toke took back the million-credit note; he smiled, sat down, and wrote out a check for the same sum (Fiat money). At last the man was pleased —

— until he tried to cash it. Have you ever tried to cash a check signed by Toke, the death god?

From SPACE SKIMMER by David Gerrold (1972)

(ed note: our hero James Tighe, underwater cave diver extraordinaire, has been invited to a meeting with billionaire Nathan Joyce. Also present at the meeting is is Nobel Prize–winning economist Professor Sankar Korrapati. )

The professor retrieved a small remote from a nearby credenza and clicked it. The TV winked off and instead a hologram glowed into existence above the coffee table. It consisted of 3D words in bold white letters:

     What is money?

     Tighe was momentarily startled. He’d never seen an open-air holographic display in person.
     Joyce noticed his reaction. “Pretty cool, eh? Software-defined light. I was an angel investor in the firm that pioneered it.”
     Tighe gazed at the words: What is money? Their meaning started to sink in. He couldn’t help but think this looked like the beginning of the world’s most elaborate time-share pitch. “Mr. Joyce—”
     “Nathan, please.”
     “Uh, Nathan, I appreciate the invitation—”
     “But why are you here? I’ll explain, but first, I’d like you to listen to a talk Sankar has been delivering in certain circles.” On Tighe’s attempt to speak he added, “Indulge me.” Joyce turned to the professor. “Doctor, if you will.”

     “Of course.” Korrapati moved alongside the glowing hologram and stared intently. “Can you tell me from where money comes, Mr. Tighe?”
     Tighe looked from the professor to Joyce and back again. Apparently they were doing this. “I … I guess it comes from a mint.”
     “To be clear: by ‘money,’ I do not mean the physical instruments—the paper and the coins—but the unit of value that money represents. How does a given unit of money come into existence?”
     Tighe was about to answer when he realized with surprise that he did not know.
     “Do not be embarrassed. Many MBAs do not know either.”

     The holographic words morphed into a US one-dollar bill.
     “The reality is that only 5 percent of all money is created by governments in the form of cash in circulation.”
     The holographic dollar shrank to a minuscule size against a backdrop of scrolling database records.
     “The remaining 95 percent of money is created by commercial banks whenever they extend credit to a borrower.”
     Tighe looked at Joyce quizzically. Joyce nodded for him to pay attention.
     The hologram now transformed into a house with a “Sold” sign on the front lawn.
     “For example, when a new mortgage is originated, that money does not come out of a bank vault. Instead, the money is created as a result of the loan. The bank supplies it to the borrower as a bank credit, with the borrower promising to repay the principal plus interest at a future date. This new debt is registered with a federal reserve or a central bank to the commercial bank’s account, allowing it to now loan out more money based on a multiple of that new loan—usually at a ratio of ten or more to one. So the more money the bank lends, the more it has available to lend.

     Tighe frowned. “Hold on. How can that be?”
     “Because in the modern world money does not represent value, Mr. Tighe—money represents debt. And the more debt that is created in the world, the more money there is.”
     Tighe looked again at Joyce.
     Joyce gestured for Korrapati to continue.

     “To be clear, it is very important that banks get back this virtual money they loan out—and with interest—or the bank will become insolvent. However, as long as loans keep getting repaid, a bank can continue creating new money in the form of credit.”
     The hologram now depicted a bar graph with the arrow traveling rightward and ever upward.
     “And so it continues, with new money being created all the time as more and more people, companies, and state and local governments borrow. But this system has a weakness …”
     Another line appeared on the graph. It was labeled Payments Due and began well above and not far behind the rising debt line—chasing it uphill.
     “Banks lend only the principal. However, loans must be repaid plus interest—and with long-term loans like mortgages, the total interest payments far exceed the principal itself. Unless the overall money supply keeps growing, there will never be enough money to pay back all the loans plus interest.
     “This is why we see ‘growth’ as the central mantra of finance. Why consumers are urged to ever-greater consumption, why prices continue to rise—because new debt must feed ever-growing interest requirements.

     “Most shocking to the layman is the fact that repaying debt destroys money. If most debts were paid off, far from helping the economy, it would increasingly paralyze it. No debt would mean there was no money.
     The hologram morphed into a line of people in tattered clothes waiting before a soup kitchen.
     “Recall the Great Depression, Mr. Tighe. Between 1929 and 1933 the overall US money supply was reduced by nearly a third. As bad loans were written off, there was less money overall to meet interest obligations, resulting in a cascade of failure.”
     The hologram now dissolved to show cartoon bank buildings toppling like dominoes.
     “The Great Depression wasn’t a case of too much debt. It was a case of too little debt.”

     Tighe raised his eyebrows, bewildered.
     The virtual graph returned as the debt line resumed its upward trajectory.
     “Debt powers modern economies, which is why it is constantly growing. The greater the debt, the larger the money supply, the more economic activity—but also the more interest that needs to be repaid to keep the system running.”
     Korrapati looked grim. “So at the very time that climate change threatens to destroy human civilization, our economic system compels us to pursue ever-greater business growth—which will eventually become impossible.
     The holographic line of repayments finally overtook the debt line—and suddenly both lines plunged straight down.
     “My financial model predicts that on its present course this unsustainable debt bubble will pop within the next decade, collapsing the entire global economy—with the potential for world conflict, mass starvation, and possibly the end of modern civilization as we know it.”

     Tighe was speechless.
     “However, there is a place where near-infinite expansion can occur—is, in fact, already occurring. Where our current debt-based financial system can expand for millions of years uninterrupted.” Korrapati pointed upward. “Space.
     Korrapati clicked on the remote, and the holographic display dissolved.
     “Commercial exploitation of our solar system can expand the human economy beyond Earth to address the accumulated accumulated debt in our economic system, massively increasing the total amount of raw materials and energy without increasing carbon emissions or hastening climate change. It is the only sure way to avoid imminent, global economic collapse.

     Tighe sat numbly for several moments, but then he looked up at an expectant Korrapati. “Let me get this straight: you’re saying humanity must expand into space—not for the sake of science or exploration, but to stop the banks from going broke?”
     “To preserve civilization.”

     “Wouldn’t it be easier to just redesign money?”
     “Redesigning the financial system is more challenging than you might think—especially with winners in the current economic system prepared to use all their power to preserve the status quo. And cryptocurrencies have their own energy—and climate change—related drawbacks.”

     Joyce cleared his throat.
     Tighe turned to look at the billionaire.
     “I have two words for you, J.T.: asteroid mining.”
     “Asteroid mining.”
     “I’ve examined Dr. Korrapati’s financial model. So have my fellow investors. We’re convinced that unless something changes, our portfolios could be worthless within a decade.

     “Look, I’m not sure why you brought me here, but I think there’s been some sort of mistake.” Tighe stood. “I’m not an investor.”
     “There was no mistake, J.T. I’ve launched an asteroid-mining company, and we’re looking to crew our first manned expedition. I’d like you to sign on.”
     Tighe slowly sat back down.
     “Asteroid mining will be a dangerous business. A job for the adventurous.” Joyce gestured to the television screen. “I’ve seen what you’re capable of. We’ll pay all training expenses, and there’s a signing bonus—yours to keep even if you don’t make the final cut.”
     “You’re sending people to mine asteroids?”
     “In space.”
     “Aren’t there already companies doing that with robots?”
     “There are several in the preparation stages. Their tech is still unproven. We think that, despite the significant added costs, sending humans along with robots will give us a competitive edge—chiefly, the ability to iterate new designs on-site to accelerate innovation. As Dr. Korrapati demonstrated, time is a factor.

From DELTA-V by Daniel Suarez (2019)

The book in the middle was meant to be a light-hearted space operatic caper. I'd established a much-slower-than-light universe in "Saturn's Children", and posthumans who could survive the harsh environments and protracted time scales implied by it. How about sending a protagonist on a tour of known space?

Well, at the first step, my suspension of disbelief broke. Because space travel is so hard in the Freyaverse that nobody in their right mind would do it, unless the stakes were unbelievably high—and they had a very low estimate of their own self-worth. In fact, come to think of it, space colonization was itself a ludicrous idea; how on earth could it pay for itself?

Nevertheless, I persisted. I realized that I needed an economic framework, otherwise the whole idea collapsed at the first hurdle, leaving me with only religious fanaticism as a plausible motive for space colonization. And while religious fanaticism features in "Neptune's Brood" (the Church of the Fragile are what you get after 5000 years of uncritical acceptance of the nonsensical "we can't keep all our eggs in one basket"/"what if life on Earth is wiped out?" arguments advanced by would-be space colonists today: our robot offspring are going to ensure that humanity spreads to the stars, kicking and screaming and dying in large numbers), religious fanatics aren't terribly engaging characters in a work of fiction.

And that's when the idea of different speeds of money hit me.

In the late-period Freyaverse, money comes in three kinds: fast, medium, and slow. We are all used to fast money; it's what we use today. It's a medium of exchange of value and it correlates with economic velocity: the hotter/faster an economy is moving, the more money circulates. You can't meaningfully transfer fast money between star systems (or even sub-systems in orbit around a common star, such as the separate moon systems of different distant gas giants) because the economies are not directly coupled: no physical goods are actually worth shipping across such distances. (I'm putting a lower threshold on the cost of a single starship mission in the Freyaverse of roughly one year of GDP for an entire solar system; in today's terms, if we had the tech to build one, that would be around $50Tn, or 5-6 times the annual GDP of the United States.)

In addition to fast money, there are long term instruments that act as reservoirs of value. Real estate is not terribly liquid—you can't take a thousandth of your house to the supermarket and use it to buy provisions—but it's still recognizably valuable. And it persists; real estate investments may hold value for decades or centuries. And because they're interchangeable with fast money, at what is effectively a wildly skewed exchange rate, these properties can act as buffers against fluctuations in the fast money economy.

The Freyaverse recognizes this by denominating investments of this type (not just houses but pyramids and space elevators and planetary terraforming projects) in a currency of their own: medium money.

But starships in the Freyaverse are slow—typically cruising at 1% of lightspeed. At this speed, Alpha Centauri is nearly 500 years away; stars with known planetary systems may take millennia to reach. Communication is a lot faster: colonized star systems use modulated laser transmissions to beam data back and forth, including the uploaded, serialized minds of people who want to travel. But what kind of currency (even for a species as long-lived as our posthuman mechanocyte-based successors) can possibly be used to intermediate exchanges of value across interstellar distances? Or to settle debts amounting to the cost of building a new colony, when that kind of sum is equal to entire years of economic productivity?

Slow money is a digital currency backed by debt—the debt incurred by constructing a new interstellar colony. To exchange slow money tokens requires something like (but not identical to) David Chaum's Digicash; all transactions need to by cryptographically signed by a trusted third party. With slow money, rather than relying on a "banker", each party can operate as a banker—but bank A can't sent cash to bank B without getting the transaction irrevocably notarized by bank C. By putting the third party in another star system, both participants in the exchange can verify that they're not being scammed, because to get your digicash packet countersigned by your banker you need to literally aim your laser communicator at their home star system. And wait. And wait a bit longer, because this whole process takes ages—slow money (thanks to requiring notarization/acknowledgement) travels no faster than a third the speed of light.

So, setup: I generated a character (subtype: girl with a mission; sub-subtype: as utterly unlike Freya as I could make her, which is why she's a middle-aged accountant), put her in jeopardy (trying to get from a highly dubious space colony to a water world, she signs on board a damaged vessel crewed by religious fanatics for a working passage), and sent her off to have adventures.

Then, midway through the first draft, this book fell on me.

The book in question was Debt: The First 5000 Years by David Graeber, and it was to 2011 pretty much what Piketty on Capital is to 2014. Short version: Graeber is an anthropologist, not an economist. His thesis is that to the extent that economics is the study of how we allocate resources, this is essentially within the domain of anthropology: and some of the central narratives of economics are inconsistent with our understanding of how human societies operate. (If you read no other part of the book, look for his demolition of Adam Smith's account of the emergence of barter among primitive peoples. Barter, Graeber points out, isn't something that emerges, and that acts as a precursor to the development of money: rather, barter is what we get in atomized societies when fiscal systems collapse and nobody trusts their neighbours. True primitive tribal societies run on interpersonal debt and/or honour systems: everybody knows what their neighbours owe them, so there's no need to provide an immediate exchange for items of value received.)

But anyway: "Debt" gave me a critical tool to look at the economics of interstellar colonization in the Freyaverse. And a tool for thinking about why colonies might be founded. Colonization is expensive, so to create a colony mission incurs a huge amount of debt, denominated in slow money (because this is the only currency that can survive the gulfs of time and space involed). The easiest way to obtain the slow money with which to pay off your star system's debt of instantiation (and interest) is to grow rapidly and send out your own colonies, in turn, which allows you to issue cash instruments redeemable against their debt, much as banks today use lending as collateral for generating new money.

Voila! Just add banking fraud, murderous matriarchs, alien space bats, talking squids in space, a water-world and the worldbuilding thereof (see also part 2), and you have a parable for our times about the banking crisis and the spiralling growth of debt that is rapidly enslaving us to a floating pool of transnational financial instruments that nobody really understands or owns.

"Neptune's Brood" was simple, really: just a light-hearted space opera that accidentally turned into an exegesis on how to design an economic system to answer one of my earlier core criticisms of the proponents of space colonisation: who's going to pay for it?.

From CRIB SHEET: NEPTUNE'S BROOD by Charles Stross (2014)

      I'd had a brief interview with the office manager, Phylea Kardea, who welcomed me home, congratulated me on my modest success, and said Tallith Min hoped that I'd stay to meet with her when I finished my accounts. I was then passed on to Ensly, who handles the Lost Star accounts and we set out to reconcile my verified accounts with their records.

     Interplanetary trade relies on a web of interplanetary financial institutions and a system wherein each transaction is authenticated by both parties with a set of codes, one of which is radio transmitted and the other delivered on a physical drive (this is in a close star cluster where the stars are only a couple of ten astronomical units apart, a few hours by radio). Credits move in a complex chain of inner-bank transfers only after being verified by both codes. My transactions were transmitted to Min & Co via radio-packets, but the second, physical drive versions of those transactions needed to match the transmitted codes to finalize the credit transfers. Every transaction had to be found in our two ledgers and reconciled to complete the transfers. In theory it should be a simple matter of merging the two accounts, but in practice, it's not. At least not for me. Miccall had handled the ship's financial side and his and Min & Co.'s financial conventions were unfamiliar to me. As a result, entries appeared under different headings in our two files. Tracking them down took a focused effort for more than two hours.

     We met Min in the CreditBox Department of the UCCB office (Unity Charter Central Bank). After exchanging greetings, we found the Security Section where each of us was scanned and our bio-metrics registered to allow access to the UCCB CreditBox to issue CreditTokens, the universally accepted currency in the Nine Star Nebula. I thought having five of us with access was a bit unnerving. I trusted them all, but I had to wonder why Min felt all five of us needed access. I rather hoped I'd be the only one who'd need to access it.

     The UCCB CreditTokens issued by a CreditBox are manufactured, monitored and verified in real time by the Directorate of Sentient Machines, ensuring that each token and associated credit transfer is authentic. This system, and indeed the whole inner workings of the Unity Charter Central Bank, is run on devices designed and monitored by sentient machines using technology which involves instant, quantum communication between the devices and tokens anywhere in the Nebula — a technology that even after 10,000 years of research remains a mystery to humans. (The same technology can be used as communications, but with few special exceptions, the Unity sticks with radio communications rather than relying on the Directorate of Sentient Machines. In part this is because sentient machines and their advanced technology keep people who believe that the machines are feverishly plotting their return to ravish their wives and daughters awake at nights.)

From THE BRIGHT BLACK SEA by C. Litka (2015)

"If you're basing the system on abundance and free trade, you won't need money, for example ..."

"Oh, but we do and will. It's one of the greatest of all human inventions. With it, we can trade with or for something in the future that doesn't exist yet. And since it's only score-keeping, we can use the comm/info net to do it."

I was out of my element, and I knew it. Money was something that was fairly easy to come by if I worked for it, and it was primarily useful for buying bread and butter. I didn't try to fathom the "Free-and-Twenty-One" economics where the actual value of money slipped and slid around, depending upon buying power. My standard of exchange was breakfast. Anywhere in the U.S., a good breakfast cost about ten dollars, and I used that yardstick to figure the value of currency when I was in other countries. I considered my primitive method of determining monetary value to be basic economics.

"Yes, the wording is such that the boycott will affect all space commerce activities carried on by the Commonwealth and its registered space facilities," Trip Sinclair observed, "even the League of Free Traders, Kevin."

"How about our Lagrangian operations?" Ursila Peri's video image wanted to know. "How can they boycott trade operations off-planet?"

"Is your air bill current, Ursila?" Trip asked her.

"Yes, but even if it wasn't, nobody out here would cut off another person's life support. If the credit line got over-extended too much for too long, we'd put the debtor on a ship home. We work together because there's a lot of nothing waiting for everybody beyond the bulkhead," she said. "They're going to have trouble enforcing tariff arrangements and trade boycotts out here, that agreement sounds exactly like something written up by a bunch of people who always have pressure around them and gravity to keep their feet on the floor. Earthworms!" She made it sound like an insult.

"Sandy, this is Jeri Hospah. Don't let his attempts at humor put you off; sometimes he means what he says. Jeri, find a sack for Sandy and issue him some chits. Then fake up some paperwork that will keep the Ell-Five people happy," Ali instructed us...

...Uncountable hours later, I awoke in the wan sleeping light of the personal compartment and was momentarily confused until I remembered where I was. I felt physically refreshed but still mentally fatigued. That's a dangerous condition in space because little things can kill a careless person.

Somebody had left a flight suit and a Remain-Over-Night kit. Jeri Hospah was either thoughtful or had a well-trained station crew. I took a sponge bath, put on the flight suit and slippers, and decided I might live if I could find breakfast.

The RON kit had a pack of chits—air, meal, water, airlock cycles—as well as an L-5 facilities directory and a visitor's card for the Free Traders' Lounge.

A note was in the kit. "Call me at 96-69-54 and I'll chit you breakfast—Jeri."

From MANNA by Lee Correy (G. Harry Stine) (1983)

(ed note: the superintendent explains the facts of life to the new voluntary exiles to Mars. Keep in mind that on Mars, the air you breath is NOT free, it has to be manufactured and you have to pay for it.)

      "Hear and believe," Farr said. "Okay, chums, let me give you the facts of life. Number one. Don't try to escape. There's no place to go. If you make it outside, you'll live about fifteen seconds. There's no air out there, and your blood will boil away in your veins. It's not a pretty way to go, and I'm told it's painful as hell.
     "Number two. Don't try to escape. You may think you're smart and see a way to get a p-suit. You may even be able to operate it. And then what? You can't make air, and you can't carry enough to get anywhere worth going. Running out of air's not a lot better than going out without a suit.
     "Number three. Don't try to escape. Sure there's a town here, and sure there are a lot of people in it. But you'll pay for everything, and I do mean everything."
     He lifted an orange disk that hung from a chain around his neck. I'd noticed that everyone except us newcomers wore one, but they weren't all the same color. "Air-tax receipt," Farr said. "Mine's orange because I'm due to have it recharged. If it turns red, that's it. Pay up or go outside. You'll need air medals, because God help you if anybody catches you in town without one."
     "Why? What happens?" someone demanded.
     "Outside," Farr said. "Not even a chance to pay up. Just out."
     "And who's to put me out?" Kelso demanded.
     Farr grinned. "Every man jack who's paid his taxes, that's who. Might take several for you, but they'll do it."

At Central Processing they charged our air tags to bright green, forty days' worth. They gave us a hundred Mars dollars, worth about half that in Federation credits. We changed our coveralls for new ones, with a choice of blue or orange.

I found a tunnel end to sleep in. They'd been digging out to expand the city, but this project was halted for lack of a labor force. Nobody bothered me. I figured I had nothing worth stealing, anyway. That turned out to be stupid: I had a charged air tag, and that would be worth my life if there was anybody around desperate enough to cut my throat for it. Nobody was, just then.

I'd been there ten days and my air tag was turning from green to yellow, It was getting time to move on. I figured another couple of days would do it.

From BIRTH OF FIRE by Jerry Pournelle (1976)

(Planet) Blessed would not have been on my route other than for business reasons. 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.

I had worked the first leg, Landfall to Blessed, successfully... 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.

From TIME ENOUGH FOR LOVE by Robert Heinlein (1973)

(ed note: Lazarus Long is immortal, at the time of the novel he is a bit over two thousand years old. He has experience with almost every job that had ever been invented.

He and his partner Zaccur are setting up a colony on the planet New Beginnings. His partner has departed for a second load of colonists while Lazarus runs the New Beginnings Bank of Commerce and the Top Dollar Trading Post under the name of Earnest Gibbons.

One fine day the town selectmen decide to nationalize the bank. Earnest/Lazarus is not surprised, this often happens. The selectmen get a quick lesson in "Be Careful What You Wish For." )

      Gibbons had plenty of time to be ready before the murmurings about his monopoly of the banking business came to a head. The New Beginnings Bank of Commerce was a bank of issue; he (or Zaccur) always set up such a bank in each colony they pioneered. Money was necessary to a growing colony; barter was too clumsy. Some medium of exchange was needed even before government was needed.
     He was not surprised when he was invited to meet with the town's selectmen to discuss the matter; it always happened. That evening, as he trimmed his Vandyke and added a touch more gray to it and to the hair on his head in preparation for the confrontation, he reviewed in his mind proposals he had heard in the past for making water run uphill, the sun to stand still, and one egg to be counted as two. Would there be some novel numbskullery tonight? He hoped so but did not expect it.
     Three hours later Gibbons had settled one point: No one had been able to think of any new way to debase currency that he had not heard at least five hundred years earlier—more likely a thousand—and each was certainly much, much older in history. Early in the meeting he asked the Moderator to have the Town Scribe write down each question so that he could answer them in a lump—and was allowed to have it his way by being balky.
     At last the Moderator Selectman, Jim "Duke" Warwick said, "That seems to be it. Ernie, we have a motion to nationalize—I guess that's the word—the New Beginnings Bank of Commerce. You're not a selectman, but we all agree that you are a party with a special interest, we want to hear from you. Do you want to speak against the proposal?"
     "Not at all, Jim. Go right ahead."
     "Eh? I'm afraid I didn't understand you."
     "I have no objection to the bank being nationalized. If that's all, let's adjourn and go to bed."
     Someone in the audience called out, "Hey, I want my question about New Pittsburgh money answered!"
     "And mine about interest! Interest is wrong—it says so in the Bible!"
     "Well, Ernie? You said earlier that you would answer questions."
     "So I did. But if you are nationalizing the bank, wouldn't it make more sense to put questions to your state treasurer, or whatever you decide to call him? The new head of the bank. By the way, who is he? Hadn't he better sit up here on the platform?"
     Warwick pounded his gavel, then said, "We haven't got that far, Ernie. For the time being the entire Council of Selectmen is the finance committee—if we go ahead with this."
     "Oh, by all means go ahead. I'm shutting down."
     "What do you mean?"
     "Just what I said: I quit. A man doesn't like to have his neighbors dislike him. The people of Top Dollar don't like what I've been doing or this meeting would never have been called. So I've quit. The bank is closed; it will not reopen tomorrow. Nor ever, with me as president of it. That's why I asked who your state treasurer will be. I'm as interested as anyone in finding out what we are going to use for money from here on—and what it will be worth."
     There was dead silence; then the Moderator had to pound his gavel and the Sergeant at Arms was very busy, all to shouts of
     "What about my seed loan?"
     "You owe me money!"
     "I sold Hank Brofsky a mule on his personal note—what do I collect?"
     "You can't do this to us!"
     Gibbons sat quietly, not letting his alertness show, until Warwick got them quieted down. Then Warwick said, wiping sweat from his brow: "Ernie, I think you've got some explaining to do."
     "Certainly, Mr. Moderator. The liquidation will be as orderly as you will let it be. Those who have deposits will be paid ... in banknotes, that being what was deposited. Those who owe money to the bank—well, I don't know; it depends on the policies the council sets up. I suppose I'm bankrupt. I can't know until you tell me what you mean when you say my bank is being 'nationalized.'
     "But I have had to take this step: Top Dollar Trading Post is no longer buying with banknotes—they may be worthless. Each deal will have to be barter. But we will continue to sell for banknotes. But I took down the posted prices just before I came here tonight ... because the stock I have on hand may be all I ever have with which to redeem those banknotes. Which could force me to raise prices. It all depends on whether 'nationalize' is simply another word for 'confiscate.'"

     Gibbons spent several days explaining to Warwick the elementary principles of banking and currency, patiently and with good humor—to Warwick by Hobson's choice because the other selectmen found that they were too busy with their farms or businesses to take on the chore. There had been one candidate for the job of national banker or state treasurer (no agreement as yet on title) from outside the selectmen, a farmer named Learner, but his self-nomination got nowhere despite his claim of generations of experience in banking plus a graduate degree in such matters.
     Warwick got his first shock while he was taking inventory, with Gibbons, of the contents of the safe (almost the only safe on New Beginnings and the only one of Earth manufacture).
     "Ernie, where's the money?"
     "What money, Duke?"
     "'What money? Why, these account books show that you've taken in thousands and thousands of dollars. Your own trading post shows a balance of nearly a million. And I know you've been collecting mortgage payments on three or four dozen farms—and haven't loaned hardly anything for a year or more. That's been one of the major complaints, Ernie, why the selectmen just had to act—all that money going into the bank and none coming out. Money's scarce everywhere. So where's the money, man?"
     "I burned it," Gibbons answered cheerfully.
     "Certainly. It was piling up and getting too bulky. I didn't dare keep it outside the safe even though we don't have much theft here—if somebody stole it, it could ruin me. So far the past three years, as money came into the bank, I've been burning it. To keep it safe."
     "Good God!"
     "What's the trouble, Duke. It's just wastepaper."
     "'Wastepaper'? It's money."
     "What is 'money,' Duke? Got any on you? Say a ten-dollar bill?" Warwick, still looking shocked, dug out one. "Read it, Duke," Gibbons urged. "Never mind the fancy engraving and the pretty paper that can't be made here as yet—read what it says."
     "It says it's ten dollars."
     "So it does. But the important part is where it says that this bank will accept that note at face value in payment of debts to the bank." Gibbons took out of his sporran a thousand dollar banknote, set fire to it while Warwick watched in horrified fascination. Gibbons rubbed the char off his fingers. "Wastepaper, Duke, as long as it's in my possession. But if I let it get into circulation, it becomes my IOU that I must honor. Half a moment while I record that serial number; I keep track of what I burn so that I know how much is still in circulation. Quite a lot, but I can tell you to the dollar. Are you going to honor my IOU's? And what about debts owed to the bank? Who gets paid? You? Or me?"
     Warwick looked baffled. "Ernie, I — just don't know. Hell, man; I'm a mechanic by trade. But you heard what they said at the meeting."
     "Yeah, I heard. People always expect a government to work miracles—even people who are fairly bright other ways. Let's lock up this junk and go over to the Waldorf and have a beer and discuss it."

     "—or should be, Duke, simply a public bookkeeping service and credit system in which the medium of exchange is stable. Anything more and you are jiggering with other people's wealth, robbing Peter to pay Paul.
     "Duke, I did my best to keep the dollar stable by keeping key prices stable—seed wheat in particular. For over twenty years the Top Dollar Trading Post has paid the same price for prime seed wheat, then resold it at the same markup—even if I took a loss and sometimes I did. Seed wheat isn't too good a money standard; it's perishable. But we don't have gold or uranium as yet, and it has to be something.
     "Now look, Duke—when you reopen as a treasury, or a government central bank, or whatever you call it, you're certain to have pressures on you to do all sorts of things. Lower the interest rates. Expand the money supply. Guarantee high prices to the farmer for what he sells, guarantee low prices for what he buys. Brother, you're going to be called worse names than they call me, no matter what you do."
     "Ernie—there's only one thing for it. You know how ... so you've got to take the job of community treasurer."
     Gibbons laughed heartily. "No, sirree, bub. I've had that headache for more than twenty years; now it's your turn. You grabbed the sack; now you hold it. If I let you put me back in as banker, all that will happen is that they will lynch both of us."

From TIME ENOUGH FOR LOVE by Robert Heinlein (1973)

(ed note: this seemed science-fictional back in 1972, but has become a reality today)

Two humans, big, muscular fellows, were pushing their way ungently to the stage. The one on Flinx's left wore glasses—not for their antique therapeutic value, but because in some current fashion circles it was considered something of a fad. He extended a credcard.

"Can you accept this, boy?"

Flinx bridled at the 'boy.' but extracted his card meter. "Indeed I can, sir. Ask your question."

The man opened his mouth, paused. "How do I know what to pay you?"

"I can't set value on my answers, only on your question. Whatever you deem it worth, sir. If I give no answer I will refund your credits." He gestured to where the minidrag rested alertly on his shoulder. "My pet here seems to have a feel for the emotional states of others which is quite sensitive. Even more so than myself. A swindler, for example, exudes something that he is especially sensitive to. I am rarely swindled."

The man smiled without mirth. "I wonder why?" He dialled a setting on the card, extended it again. "Will a hundred credits do?"

Flinx was quick to stifle his reaction. A hundred credits! That was more than he sometimes made in a month! For a moment he was tempted to lower the figure, mindful of the laugh Mother Mastiff might have if she found out. Especially after his comments on her priceings this morning. Then he reminded himself that, after all, the man had set the price and surely would not cheat himself. He tried but could detect no trace; of humour about the man. Nor his companion. Quite the contrary. And he hadn't heard the question yet. What if he couldn't answer it?

"A ... a hundred credits would be most satisfactory, sir." The man nodded and stuck his card in the little black meter. The compact machine hummed softly and the amount, one-oh-oh-zero-zero, clicked into place on its tiny dial. There was a. brief pause and then it buzzed once, the red light on its top glowing brightly. It noted that the amount of so-and-so, card number such-and-such, was good for the amount dialled, and that credits numbering one hundred (100) had been transferred to the account of one Philip Lynx (his given name in the city records) in the Royal Depository of the sovereign Republic of Moth. Flinx returned the box to its place in his pouch and looked back to the two expectant men.

"Ask your question, sirs."

From THE TAR AIYM KRANG by Alan Dean Foster (1972)

A family got up to leave. The wife paid Rosaria with three separate credit chips. From the prices chalked beside the serving window, the five dinners totaled less than ten pesos—one and a half Frisian thalers. The citizens of Potosi didn’t have easy access to credit terminals which could have combined the small amounts into a single chip for convenience.

(Peres wants to cheat the Frisians, because he doesn't want to pay the bill for the Frisian's services) “So our Frisian visitors arrive,” Peres caroled, “they clean up our problem. They board the ship we provide, though they don’t know the ship’s ours. And the ship never gets home (because Peres has placed a time bomb on the ship). The credit chips are aboard the same vessel, so they’re never presented for payment. End of story, yes?”

“I’m Barbour,” the Frisian said. “And don’t worry about how I got through your fence, I did, that’s all. Did you bring the money?”

“You claim you can free Adolpho,” said the Widow Guzman. “If you can do that, you’ll have your pay. You’ll have any pay you ask.”

In open-remitter chips, so there’s no way they can trace back where it came from?” Barbour warned. He looked as skittish as a roach when the lights come on.

“Yes, yes, just as you said,” Roberson snapped. “Now, how are you going to release Peres?”

From THE SHARP END by David Drake (1993)

“This is where we begin.” Relling pointed to a small box-like device attached to the far side of the table. “Most of this will be more or less familiar. Pick up the printed menu, select your dish, note the number of your selection and dial it—simple enough. The meal will come up through the delivery chute in the centre of the table.” Relling paused and beckoned him closer. “Now we come to the tricky part. Having selected our meal, the device expects us to pay for it and will not serve the meal until we do. Right. Now, on top of this box you will note the following—a calibrated dial with a double set of figures, a small slot for an economic key and three blank dials. The first blank dial is marked STANDARD CHARGES that will show the cost of the meal; the second is marked BALANCE—which is obvious; and the third, ADJUSTED BALANCE, will be made plain when I pay for the meal. Now watch.” He leaned forward and inserted his economic key into the small slot and immediately the three dials lit. The dial marked STANDARD CHARGE showed 4.07 and the second dial marked BALANCE showed 6y-282d-19.08.

Relling smiled. “Yes, it looks confusing but really it is quite simple. Our economic system is based on a time/work unit system. The cost of the meal is 4.07 while my credit balance at the bank is 6 years, 282 days and 19.08 hours. Follow? I then set the pointers on this calibrated dial to the cost of the meal or the figures under STANDARD CHARGE, which act gives the bank authority to deduct that amount from my credit balance, as you will see Look”

Gaynor saw the dial marked ADJUSTED BALANCE suddenly display the figures: 6y-282d-15.01.

“Simple, isn’t it?” Relling withdrew his key. “Now let’s sit down and enjoy this meal while it’s hot—you can ask questions as we eat.”

Gaynor had so many questions that he never remembered the substance of the meal.

“What’s to stop me using your key?”

“Each key is exactly tuned to the personality of the owner. Use mine and your order will not only be rejected but the device will call the police.”

“I could hold a gun to your head while you used it.”

Relling grinned. “All these mechanisms incorporate an hysteria index of acute sensitivity. You’d still get a rejection—and the police. Sorry, Gaynor. We have all the answers—you can’t beat this thing. All these devices are hooked to the Robotic Bank, which retains and records the entire credit of every individual in the community. You go to work, you clock in and immediately the Robotic Bank begins ticking in your credit until such a time as you clock out. All the time you are working you are adding to your abstract credit balance, a balance which can never be lost or stolen.

Relling pushed aside his empty plate. “You’ll find work rates only mildly confusing. For instance, the publishing houses offer you this reporting job at rates of six-to-one or, more aptly, six hours’ pay for one hours work—which, if not riches, brings near-affluence.”

From THE PRODIGAL SUN by Philip E. High (1964)

(ed note: Tyl Koopman and Charles Desoix are waiting at the planetary starport, located on an island in the river. They are waiting for hovercraft to transport them across the river to Bamberg City. The starport is located away from the city in case a starship crashes and explodes.)

      "Now," he (Tyl Koopman) added, controlling his grimace, "how do we get to the mainland if we're not cargo?"
     "Ah, but we are," Desoix noted as he raised the briefcase that seemed to be all the luggage he carried. "Just not very valuable cargo, my friend. But I think it's about time to—"
     As he started toward the door, one of the hovercars they'd watched put out from the city drove through the mingled cluster of men from the starships and the surface freighter. Water from the channel surrounded the car in a fine mist that cleared its path better than the threat of its rubber skirts. While the driver in his open cab exchanged curses with men from the surface freighter, the rear of his vehicle opened to disgorge half a dozen civilians in bright garments.
     "Our transportation," Desoix said, nodding to the hovercar as he headed out of the shelter. "Now that it's dropped off the Bamberg factors to fight for their piece of the market. Everybody's got tobacco, and everybody wants a share of what may be the last cargoes onto the planet for a while."
     "Before the shooting starts," Tyl amplified as he strode along with the UDB officer. They hadn't sent a briefing cube to Miesel for him … but it didn't take that or a genius to figure out what was going to happen shortly after a world started hiring mercenary regiments.

     "That's the betting," Desoix agreed. He opened the back of the car with his universal credit key, a computer chip encased in noble metal and banded to his wrist.
     "Oh," said Tyl, staring at the keyed door.
     "Yeah, everything's up to date here in Bamberg," said the other officer, stepping out of the doorway and waving Tyl through. "Hey!" he called to the driver. "My friend here's on me!"
     "I can—" Tyl said.
     "—delay us another ten minutes," Desoix broke in, "trying to charge this one to the Hammer account or pass the driver scrip from Lord knows where."
     He keyed the door a second time and swung into the car, both men moving with the trained grace of soldiers who knew how to get on and off air-cushion vehicles smoothly—because getting hung up was a good way to catch a round.
     "Goes to the UDB account anyway," Desoix added. "Via, maybe we'll need a favor from you one of these days."
     "I'm just not set up for this place, coming off furlough," Tyl explained. "It's not like, you know, Colonel Hammer isn't on top of things."

     "One thing," Desoix said, looking out the window even though the initial spray cloaked the view. "Money's no problem here. Any banking booth can access Hammer's account and probably your account back home if it's got a respondent on one of the big worlds. Perfectly up to date. But, ah, don't talk to anybody here about religion, all right?"
     He met Tyl's calm eyes. "No matter how well you know them, you don't know them that well. Here. And don't go out except wearing your uniform. They don't bother soldiers, especially mercs; but somebody might make a mistake if you were in civilian clothes."
     "What's the problem?" Tyl asked calmly. From what he'd read, the battle lines on Bamberia were pretty clearly drawn. The planetary government was centered on Continent One—wealthy and very centralized, because the Pink River drained most of the arable land on the continent. All the uniquely flavorful Bamberg tobacco could be barged at minimal cost to Bamberg City and loaded in bulk onto starships.
     There hadn't been much official interest in Continent Two for over a century after the main settlement. There was good land on Two, but it was patchy and not nearly as easy to develop profitably as One proved.
     That didn't deter other groups who saw a chance that looked good by their standards. Small starships touched down in little market centers. Everything was on a lesser scale: prices, quantities, and profit margins …
     But in time, the estimated total grew large enough for the central government to get interested. Official trading ports were set up on the coast of Two. Local tobacco was to be sent from them to Bamberg City, to be assessed and transshipped.
     Some was; but the interloping traders continued to land in the back country, and central government officials gnashed their teeth over tax revenues that were all the larger for being illusory.
     The traders didn't care. They had done their business in holographic entertainment centers and solar-powered freezers, but there was just as much profit in powerguns and grenades.
     As for mercenaries like Alois Hammer—and Tyl Koopman … They couldn't be said not to care; because if there wasn't trouble, they didn't have work.
     Not that Tyl figured there was much risk of galactic peace being declared.

From COUNTING THE COST by David Drake (1987)

Commodity money

Commodity money is when the currency is physical lumps of something valuable, e.g., solid coinage gold coins.

Sometimes the coins have Seigniorage, meaning when you purchase the commodity money at the treasury the cost is a bit more than the mere market rate of the precious metal.

Examples of Commodity money in science fiction include:

  • HEX COMIC BOOK: In the post-apocalyptic world, the currency are Soames pills used to decontaminate radioactive water.

  • TANK GIRL COMIC BOOK: currency is actual bottle of potable water. No symbolic money rings as is in DUNE.

  • MAD MAX 2: currency are jerrycans full of automobile gasoline.

  • IN TIME: currency is actually time from one's lifespan.

  • STAR WARS: THE FORCE AWAKENS: on the scavenger world Jakku, the junk dealers pay for salvaged stuff with "portions", some sort of cheap food.

  • DINNER AT DEVIANT'S PALACE by Tim Powers: in post-apocalyptic California, the currency is bottles of alcohol. A fuel, disinfectant, and a beverage all in one.

  • CHILDE CYCLE by Gordon Dickson: the interstellar currency between planetary governments is skilled professionals. The economy of the planets is based on the trade of contracts of specialists.

  • JAILHOUSE ROCK: in the prison the richest man is Elvis Presley's mentor, who has hundreds of cartons of cigarettes.

  • DEADLANDS HELL ON EARTH GAME: In the post-apocalyptic world, bullets are hard currency due to high demand and low or non-existent production.

  • GURPS AFTER THE END GAME: In the post-apocalyptic world, rifle cartridges are currency

  • STARGATE SG-1: galactic trade is conducted with "naquadah", the unobtainium mineral that magically amplifies energy sources.

  • METRO 2033 GAME: In the post-apocalyptic world, pre-apocalyptic military-grade bullets are currency, since the new bullets being currently manufactured are pretty pathetic in comparision.

  • CITIES IN FLIGHT SERIES by James Blish: the interstellar economy uses the OC Dollar which is on the Germanium Standard (basis for semiconductor electronic chips). Until some moron invents a way to synthesize germanium and crashes the economy of the entire freaking galaxy. They try to put it on the Anti-agathic Drug standard but that doesn't work very well because people have to use their drugs or lose immortality.

  • REAL-WORLD COLONIAL VIRGINIA: tobacco was currency.

  • REAL-WORLD RUSSIA: in the nineties and currently in remote areas, bottles of vodka are currency.

  • ANCIENT ROME: soldiers were partially paid with salt. No, that turns out to be an urban legend.


     Having made this mental calculation, I knew that my weight, being 150 pounds on the earth, should on this asteroid be an ounce and a half.
     Curious to see whether fact would bear out theory, I had myself weighed with a spring balance. Mr. Edison, Lord Kelvin and the other distinguished scientists stood by watching the operation with great interest.
     To our complete surprise, my weight, instead of coming out an ounce and a half, as it should have done, on the supposition that the mean density of the asteroid resembled that of the earth—a very liberal supposition on the side of the asteroid, by the way—actually came out five ounces and a quarter!
     "What in the world makes me so heavy?" I asked.
     "Yes, indeed, what an elephant you have become," said Mr. Edison.
     Lord Kelvin screwed his eyeglass in his eye, and carefully inspected the balance.
     "It's quite right," he said. "You do indeed weigh five ounces and a quarter. Too much; altogether too much," he added. "You shouldn't do it, you know."
     "Perhaps the fault is in the asteroid," suggested Professor Sylvanus P. Thompson.
     "Quite so," exclaimed Lord Kelvin, a look of sudden comprehension overspreading his features. "No doubt it is the internal constitution of the asteroid which is the cause of the anomaly. We must look into that. Let me see? This gentleman's weight is three and one-half times as great as it ought to be. What element is there whose density exceeds the mean density of the earth in about that proportion?"
     "Gold," exclaimed one of the party.
     For a moment we were startled beyond expression. The truth had flashed upon us.
     This must be a golden planet—this little asteroid. If it were not composed internally of gold it could never have made me weigh three times more than I ought to weigh.

     Mr. Edison suddenly turned the current of talk.
     "What do you suppose those Martians were doing here?"
     "Why, they were wrecked here."
     "Not a bit of it," said Mr. Edison. "According to your own showing they could not have been wrecked here. This planet hasn't gravitation enough to wreck them by a fall, and besides I have been looking at their machines and I know there has been a fight."
     "A fight?" exclaimed several, pricking up their ears.
     "Yes," said Mr. Edison; "those machines bear the marks of the lightning of the Martians. They have been disabled, but they are made of some metal or some alloy of metals unknown to me, and consequently they have withstood the destructive force applied to them, as our electric ships were unable to withstand it. It is perfectly plain to me that they have been disabled in a battle. The Martians must have been fighting among themselves."
     "About the gold!" exclaimed one.
     "Of course. What else was there to fight about?"
     At this instant one of our men came running from a considerable distance, waving his arms excitedly, but unable to give voice to his story, in the inappreciable atmosphere of the asteroid, until he had come up and made telephonic connection with us.
     "There is a lot of dead Martians over there," he said. "They've been cleaning one another out."
     "That's it," said Mr. Edison. "I knew it when I saw the condition of those machines."
     "Then this is not a wrecked expedition, directed against the earth?"
     "Not at all."
     "This must be the great gold mine of Mars," said the president of an Australian mining company, opening both his eyes and his mouth as he spoke.
     "Yes, evidently that's it. Here's where they come to get their wealth."
     "And this," I said, "must be their harvest time. You notice that this asteroid, being several million miles nearer to the sun than Mars is, must have an appreciably shorter period of revolution. When it is in conjunction with Mars, or nearly so, as it is at present, the distance between the two is not very great, whereas when it is in the opposite part of its orbit they are separated by an enormous gap of space and the sun is between them."
     "Manifestly in the latter case it would be perilous if not entirely impossible for the Martians to visit the golden asteroid, but when it is near Mars, as it is at present, and as it must be periodically for several years at a time, then is their opportunity."
     "With their projectile cars sent forth with the aid of the mysterious explosives which they possess, it is easy for them under such circumstances, to make visits to the asteroid."
     "Having obtained all the gold they need, or all that they can carry, a comparatively slight impulse given to their car, the direction of which is carefully calculated, will carry them back again to Mars."
     "If that's so," exclaimed a voice, "we had better look out for ourselves! We have got into a very hornet's nest! If this is the place where the Martians come to dig gold, and if this is the height of their season, as you say, they are not likely to leave us here long undisturbed."
     "These fellows must have been pirates that they had the fight with," said another.
     "But what's become of the regulars, then?"
     "Gone back to Mars for help, probably, and they'll be here again pretty quick, I am afraid!"

     The more we saw of this golden planet the greater became our astonishment. What the Martians had removed was a mere nothing in comparison with the entire bulk of the asteroid. Had the celestial mine been easier to reach, perhaps they would have removed more, or, possibly, their political economists perfectly understood the necessity of properly controlling the amount of precious metal in circulation. Very likely, we thought, the mining operations were under government control in Mars and it might be that the majority of the people there knew nothing of this store of wealth floating in the firmament. That would account for the battle with the supposed pirates, who, no doubt, had organized a secret expedition to the asteroid and been caught red-handed at the mine.

From EDISON'S CONQUEST OF MARS by Garrett Serviss (1947)

And then Hardin withdrew a two-credit coin from his vest pocket. He flipped it and its stainless-steel surface caught flitters of light as it tumbled through the air. He caught it and-flipped it again, watching the flashing reflections lazily. Stainless steel made good medium of exchange on a planet where all metal had to be imported.

“Let’s get back to business,” urged Hardin. “How would you take these so-called taxes, your eminence? Would you take them in kind: wheat, potatoes, vegetables, cattle?”

The sub-prefect stared. “What the devil? What do we need with those? We’ve got hefty surpluses. Gold, of course. Chromium or vanadium would be even better, incidentally, if you have it in quantity.”

Hardin laughed. “Quantity! We haven’t even got iron in quantity. Gold! Here, take a look at our currency.” He tossed a coin to the envoy.

Haut Rodric bounced it and stared. “What is it? Steel?”

“That’s right.”

“I don’t understand.”

“Terminus is a planet practically without metals. We import it all. Consequently, we have no gold, and nothing to pay unless you want a few thousand bushels of potatoes.”

“Well — manufactured goods.”

“Without metal? What do we make our machines out of?”

From FOUNDATION by Isaac Asimov (1951)

Commodity-backed money

Representative or Commodity-backed money is when the currency is paper bills or worthless coins that are backed by stores of something valuable in the treasury. This is sometimes called the Specie Standard.

Example: the Gold standard. Paper gold certificates can only be printed by the treasury up to the amount of gold in their vaults. Most nations on Terra abandoned the gold standard during the 20th century due to the inherent problems. Most current economists are not in favor of a return to the gold standard, and all efforts in the US to legislate such a return have failed. But the Gold Bugs never stop trying.

Examples of Commodity-Backed money in science fiction include:

  • THE PRODIGAL SUN by Philip E. High: money backed by hours of work. As a person works, their hours of labor are accumulated as pay-hours. Basic labor has a factor of 1, where one hour of labor earns 1 pay-hour. More skilled has higher factors: a reporter has a factor of 6 or one hour of labor earns 6 pay hours. Goods and services have purchase prices in terms of pay hours.

  • by SPI: the currency is called LaborCredits, which from the name is probably more or less the same as in The Prodigal Sun.

  • THE HIGH FRONTIER BOARDGAME: the economy of industrializing the solar system is backed by tanks of water (the most useful substance in the universe). 1 tank holds 40 metric tons of water

  • THE RESTAURANT AT THE END OF THE UNIVERSE by Douglas Adams: When the Golgafrinchan space ark B dumps its moron colonists on the primitive Planet Earth, they adopt the tree leaf as legal tender. This makes them all rich, in theory. Unfortunately due to the abundant supply of leaves there is rampant inflation. You need three deciduous forests to purchase one ship’s peanut. To deal with the problem they embark on a program to revalue the leaf by burning down all the forests. Things rapidly go downhill from there.

  • NEAR SPACE SERIES by Allen Steele: money is back by oxygen, the unit of currency is called a "lox", for liquid oxygen. 1 lox is equivalent to a dollar, a centilox is a penny, a kilolox is a grand, and a megalox is a cool million.

  • CONFEDERATION UNIVERSE by Peter Hamilton: money is backed by Helium-3, sine qua non of D-3He fusion. The fuseodollar is on the He3 Standard, since helium-3 is somewhat rare.

  • TIME ENOUGH FOR LOVE by Robert Heinlein: on the colony on planet New Beginnings the protagonist sets up a bank since nobody else knows enough about finance to do it. For practical reasons the money is backed by seed wheat, which not good since it is perishable but there isn't enough gold or silver around to support the economy. The protagonist pegged the money to seed wheat in order to stabilize wheat prices, which the colony needs in order to grow.

  • BLOOM by Wil McCarthy: the currency is backed by uranium with the basic unit being one gram. This is not due to its use in fission, but rather in the transmutation potential of ladderdown reactions. On this scale the most worthless element is Iron-56.

  • DUNE by Frank Herbert: the currency is backed by potable water on the desert planet. Underground cisterns "bank" the water, when a person adds water they are given currency in the form of rings.

  • BATTLETECH GAMES: In this universe the ComStar megacorporation has more or less a monopoly on faster-than-light communication after the collapse of the Star League. ComStar used their Letter of Credit to bill the various Great Houses for usage of the ComStar network. The Letter of Credit was intended as a method of payment for those services, its value based on a fixed amount of ComStar service, transmission time, or delivery distance.

    Now each of the Great Houses had their own individual currencies, called House Bills. The exchange rate of H-bills between two different houses would wildly fluctuate. Mercenaries (who operated between various houses more than inside a given house) got the bright idea of requesting payment in ComStar Letters of Credit to ensure a consistent payment basis.

    This became the "C-bill" where 1 C-bill = 1 second of text-only FTL transmission time. So it is a trans-empire common currency backed by seconds of FTL transmission.

  • RGB MARS TRILOGY by Kim Stanley Robinson: the currency is backed by calories of heat.

  • WARLOCK IN SPITE OF HIMSELF SERIES by Christopher Stasheff: the interstellar government's currency is the "kwaher" or currency backed by kilowatt-hours of energy.

  • THE SHAPE OF THINGS TO COME by H. G. Wells: the World Transport Union (WTU) creates the "air dollar." 1 air dollar will purchase the transport of one kilogram the distance of one kilometer on board a WTU aircraft.

  • REAL-WORLD COLONIAL VIRGINIA: certificates issued for delivering tobacco to warehouses was the first United States commodity-backed money.


“This is where we begin.” Relling pointed to a small box-like device attached to the far side of the table. “Most of this will be more or less familiar. Pick up the printed menu, select your dish, note the number of your selection and dial it—simple enough. The meal will come up through the delivery chute in the centre of the table.” Relling paused and beckoned him closer. “Now we come to the tricky part. Having selected our meal, the device expects us to pay for it and will not serve the meal until we do. Right. Now, on top of this box you will note the following—a calibrated dial with a double set of figures, a small slot for an economic key and three blank dials. The first blank dial is marked STANDARD CHARGES that will show the cost of the meal; the second is marked BALANCE—which is obvious; and the third, ADJUSTED BALANCE, will be made plain when I pay for the meal. Now watch.” He leaned forward and inserted his economic key into the small slot and immediately the three dials lit. The dial marked STANDARD CHARGE showed 4.07 and the second dial marked BALANCE showed 6y-282d-19.08.

Relling smiled. “Yes, it looks confusing but really it is quite simple. Our economic system is based on a time/work unit system. The cost of the meal is 4.07 while my credit balance at the bank is 6 years, 282 days and 19.08 hours. Follow? I then set the pointers on this calibrated dial to the cost of the meal or the figures under STANDARD CHARGE, which act gives the bank authority to deduct that amount from my credit balance, as you will see Look”

Gaynor saw the dial marked ADJUSTED BALANCE suddenly display the figures: 6y-282d-15.01.

Relling grinned. “You go to work, you clock in and immediately the Robotic Bank begins ticking in your credit until such a time as you clock out. All the time you are working you are adding to your abstract credit balance, a balance which can never be lost or stolen.”

Relling pushed aside his empty plate. “You’ll find work rates only mildly confusing. For instance, the publishing houses offer you this reporting job at rates of six-to-one or, more aptly, six hours’ pay for one hours work—which, if not riches, brings near-affluence.”

From THE PRODIGAL SUN by Philip E. High (1964)
Reputation as Money

In a surprising number of science fiction novels, the economic system uses commodity-backed money based on a persons Reputation.

"Some people's futures are determined by popular vote: American Idol contestants, class presidents, and people who want to get gay married in California. But what if every aspect of our lives was determined by our reputation and popularity? Would our futures be better, or would the tyranny of the popular spin us into dystopia?

We look at ten science fiction stories where society is organized around reputation and popularity.

Down and Out in the Magic Kingdom by Cory Doctorow: Down and Out's Bitchun Society has done away with poverty, scarcity, and capitalism, replacing it with the Whuffie economy. Your Whuffie score depends on how much respect people have for you, and to some extent, how much respect you garner from folks who disagree with you. You won't starve with a low Whuffie score, but life won't exactly be pleasant. Without Whuffie, you can't hang on to your possessions, you get lousy housing, and elevators won't even stop for you.

The Downside of Popularity: Even without money, people can still be bribed to do pretty awful things in exchange for a little esteem boost. And, as elections and reality television tell us, just because an idea is popular doesn't mean it isn't also terrible.

"The Guy Who Worked for Money" by Benjamin Rosenbaum: In the post-capitalist future, the world is controlled by Moody's. Well, not just Moody's, also Snopes and a rating system known as hUBBUB. Your followers can watch your every move and approve or disapprove of it one the fly. Instead of investing money, you invest time and emotional energy in your personal relationships. Get yourself a high hUBBUB rating and the world is your shiny cool kid oyster.

The Downside of Popularity: Economics becomes personal. Say the wrong thing at a cocktail party, and you can say goodbye to your carefully cultivated wealth.

Extras by Scott Westerfeld: After the events of Westerfeld's Uglies trilogy, cities struggle to restructure their social systems. In the city of Yokohama, everyone is assigned a "face rank," which measures their popularity. You can score a prime face rank by doing something incredible, or reporting a story about something incredible. Yes, it's a future ruled by bloggers.

The Downside of Popularity: It encourages people to dick over their friends for a great story, or sensationalize a story before all the facts are in.

The Algebraist by Iain M. Banks: The alien Dwellers live for billions of years, exchanging "kudos" to establish their social order. Although your kudos determines your status in society, to some extent, these reputation points do function like money; Dwellers can bet kudos or trade it for services.

The Downside of Popularity: Kudos operates under a bizarre sort of hipster-logic; the harder you work for your kudos, the less it's worth. Conversely, seeming like you don't particularly care about kudos is a great way to earn it.

"All Around the Universe" by Howard L. Myers: Myers' Admirable Society has decided that Admiration is the basic quality that everyone pursues in life, and so the best way to keep society moving forward to treat Admiration as currency. If you have a favorable interaction with another human being, your bank account will swell. But a day and a half with a high-class prostitute can wipe out your funds if you're just an average-looking chap.

The Downside of Popularity: Some people chafe at the idea of a society where people are forced to be popular all the time, and earning Admiration can get tougher as you get older. After all, when your pals hear that story about the famous chick you bedded for the 50th time, their Admiration starts to wear thin.

Distraction by Bruce Sterling: Money has by no means disappeared in this future version of America, but amidst the chaos of the crashing dollar, some gangs — such as the biker socialist Regulators — have eschewed money in favor of independent reputation economies. The reputation scoring system keeps folks honest, loyal, and polite, since the only way to achieve social wealth is by contributing to the good of the gang.

The Downside of Popularity: The Feds aren't big fans of folks who try to hop off the money train. (As one character puts it, "Living without money is just not the American way.") So they go after the gangs' reputation servers, leaving their social systems prone to data loss and, consequently, chaos.

Accelerando by Charles Stross: Stross' novel sees the birth of the reputation economy as venture altruist Manfred Macx puts his funds and energies into projects that earn other people profits and benefits, while living off the favors he earns instead of money. Eventually, a reputation stock market emerges, where you can invest a portion of your reputation in an idea, and see dividends or losses based on the idea's popularity.

The Downside of Popularity: Just like the monetary stock market, the reputation market is vulnerable to overinflation and lack of market confidence, and reputation investors sometimes put too much faith in marketers.

Pop Apocalypse by Lee Konstantinou: When face recognition is perfected, celebrity culture explodes into every aspect of human life. People with high-ranking Names are in great demand by the reality TV-loving public, and footage and photos of these celebs fetches a high price from media outlets, creating a 24-hour celebrity news cycle. This means that everyone who is the least bit famous is being constantly filmed and photographed. And if you've got a really valuable Name, you can IPO on the Reputation Exchange Market.

The Downside of Popularity: The horrors of constant surveillance aside, once you open up your reputation for public trading you have to obey the will of your voting shareholders. You'd better be feeling really good about the invisible hand of the market.

Super Sad True Love Story by Gary Shteyngart: The twenty-minutes-in-the-future America isn't a reputation economy, but your worth as a human being is determined by a series of statistics. In a world where all data is public, you're judged on your net worth, credit score, and disease profile. But other people get to rate you on your f*ckability and personality. So folks are constantly judging you based on your statistics and contributing new statistics you'll be judged by. Sounds fun.

The Downside of Popularity: Folks spend so much time focused on their statistics that they forget to be actual human beings.

"The Moon Moth" by Jack Vance: Everything on the planet Sirene depends on your prestige or "strakh." Strakh determines everything — how you speak with other people, what items you may take from an artisan, and where you live. Fortunately, determining another person's strakh is simple enough. Everyone on Sirene wears a mask that demonstrates their status.

The Downside of Popularity: The Sirene have developed a complex, nearly inpenetrable social etiquette system, and something as simple as living in a shabby house or speaking to someone without the proper musical accompaniment can lower your strakh. Plus, the penalty for a serious faux pas is death. So chew with your mouth closed and don't walk the docks of Zundar while wearing your mask.


Dear Net-Mail User [EweR-635-78-2267-3 aSp]:

Your mailbox has just been rifled by EmilyPost, an autonomous courtesy-worm chain program released in October 2036 by an anonymous group of net subscribers in western Alaska.

[ref: sequestered confession 592864 -2376298.98634, deposited with Bank Leumi. 10/23/36:20:34:21. Expiration-disclosure 10 years.]

Under the civil disobedience sections of the Charter of Rio, we accept in advance the fines and penalties that will come due when our confession is released in 2046. However we feel that’s a small price to pay for the message brought to you by EmilyPost.

In brief, dear friend, you are not a very polite person. EmilyPost’s syntax analysis subroutines show that a very high fraction of your net exchanges are heated, vituperative, even obscene.

Of course you enjoy free speech. But EmilyPost has been designed by people who are concerned about the recent trend toward excessive nastiness in some parts of the net. EmilyPost homes in on folks like you and begins by asking them to please consider the advantages of politeness.

For one thing, your credibility ratings would rise. (EmilyPost has checked your favorite bulletin boards, and finds your ratings aren’t high at all. Nobody is listening to you, sir!) Moreover, consider that courtesy can foster calm reason, turning shrill antagonism into useful debate and even consensus.

We suggest introducing an automatic delay to your mail system. Communications are so fast these days, people seldom stop and think. Some net users act like mental patients who shout out anything that comes to mind, rather than as functioning citizens with the human gift of tact.

If you wish, you may use one of the public-domain delay programs included in this version of EmilyPost, free of charge.

Of course, should you insist on continuing as before, disseminating nastiness in all directions, we have equipped EmilyPost with other options you’ll soon find out about…

From EARTH by David Brin (1990)

Fiat money

Fiat money: is when the paper bills have value because the issuing government says so.

Pretty much all money in the real world is fiat money. Most modern governments use it because it allows flexibility during a financial crisis. It allows the government to adopt an expansionary monetary policy aka "printing money".

Examples of Fiat money in science fiction include the vast majority of novels and stories. If there is no pressing reason for the author to invent some non-standard monetary system, they just assume it uses the same system that obtains in the real world: fiat money.

Debased Currency

Debasing a currency means making a nation's money worth less. Generally this is done by the nation in question in order to gain some financial advantage at the expense of its citizens. The historic method was to secretly reduce the precious metal content of each coin, assuming a government unsophisticated enough to actually think that the gold standard is a good idea. If the goverment is not on the gold or other valuable element standard, it can engage in the more modern method of currency debasement by printing more paper money.

Soon Gresham's law rears its ugly head. The old more valuable coins will vanish from circulation as people horde them, and the new less valuable coins will become widely used.

Obviously criminals will engage in do-it-yourself unofficial currency debasement, aka "counterfeiting". If the local government is on the gold standard the crooks will clip the coins, basically reducing the gold content of the coin by making the coin smaller, and melting the little trimmed or filed off bits into ingots. If the govenment uses paper money it is time for the eternal war between crooks cranking out counterfeit money with commercially available printing technology (paper and 3D) and governments trying more and more high-tech anti-counterfeiting measures. Counterfeiting is always illegal, and the penalties are severe. The government is of the opinion that it is the only one authorized to debase the currency, and it is real touchy about unfair competition.

And some reckless criminals will engage in the insanely dangerous crime of counterfeiting those trade tokens known as "casino tokens". This is outrageously risky for two reasons: [1] the tokens have anti-counterfeiting measures and counterfeit detection technology orders of magnitude more sophisticated that government measures, and [2] since many casinos are owned and operated by organized crime they will simply murder you instead of bothering to call the cops.

In science fiction debasement sometimes happens for more radical reasons. Some science fictional means suddenly destroys the value of the material used for the standard; e.g., some idiot invents a device that cranks out tons of gold, thus blowing the gold standard out of the water and crashing the entire economy. Alternatively another idiot invents some new and improved method of counterfeiting money, commonly by inventing a matter-duplicator which can make perfect duplicates indistinguishable from the original.

  • In James Blish's Cities in Flight the OC Dollar was based on the Germanium Standard, because of its vital use in transistors and computer chips. This worked fine, until some joker figured out how to synthesise germanium and thus obliterated the economy of the whole galaxy.

  • In George O, Smith's "Pandora's Millions", the invention of a replicator crashed the economy of the solar system. Replicators mean there are no longer any rare metals to base your money on, and all material goods become basically free. The only thing of value are personal services (such as those of a surgeon or doctor). The only thing that prevents utter disaster is a synthetic element that cannot be replicated (because replication causes it to explode). The element allows one to create cheques, legal tender, and other critical items that cannot be counterfeited by a replicator.

  • In the Star Trek universe, the Federation is a post-money society that uses replicators. The Ferengi use "gold-pressed Latinum" as the basis of their currency, since Latinum is the one element a replicator cannot create.

  • In the Demon Princes pentology by Jack Vance the currency 'SVU' or Standard Value Unit was a printed note equal in value to one hour of common labor. A device called a "fake meter" is used to detect counterfeits. In the second novel the protagonist discover how to fool the fake meter, and hilarity ensues.

Seigniorage /ˈseɪnjərɪdʒ/, also spelled seignorage or seigneurage (from Old French seigneuriage "right of the lord (seigneur) to mint money"), is the difference between the value of money and the cost to produce and distribute it. The term can be applied in the following ways:

  • Seigniorage derived from specie—metal coins—is a tax, added to the total price of a coin (metal content and production costs), that a customer of the mint had to pay to the mint, and that was sent to the sovereign of the political area.
  • Seigniorage derived from notes is more indirect, being the difference between interest earned on securities acquired in exchange for bank notes and the costs of producing and distributing those notes.

The term also applies to monetary seignorage, where sovereign-issued securities are exchanged for newly minted bank notes by a central bank, thus allowing the sovereign to 'borrow' without needing to repay. However, monetary seignorage refers to the sovereign revenue obtained through routine debt monetization, including expanding the money supply during GDP growth and meeting yearly inflation targets.

Seigniorage is a convenient source of revenue for some governments. By providing the government with increased purchasing power at the expense of the public's purchasing power, it imposes what is metaphorically known as an inflation tax on the public.


Scenario A

A person has one ounce of gold, trades it for a government-issued gold certificate (providing for redemption in one ounce of gold), keeps that certificate for a year, and then redeems it in gold. That person ends up with exactly one ounce of gold again. No seigniorage occurs.

Scenario B

Instead of issuing gold certificates, a government converts gold into currency at the market rate by printing paper notes. A person exchanges one ounce of gold for its value in currency. This person keeps the currency for one year, and then exchanges it all for an amount of gold at the new market value. If the value of the currency relative to gold has changed during the interim this second exchange may yield more or less than one ounce of gold. (Assume that the value or direct purchasing power of one ounce of gold remains constant through the year.)

If the value of the currency relative to gold has decreased, then the person receives less than one ounce of gold. Seigniorage occurred.

If the value of the currency relative to gold has increased, then the person receives more than one ounce of gold. Seigniorage did not occur.

Seigniorage, therefore, is the positive return on issuing notes and coins, or "carry" on money in circulation.

The opposite, "cost of carry (demurrage)", is not regarded as a form of seigniorage.

Ordinary seigniorage

Ordinarily seigniorage is only an interest-free loan (for instance of gold) to the issuer of the coin or paper money. When the currency is worn out, the issuer buys it back at face value, thereby balancing exactly the revenue received when it was put into circulation, without any additional amount for the interest value of what the issuer received.

Historically, seigniorage was the profit resulting from producing coins. Silver and gold were mixed with base metals to make durable coins. Thus the British "sterling" was 92.5% pure silver; the base metal added (and thus the pure silver retained by the government mint) was (less costs) the profit, the seigniorage. United States gold coins before 1933 were made from 90% gold and 10% copper. To make up for the lack of gold the coins are over-weighted. A one-ounce Gold American Eagle will have as much of the alloy as is needed to contain a total of one ounce of gold which will be over one ounce. Seigniorage is earned by selling the coins above the melt value in exchange for guaranteeing the weight of the coin.

Currently, under the rules governing monetary operations of major central banks (including the central bank of the United States), seigniorage on bank notes is simply defined as the interest payments received by central banks on the total amount of currency issued. This usually takes the form of interest payments on treasury bonds purchased by central banks, putting more dollars into circulation. However, if the currency is collected, or is otherwise taken permanently out of circulation, the back end of the deal never occurs (that is, the currency is never returned to the central bank). Thus the issuer of the currency keeps the whole seigniorage profit, by not having to buy worn out issued currency back at face value.

Solvency constraints of central banks

The solvency constraint of the standard central bank only requires that the present discounted value of its net non-monetary liabilities (separate from its monetary liabilities accrued through seigniorage attempts) be zero or negative in the long run. Its monetary liabilities are liabilities only in name, as they are irredeemable: the holder of base money cannot insist at any time on the redemption of a given amount of base money into anything else other than the same amount of itself (base money)—unless, of course, the holder of said base money is another central bank reclaiming the value of its original interest-free loan.

Seigniorage as a tax

Economists regard seigniorage as a form of inflation tax, redistributing real resources to the currency issuer. Issuing new currency, rather than collecting taxes paid out of the existing money stock, is then considered in effect a tax that falls on those who hold the existing currency. Inflation of the money supply in the long run may cause—and, all other things being equal, will cause—a general rise in prices due to the reduced purchasing power of the currency.

This is one reason offered in support of free banking, a gold or silver standard, or at a minimum the reduction of political control over central banks. The latter could then take as their primary objective ensuring a stable value of currency by controlling monetary expansion and thus limiting inflation. Independence from government is required to reach this aim – indeed, it is well known in economic literature that governments face a conflict of interest in this regard. In fact, "hard money" advocates argue that central banks have utterly failed to obtain the objective of a stable currency. Under the gold standard, for example, the price level in both England and the US remained relatively stable over hundreds of years, though with some protracted periods of deflation. Since the US Federal Reserve was formed in 1913, however, the US dollar has fallen to barely a twentieth of its former value through the consistently inflationary policies of the bank. Economists counter that deflation is hard to control once it sets in and its effects are much more damaging than modest, consistent inflation.

Banks or governments relying heavily on seigniorage and fractional reserve sources of revenue can find it counterproductive. Rational expectations of inflation take into account a bank's seigniorage strategy, and inflationary expectations can maintain high inflation. Instead of accruing seigniorage from fiat money and credit, most governments opt to raise revenue primarily through formal taxation and other means.

Inflation tax benefits to governments

In the book Inflation Tax: The Plan To Deal With The Debts, there are suggested to be a number of ways in which governments gain benefits directly or indirectly from inflation i.e.

  • Decreased debt burden (the primary benefit; only occurs if inflation is unexpected)
  • Increased personal tax revenue
  • Extra revenue from saving account interest tax
  • Increased revenue from business taxation
  • Relatively lower public expenditure
  • Taxing people who don't vote (e.g., foreigners)
  • Helping to reduce the burden of other debtors (e.g. mortgage holders and banks; only occurs if inflation is unexpected)
  • Making GDP appear higher.

It has been argued that inflation has been used by successive governments since 1945 as a tool to manage their debts.

Contemporary usage

The "50 State" series of quarters (25-cent coins) was launched in the U.S. in 1999. The U.S. government planned on a large number of people collecting each new quarter as it rolled out of the U.S. Mint, thus taking the pieces out of circulation. Each set of quarters is worth $14.00 (a complete set includes quarters for all fifty states, the five U.S. territories, and the District of Columbia). Since it costs the Mint about five cents for each 25-cent piece it produces, the government made a profit whenever someone "bought" a coin. The U.S. Treasury estimates that it has earned about US$6.3 billion in seigniorage from the quarters over the course of the entire program.

In some cases, national mints report the amount of seigniorage provided to their respective governments; for example, the Royal Canadian Mint reported that in 2006 it generated $C93 million in seigniorage for the Government of Canada. The U.S. government, the largest beneficiary of seignorage, earned approximately $25 billion annually as of 2000. For coinage only, seigniorage accruing to the U.S. Treasury per dollar issued for the fiscal year 2011 was 45 cents.

Occasionally, central banks have introduced limited quantities of higher-valued banknotes in unusual denominations, with the intention of these notes being collected. The denomination chosen will usually coincide with an anniversary of national significance. However, the potential seigniorage that can be earned from such printings has proven to be limited, since the unusual denomination makes the notes more difficult to circulate and only a relatively small number of people are willing to collect higher-valued notes.

According to some reports, over half of Zimbabwe governmental revenue in 2008 was seigniorage. Zimbabwe has experienced hyperinflation (see Hyperinflation in Zimbabwe), with the annualized rate at about 24,000% in July 2008 (prices doubling every 46 days).

Overseas circulation

A very profitable type of seignorage is from the international circulation of banknotes. While the cost of printing banknotes is minimal, the foreign entity must provide goods and services at the face value of the note to obtain it. The banknote is retained because the entity values it as a store of value because of mistrust of the local currency.

Overseas circulation is intimately tied in with large value banknotes. One purpose of using foreign currency is for store of value, but another is efficiency of private transactions, some of which are illegal.

American currency has been circulating globally for most of the 20th century. Certainly in World War II, the amount of currency in circulation was increased several fold. However, the modern era of huge printings of the United States one hundred-dollar bill started with the fall of the Soviet Union in 1991. Production was quadrupled with the first ever trillion dollar printing of this bill. As of the end of 2008, U.S. currency in circulation with the public amounted to $824 billion and 76% of the currency supply was in the form of $100 denomination banknotes, amounting to twenty $100 bills per U.S. citizen. Over the past decade there has been considerable controversy concerning the amount of U.S. currency circulating abroad. Porter and Judson have claimed that in the mid nineties between 53 and 67 percent of U.S. currency was overseas, whereas Feige’s estimates suggested a figure closer to 40 percent abroad. Most recently, Goldberg writing in a New York Federal Reserve publication asserted that “about 65 percent ($580 billion) of all banknotes are in circulation outside of the country. However, these assertions are contradicted by the Federal Reserve Board of Governors Flow of Funds statistics which show that at the end of March 2009, only $313 billion (36.7 percent) of U.S. currency was held abroad. Feige calculates that since 1964, "the cumulative seigniorage earnings accruing to the U.S. by virtue of the currency held by foreigners amounted to $167–$185 billion and over the past two decades seigniorage revenues from foreigners have averaged $6–$7 billion dollars per year".

The American $100 bill has some competition, primarily from the €500 note. The larger value of the banknote makes it easier to transport larger amounts of money. As an example, $1 million in currency in $100 bills weighs 22 pounds, if, say, you were to carry it on board an airplane. It is difficult to carry this much money without a briefcase and some physical security. The same amount in €500 notes would weigh less than three pounds, and it could probably be dispersed in clothing and in luggage without attracting attention or alerting a security device. For many illegal operations, the problem of transporting currency is more difficult than transporting cocaine because of the size and weight of the currency. The ease of transporting banknotes makes the euro very attractive to Latin American drug cartels.

The Swiss 1000 franc note is probably the only other banknote that is in circulation outside of its home country. It is worth slightly more than US$1000. However, to the non-Swiss it doesn't provide a significant advantage over the €500 note as there are 20 times as many of the €500 note circulating and they are more widely recognized. As a reserve currency it is roughly 0.1% of the currency composition of official foreign exchange reserves.

Governments differ radically in their issuance of large banknotes. As of August 2009, the number of 1000 Swiss franc notes circulating was over three times the population of Switzerland. In comparison, the number of £50 banknotes circulating is slightly less than three times the population of the United Kingdom. But the 1000 franc note is worth roughly £600. The British government has traditionally been wary of large banknotes since the counterfeiting Operation Bernhard in World War II which caused the Bank of England to withdraw all notes larger than £5 from circulation, and not reintroduce other denominations until the early 1960s (£10), 1970 (£20) and March 20, 1981 (£50).

The American treasury considered re-issuing a US$500 banknote when the euro banknotes began circulating. There was concern that the high value banknotes would provide competition. However, after recognition that the $500 banknote would provide a huge advantage to worldwide criminal operations and dictatorships, the decision was made not to pursue this option.

From the Wikipedia entry for SEIGNIORAGE

(ed note: the protagonist is traveling with a naval courier. Said courier is doing a bit of smuggling on the side. The unit of currency is called a "conmark". When the war started, they switched over to a devalued conmark that was little better than scrip.)

     The Captain wasted little time on us. He spoke with the courier briefly. The courier opened that huge case and passed over a kilo canister. The Captain handed him some greasy Conmarks. They were old bills, pre-war pink instead of today’s lilac gray. The courier shoved them inside his tunic, grinned at me, and went outside.
     “Coffee,” he explained. And, “A man has to make hay while the sun shines. A local proverb.”
     My glimpse inside the case had shown me maybe forty more canisters.
     It was an old, old game with Fleet couriers. The brass knew about it. Only their pets received courier assignment. Sometimes there were kickbacks. My companion didn’t look like a man whose business was that big.
     “I see.”
     “Sometimes tobacco, too. They don’t raise it here. And chocolate, when I can make the contacts back home.”
     “You should’ve loaded the boat.” I didn’t resent his running luxuries. Guess I’m a laissez-faire capitalist at heart.
     He grinned. “I did. Can’t deal with the Captain, though. After a while one of the sergeants will notice that nobody has patrolled that part of the plain lately. He’ll make the sweep himself, just to keep his hand in. And I’ll find a bale of Conmarks when I get back.” He hoisted his case. “This’s for special people. I sell it practically at cost.”
     “Conmarks ought to be drying up out here.”
     “They’re getting harder to come by. I’m not the only courier on the Canaan run.” He brightened. “But, s**t. There had to be billions floating around before the war. It’ll come out. Just got to keep refusing military scrip.

From PASSAGE AT ARMS by Glen Cook (1985)

That was something else the Maxwell Plan would have to take care of. Gresham's Law was running hog-wild on Poictesme. A Planetary Government sol was worth about ten centisols, Federation (i.e., a Poictesme Planetary Government dollar is worth only ten cents in Federation money), and aside from deposit boxes, woolen socks under the mattress, and tin cans buried in the corner of the cellar, Federation currency was nonexistent.

From JUNKYARD PLANET by H. Beam Piper (1963)

      “I’ve got the news from Earth,” the captain said to the toes of his shoes.
     The dozen members of the Pasadena’s crew sat rigidly on the galley benches. They were a mixed bag, despite their uniforms, but they all had their eyes on the captain and all their faces had turned one shade or another of fear.
     The captain opened his mouth again. Cloth rustled as the crew shifted their weight.
     “It turns out the rumors we got from the Ulysses were accurate. There is a terrorist. He was holding the bank network hostage.
     “But yesterday he lost control of the artificial intelligence he was using to do it.” Tension telegraphed itself across the room. Jaws clenched and feet shuffled. Schyler swallowed and went on.
     “What the thing did was randomize the accounts. Lloyds’ Bank woke up four days ago to find out it had three pounds and sixty pence in its lines. Some backwoods Australian’s record read out at six hundred million.”
     Dobbs’s heart knocked against her ribs. So, eliminating hard currency was a bad idea after all, she thought absurdly.
     “It changed within the hour. All the hard storage had been seeded with kick-off codes. He must’ve planned this over ten years ago, and been setting it up for the past two, at least.
     “There is no money left on Earth. The whole standard’s meaningless.”
     A flood of frantic murmurs and curses washed across the room as the implications sank in. One flash of current in the lines, and there was no money. No recognizable way to get food or shelter. No way to trade for skills, or transport, or anything at all. No way for the ship to trade for reactor fodder, or water. No way to bargain for passage planetside. The wave of voices swelled to the breaking point.
     Schyler did not waste the silence she bought him. “They’re trying to stop the riots but …” He rubbed his brow hard. “It’s not happening. The communications nets are all shut down. See, when the AI got done with the banks, it got into the general network.
     “It’s still out there.”
     The crew stayed frozen where they were. For a sick instant, Dobbs wished someone would start shouting.
     Still out there. In her imagination, the phrase echoed through her crewmates’ minds to the harsh rhythm of shallow breathing. It finished off the banks. What’ll it finish off next? Those things are nearly alive. What’ll it do now that it’s free? Do they know where it is? Do they know anything at all?
     “I had Lipinski cut the data feeds as soon as I heard.” Schyler tried to muster some kind of reassurance in his voice. “And I sealed the airlock.” He held up one square hand. “I’m not trying to force anybody to stay with the Pasadena. I just didn’t want to take the chance of a riot on the station getting in.” Shoulders and stances relaxed a little. “You’re all released from your contracts as of now. If you’ve got anywhere to go, get there. If you’ve got any ideas, I could use them.

From FOOL'S ERRAND by Sarah Zettel (1993)

Max [voiceover]: They used to say one nuclear bomb can ruin your whole day. It was sort of a joke, until the June morning those terrorist bozos whacked us with an electromagnetic pulse from 80 miles up. You always hear people yapping on how it was all different before the pulse. Land of milk and honey blah, blah, blah, blah with plenty of food and jobs and things actually worked. I was too young to remember, so, whatever… The thing I don't get is why they call it a depression. I mean, everybody's broke, but they aren't really all that depressed. Life goes on.

America really thought they had it dialed in, money hanging out the butt. But it was all just a bunch of ones and zeros in a computer someplace. So, when that bomb went ka-blooey and the electromagnetic pulse turned all the ones and zeros into plain old zeros, everyone's like, "No way!" Now, America's just another broke ex-super power looking for a handout and wondering why.

From DARK ANGEL (2000)

There was money aboard the (starship) city, but no ordinary citizen ever saw it or needed it. It was there to be used exclusively for foreign trade—that is, to bargain for grazing rights, or other privileges and, supplies which the city did not and could not carry within the little universe bounded by its spindizzy field. The ancient herdsmen had accumulated gold and jewels for the same reason. Aboard Scranton, the equivalent metal was germanium, but there was actually very little of it in the city’s vaults; since germanium had been the universal metal base for money throughout this part of the galaxy ever since space flight had become practical most of the city’s currency was paper—the same “Oc dollar” everyone used in trading with the colonies.

They were also to use city facilities to refine the necessary power metals, chiefly thorium, of which Heaven had an abundance beyond its ability to process. After the economy was revamped, the Archangels hoped to have their own refineries, and to sell the pure stuffs to other planets. Curiously, they also had enough germanium to be willing to pay for the job in this metal, although it too was notoriously difficult to refine; this was fortunate for them, since without any present interstellar trade, they were woefully short of Oc Dollars.

The other factor was economic: The rise of the metal germanium as the jinn of solid-state physics. Long before flight into deep space became a fact, the metal had assumed a fantastic value on Earth. The opening of the interstellar frontier drove its price down to a manageable level, and gradually it emerged as the basic, stable monetary standard of space trade.

(ed note: Mayor Amalfi and the starship city of New York return to the civilized part of the galaxy, after being away for a bit more than a hundred years)

     "Why?" Amalfi asked, in a reasonable one. "You shot at us first. We've done nothing wrong."
     "Nothing but pass a bum check! Around here that's a crime worse than murder, brother. I checked you with Lerner, and he's frothing at the mouth. You'd damn well better pray that some other squad gets to you before his does!"
     "A bum check?" Amalfi said. "You're blowing. Our money's better than anything you're using around here, by the looks of you. It's germanium—solid germanium."
     "Germanium?" the dockman repeated incredulously.
     "That's what I said. It'd pay you to clean your ears more often."
     The garageman's eyebrows continued to go higher and higher, and the corners of his mouth began to quiver. Two fat, oily tears ran down his cheeks. Since he still had his hands locked behind his head, he looked remarkably like a man about to throw a fit. Then his whole face split open.
     "Germanium!" He howled. "Ho, haw, haw, haw! Germanium! What hole in the plenum have you been living in, Okie? Germanium—haw, haw!" He emitted a weak gasp and took his hands down to wipe his eyes. "Haven't you any silver, or gold, or platinum, or tin, or iron? Or something else that's worth something? Clear out, bum. You're broke. Take it from me as a friend, clear out; I'm giving you good advice."
     He seemed to have calmed down a little, Amalfi said. "What's wrong with germanium?"
     "Nothing," the dockman said, looking at Amalfi over his incredible nose with a mixture of compassion and vindictiveness, "It's a good, useful metal. But it just isn't money any more, Okie. I don't see how you could have missed finding that out. Germanium is trash now—well, no, it's still worth something, but only what it's actually worth, if you get me. You have to buy it; you can't buy other things with it.
     "It's no good here as money. It's no good anywhere else, either. Anywhere else. The whole galaxy is broke. Dead broke."
     "And so are you."

He shelved it to consider what he had learned about his own bad check. Germanium never had had the enormous worth in real terms that it had had as a treasure metal. It did have properties which made it valuable in many techniques: the germanium lattice would part with an electron at the urging of a comparatively low amount of energy; the p-n boundary functioned as a crystal detector; and so on. The metal found its way into uncountable thousands of electronic devices—and, it was rare.

But not that rare. Like silver, platinum, and iridium before it, germanium's treasure value had been strictly artificial—an economic convention, springing from myths, jewelers' preferences, and the jealousy of statal monopolies. Sooner or later, some planet or cluster with a high technology—and a consequently high exchange rate— would capture enough of the metal to drive its competitors, or, more likely, its own treasury, off the germanium standard; or someone would learn to synthesize or transmute the element cheaply. It hardly mattered which had happened now.

What mattered was the result. The actual metallic germanium on board the city now had only an eighth of its former value at current rates of sale. Much worse, however, was the fact that most of the city's funds were not metal, but paper: Oc dollars, issued against government-held metal back on Earth and a few other administrative centers. This money, since it did not represent any metallic germanium that belonged to the city, was now unredeemable—valueless.

From CITIES IN FLIGHT by James Blish (1970)

      "So what,” a rather harsh voice declared. “I'm T. Semyon Braunstein, Administrator of NAUGA-State, and we want to talk to you about our gold which you have been dispensing in a very cavalier fashion."
     "You want it back, I take it?"
     "Damn straight! We know you made a big haul when you took over NAU-Ceres I and we do indeed want it back."
     "Well, now,” Cantrell said, “how much of your treasure am I supposed to have plundered?"
     "We frankly don't know,” Braunstein replied, “and the presumption is that all the gold you have is ours in absence of proof to the contrary."
     "That would appear to be arguable,” said Cantrell. “Let's stick to the facts."
     "How much did you take?” Braunstein asked.
     "One million four hundred and eighty thousand ounces. That's what, five tons? The entire lot was minted into Ceres d'Or and put into local circulation."
     "You issued gold-backed paper, too,” McQuayle said, “a lot more than any one and a half million ounces, by damn!"
     "So what? Gold-backed paper is paper, not gold."
     "We want the gold that's backing it up,” Braunstein said. “That's our gold, you pirate!"
     "Don't be such a (expletive deleted) fool,” Cantrell snapped. “Ceres—all the mines on Ceres—never produced more than about twelve million ounces a year. That's what—maybe forty tons. Today, here at Castillo Morales, I am depositing five thousand six hundred and sixty tons of gold. How did I get my hands on one hundred and forty-one years’ worth of your peak production, hey? Answer me that, clown!"

     There was a rather long pause as McQuayle and Braunstein digested the information. “Where did the gold come from, then?” Braunstein asked.
     "We used the big laser to refine a cubic kilometer of nickel-iron. It took us nearly a year."
     "How much gold was there?” asked McQuayle.
     "The nickel-iron assayed 0.75 ppm gold by weight,” replied Cantrell. “What's the weight of a cubic kilometer of nickel-iron, 8×109 tons?"
     "And you could run off another five or six thousand tons of gold next year?” Braunstein asked.
     "And the year after,” Cantrell agreed. “And the (Japanese) won't bother me about it because they have big lasers on most of their space stations, and most of the space stations with big lasers are close to large masses of nickel-iron. I've given them the whole technology."

     "The gold standard,” McQuayle said weakly, “you've just shot the gold standard in the ass—one location producing five thousand tons of gold a year! Fifty would produce—what? Two hundred fifty thousand tons? And more would be coming on stream all the time ... we pegged the dollar at eight hundred fifty to the ounce ... we can't hold it there ... we can't limit production—my God! What's our money going to be worth?"
     "I suggest you get a handle on the paper,” Cantrell said, “because if you stick with the gold standard, you're in for one hell of an inflation."
     "The gold mines on Ceres seem to be a bit redundant,” Braunstein remarked at last. “Do the Japanese realize that the gold you're dumping on them isn't worth (expletive deleted)?"
     "No. They think, like you did, that it was stolen from the NAU.” Cantrell paused for a moment to watch the forklift trucks moving the pallets of gold bars. “Premier Ito will be announcing our agreement in about ten minutes, at 1900. I told him we'd work out the details when I got back to Rosinante."
     "Well, goddamnit, get my financial advisors!” Braunstein yelled.
     "I beg your pardon?"
     "I wasn't talking to you, Cantrell."
     "You've totally destroyed the economy of the world,” McQuayle said. “What did you get out of it, Cantrell?"
     "Survival. The Japanese Fleet is already heading away from Rosinante. Besides, I expect the economy of the world will survive."

From THE PIRATES OF ROSINANTE by Alexis Gilliland (1982)

     "Okay; what do you want firstest and mostest of, now that copper and uranium are out of the way?”...
     "...Deston did not say anything and after a moment the older man went on, “Platinum and iridium, of course. Osmium, tungsten …”
     “Tungsten isn’t too scarce, is it?”
     “For the possible demand, very much so. I’d like to sell it for fifteen cents a pound. Beryllium, tantalum, titanium, thorium, cerium—and, for the grand climax to end all climaxes—rhenium.”...
     ...Deston caught the paper and read it. “Is that all?”
     “Isn’t that enough? You’re a brute for punishment.”
     “I’m surprised, is all, that gold isn’t on it.
     “Gold!” Maynard snorted. “Besides currency base, jewelry, and show, what’s it good for? We’ve never touched it and never intend to—produce a few tons too much and you upset the economy instead of benefitting it.
     “I never thought of it that way, but that’s right. Okay, chief, we’ll flit. I’ll keep you posted."

From SUBSPACE EXPLORERS by E. E. "Doc" Smith (1965)

Our Heroes have made Terra's first interstellar voyage to the planet Osnome (remarkably like Edgar Rice Burrough's Barsoom, except the human-looking people are green, not red). They are given gifts of alien gems called "faidons", which are indestructable glowing gemstones totally unknown on Terra. Richard Seaton and his best bud Martin Crain are worried about what happens when their wives wear the gems on Terra.

     "These jewels rather puzzle me, Dick. What are they?" asked Martin, as the four assembled, waiting for the first meal. As he spoke he held up his third finger, upon which gleamed the royal jewel of Osnome in its splendid Belcher mounting of arenak as transparent as the jewel itself and having the same intense blue color. "I know the name, 'faidon,' but that's all I seem to know."
     "That's about all that anybody knows about them. It is a naturally-occurring, hundred-faceted crystal, just as you see it there—deep blue, perfectly transparent, intensely refractive, and constantly emitting that strong, blue light. It is so hard that it cannot be worked, cut, or ground. No amount of the hardest known abrasive will even roughen its surface. No blow, however great, will break it—it merely forces its way into the material of the hammer, however hard the hammer may be. No extremity of either heat or cold affects it in any degree, it is the same when in the most powerful electric arc as it is when immersed in liquid helium."
     "How about acids?"
     "That is what I am asking myself. Osnomians aren't much force at chemistry. I'm going to try to get hold of another one, and see if I can't analyze it, just for fun. I can't seem to convince myself that a real atomic structure could be that large."
     "No, it is rather large for an atom," and turning to the two girls, "How do you like your solitaires?"
     "They're perfectly beautiful, and the Tiffany mounting is exquisite," replied Dorothy, enthusiastically, "but they're so awfully big! They're as big as ten-carat diamonds, I do believe."
     "Just about," replied Seaton, "but at that, they're the smallest Dunark could find. They have been kicking around for years, he says—so small that nobody wanted them. They wear big ones on their bracelets, you know. You sure will make a hit in Washington, Dottie. People will think you're wearing a bottle-stopper until they see it shining in the dark, then they'll think it's an automobile headlight. But after a few jewelers have seen these stones, one of them will be offering us five million dollars apiece for them, trying to buy them for some dizzy old dame who wants to put out the eyes of some of her social rivals. Yes? No?"
     "That's about right, Dick," replied Crane, and his face wore a thoughtful look. "We can't keep it secret that we have a new jewel, since all four of us will be wearing them continuously, and anyone who knows jewels at all will recognize these as infinitely superior to any known Earthly jewel. In fact, they may get some of us into trouble, as fabulously valuable jewels usually do."
     "That's true, too. So we'll let it out casually that they're as common as mud up here—that we're just wearing them for sentiment, which is true, and that we're thinking of bringing back a shipload to sell for parking lights."
     "That would probably keep anyone from trying to murder our wives for their rings, at least."

From THE SKYLARK OF SPACE by E. E. "Doc" Smith (1928)

(ed note: After Richard Seaton manages to single-handedly save the nation of Kondal on the planet Osnome, the Kondalians reward him. As it turns out Osnome is very rich in heavy metals, so they give him a bit of platinium.)

"How much are you loading on, Dunark?" asked Seaton, when the large compartment was more than half full.

"My order called for about twenty tons, in your weight, but I changed it later—we may as well fill that room full, so that the metal will not rattle around in flight. It doesn't make any difference to us, we have so much of it. It is like your gift of the salt, only vastly smaller."

"What are you going to do with it all, Dick?" asked Crane. "That is enough to break the platinum market completely."

"That's exactly what I'm going to do," returned Seaton, with a gleam in his gray eyes. "I'm going to burst this unjustifiable fad for platinum jewelry so wide open that it'll never recover, and make platinum again available for its proper uses, in laboratories and in the industries.

"You know yourself," he rushed on hotly, "that the only reason platinum is used at all for jewelry is that it is expensive. It isn't nearly so handsome as either gold or silver, and if it wasn't the most costly common metal we have, the jewelry-wearing crowd wouldn't touch it with a ten-foot pole. Useless as an ornament, it is the one absolutely indispensable laboratory metal, and literally hundreds of laboratories that need it can't have it because over half the world's supply is tied up in jeweler's windows and in useless baubles. Then, too, it is the best thing known for contact points in electrical machinery. When the Government and all the scientific societies were abjectly begging the jewelers to let loose a little of it they refused—they were selling it to profiteering spendthrifts at a hundred and fifty dollars an ounce. The condition isn't much better right now; it's a vicious circle. As long as the price stays high it will be used for jewelry, and as long as it is used for jewelry the price will stay high, and scientists will have to fight the jewelers for what little they get."

"While somewhat exaggerated, that is about the way matters stand. I will admit that I, too, am rather bitter on the subject," said Crane.

"Bitter? Of course you're bitter. Everybody is who knows anything about science and who has a brain in his head. Anybody who claims to be a scientist and yet stands for any of his folks buying platinum jewelry ought to be shot. But they'll get theirs as soon as we get back. They wouldn't let go of it before, they had too good a thing, but they'll let go now, and get their fingers burned besides. I'm going to dump this whole shipment at fifty cents a pound, and we'll take mighty good care that jewelers don't corner the supply."

From THE SKYLARK OF SPACE by E. E. "Doc" Smith (1928)

Somalia has long played host to one of the world's strangest monetary phenomenon, a paper currency without a central bank. I explored the idea of Somalia's "orphaned currency" more fully four years ago, but if you're in a rush what follows is the tl;dr version. Despite the fact that both the Central Bank of Somalia and the national government ceased to exist when a civil war broke out in 1991, Somali shilling banknotes continued to be used as money by Somalis. Over the years, Somalis also accepted a steady stream of counterfeits that circulated in concert with the old official currency, a state of affairs that William Luther explores in some detail here.

The story is worth revisiting because apparently Somalia's newly restored central bank is on the verge of re-entering the game of printing banknotes after a quarter century absence. With the help of the IMF, the Central Bank of Somalia (CBS) plans to issue new 1000 shilling banknotes, the introduction of higher denomination notes coming later down the road.

Old legitimate 1000 shilling notes and newer counterfeit 1000 notes are worth about 4 U.S. cents each. Both types of shillings are fungible—or, put differently, they are accepted interchangeably in trade, despite the fact that it is easy to tell fakes apart from genuine notes. This is an odd thing for non-Somalis to get our heads around since for most of us, an obvious counterfeit is pretty much worthless. The exchange rate between dollars and Somali shillings is a floating one that is determined by the cost of printing new fake 1000 notes. For instance, if a would-be counterfeiter can find a currency printer, say in Switzerland, that will produce a decent knock off and ship it to Somalia for 2.5 U.S. cents each (which includes the cost of paper and ink), then notes will flood into Somalia until their purchasing power falls from 4 to 2.5 U.S. cents… at which point counterfeiting is no longer profitable and the price level stabilizes.

Below is the long-term price of Somali shillings, which I've snipped from Luther's paper. You can see how the purchasing power of a 1000 shilling note has fallen to what Luther calculates to be the cost of producing a new banknote, around 4 cents. His chart goes up to 2013, but if you look at the IMF's most recent report on Somalia (see Figure 3) you'll see that the exchange rate hasn't moved much.

So with a new official banknotes on the way, what will happen to the old legacy notes and counterfeits? According to the IMF mission chief Mohammed Elhage, the IMF is in the midst of trying to determine at what price it will convert old notes for new official ones. So rather than repudiating counterfeits, the normal route taken by central bankers, the CBS will buy them up and cancel them. It will have to offer a decent price too, say like 5 or 6 U.S. cents for each 1000 note. If it makes a stink bid, say 3 U.S. cents, Somalis may simply ignore the appeal to bring in their old currency and keep using the old stuff. Because the buyback decision validates the work of counterfeiters, it just seems wrong. However, keep in mind that for the last twenty-five years it has been counterfeiters who have been willing to take on the risk of providing Somalis with a very real service, the provision of a working paper medium of exchange.

There is another good reason for buying up old legacy notes and counterfeits and cancelling them. If the CBS lets the old notes stay in circulation, then Somalia's ragtag multi-currency system will only get more confusing, with old legacy and counterfeit notes circulating concurrently with new shillings and U.S. dollars. With the new issue of shillings having a different purchasing power than the old ones, yet another floating exchange rate will be added to the mix. Who needs that sort of confusion? Better for the CBS to absorb the cost of buying up fakes in order to promote a more homogeneous currency.

As I pointed out in my old post, there's an old and nagging question in monetary economics that has never been satisfactorily answered: why is fiat money valuable? Somalia serves as a great laboratory to investigate this question because its situation is so unique. One famous answer to the riddle of fiat money is that governments use force to ensure that fiat money is valued. But this can't be the case in Somalia: it hasn't had a government since 1991, yet shillings continue to be accepted.

A second answer is that once money is valued—say because it a central bank has been pegged to an existing store of value like gold—then once the central bank disappears and the anchor is lost, those orphaned notes will continue to have value by dint of pure inertia and custom. This theory certainly seems to fit Somalia's experience.

The last theory is that when a central bank is destroyed, the money it issues will quickly become worthless... unless citizens expect a future central bank to emerge and reclaim the orphaned currency as its own. If so, it makes sense to keep using the currency since it isn't actually orphaned—it's on the way to being adopted. If the expectation is that this future central bank will also adopt counterfeit notes, it makes sense for people to accept all knock-offs as well. So we can tell a story that shillings, both real and fake, never fell to zero because enough Somalis had a hunch that a future body would reclaim them, a hunch that is on the verge of being realized as a newly-christened CBS seems set to buy old and fake shillings back. Were Somalis really this good at predicting the future? I don't know, but like the second theory, the last one seems to explain the data.

Personally, I think introducing a new paper currency is a bad idea. For some time now Somalia has been partially dollarized economy. U.S. dollar banknotes are the most popular paper currency, with old shillings being used in small payments and in the countryside. Mobile payments are extremely popular, but they are usually denominated in U.S. dollars, not shillings, and tend to be prevalent in cities where network coverage is best.

There are several problems with dual-currency systems like Somalia's. First, they impose a small but steady stream of currency conversion costs on the population, both the actual cost of shifting one's wealth from one to the other as well as the mental gymnastics involved in converting prices in one's head. Secondly, there are fairness issues. Civil servants are usually paid in the domestic currency and those in rural parts deal in the stuff. Urban private sector workers tend to earn dollars. In developing nations, dollars are usually more stable than domestic currency. As a result prices of houses, cars, and rent are often set in dollars. The class of folks who are paid in dollars make out better than the class that is earning shillings. Dollar earners never have to leave the much stabler dollar loop while those earning domestic currency suffer from constant slippage due to conversion costs and chronic inflation.

Now the IMF might argue that new shillings will completely expel dollars, thus forcing everyone into the same shilling loop and removing any monetary inequalities. But that's hog wash. The literature on dollarization teaches us that once the dollar begins to be used by a country—usually because the domestic currency has suffered from high inflation—it is very hard to remove it. Long after the local currency has been successfully stabilized, dollarization continues, an effect referred to by economists as hysteresis. Bring back the shilling and the dollar will stick around.

While bringing back new shillings doesn't make much sense, some sort of currency reform is probably worthwhile. While cities seem to be already well-served by dollars and mobile money, the rural population still relies on old and deteriorating shilling notes. Instead of foisting new shillings on these people, why not replace them with locally-minted small denomination dollar coins? I call this the Panama solution. For those who don't know, Panama is a dollarized nation. Due to the high costs of shipping in coins form the U.S., Panama mints its own dollar-denominated small change, paper money printed by the Federal Reserve taking care of the rest of the nation's physical money requirements. 

By adopting the Panama model all Somalis would get to deal in U.S. dollars, thus removing any monetary class divisions. Gone too would be the headache of constantly converting between shillings and dollars, since with U.S. coinage there would only be dollars. And poor Somalians living in rural areas without phone coverage would finally get clean and homogenous small denomination cash.

Admittedly, there's far less for a central banker to do if he/she issues a narrow range of small denomination U.S. denominated coins, say 1¢, 5¢, and 25¢, rather than a full range of banknotes. It's certainly not sexy. But it would be cost effective. Coins, after all, last much longer than notes. This durability means that coins are a cheaper circulating medium for a central bank to maintain than paper. There is also the national ego that must be satisfied. What nation doesn't have its own currency? The worst reason to adopt a new shilling is because some concept of nationhood requires it—Panama has been using the dollar for decades, and this hasn't prevented it from becoming one of Central America's most successful nations.


Illegal Cash

In some science fiction, physical money is illegal since the Police State cannot trace physical money transactions (see Cashless Society). By law all money transations must be via credit cards or debit cards. Intangible electronic numbers transferred from one bank ledger to another through traceable internet connections (credit cards or debit cards), so the state can keep a close eye on all your purchases. To the very last penny.

Not to mention it also records the time and location where the money was paid. If there was a political protest at 13:30 o'clock on Ceres street, the thought police might arrest every citizen who bought something close to that time and close to that location.

Naturally people wanting to bribe somebody or purchase illegal goods had to find some physical untraceable alternative. Purchasing illegal drugs with your bank card will just get you busted by the narks.

Such illegal currency is related to the concept of money laundering. But it is also required for disadvantaged people who for whatever reasons cannot obtain a credit or debit card. They literally cannot be paid or purchase anything. Not to mention people who do have such cards but have the cards or their identities stolen. Until new cards can be issued the victims with stolen cards also cannot be paid or purchase anything, which can be a week or so.

Keep in mind that the definition of "illegal" can abruptly change if the government takes an unexpected turn for the totalitarian.

In 1940s Germany, it suddenly became the law that people of Hebraic heritage were to be rounded up and sent to the death camps. Some compassionate people would hide Hebraic families in places such as their house attics. This would be much harder if there was no anonymous money.

If the government can see every single purchase you make via government mandated credit cards, it will be easy for them to spot that you are purchasing more groceries than is reasonable for a family of your size. Next thing you know the secret police is pounding on your door, wanting to inspect your attic. This is analogous to how narcotic police spot underground cannabis farms by abnormally high electricity bills, for all the grow-lights.

In underworld crime thriller novels, shadowy characters sometimes use Krugerrand gold coins to purchase illegal goods on the theory that Krugerrands are untraceable.

In the science fiction show The Expanse, Detective Miller accepts bribes in the form of casino chips. One of the authors said: "Why do they use casino chips as money on The Expanse? It's how you get a black market economy when everything else is traceable e-money." Later the casino chips can be cashed in at any pawn shop or casino cashier. Untraceable money laundering.


In the real world, events overtook science fiction when some genius invented a way to transfer money over the internet, but encrypted in such a way that the authorities could not determine who was the buyer and who was the seller. Specifically they can see the transaction but have no idea of the identity of the sender or receiver. This is called Bitcoin (BTC), symbolized by , Ƀ, or ฿. Bitcoin is the first cryptocurrency that is decentralized. The buyer and the seller are only recorded as bitcoin addresses, and new addresses can be created for each transaction.

TrivialGravitas pointed out to me that the vulnerable part is when a buyer converts some of their cash into bitcoin in order to purchase something or when the seller converts some bitcoins received in a sale into real cash. That's when law enforcement can catch you.

However, this can be managed by using third party bitcoin services (physically located in countries with no law-enforcement treaties with either the buyer or seller countries) to trade bitcoin for real money. Users who do not want to use an intermediary third-party can also post “buy” and “sell” orders on #bitcoin-otc, a Bitcoin marketplace located on the freenode Internet relay chat (IRC) network.

It is also possible for the buyer and/or the seller to combine the balance of old Bitcoin addresses into a new address to make new payments or widthdrawals. This also makes it more difficult for law enforcement to identify people at the point where real cash is converted to or from bitcoin.

In theory a buyer can create bitcoins by bitcoin mining. But that required outrageous amount of computing power. As of this writing (2019) world-wide bitcoin mining is consuming an amount of electricty about equal to that of Switzerland. It also created a world-wide shortage of GPU graphic cards, the computing engine of choice for bitcoin mining.

A 2012 FBI report covers the (unclassified) advantages and disadvantages of using bitcoin for covert or illicit activites.

There are those who are of the opinion that anybody who uses Bitcoins, especially for investment speculation, is an idiot. They use a disparaging term for Bitcoin, calling them "Dunning - Krugerrands"


His total assets were quickly converted to New Yen, a fat sheaf of the old paper currency that circulated endlessly through the closed circuit of the world's black markets like the seashells of the Trobriand islanders. It was difficult to transact legitimate business with cash in the Sprawl; in Japan, it was already illegal.

In Japan, he'd known with a clenched and absolute certainty, he'd find his cure. In Chiba. Either in a registered clinic or in the shadowland of black medicine. Synonymous with implants, nerve-splicing, and microbionics, Chiba was a magnet for the Sprawl's techno-criminal subcultures.

From NEUROMANCER by William Gibson (1984)

      ‘No problem,’ said Tanner, waving an irritated hand at his companion. Judging by his accent he hailed from the East Coast Republic, maybe New York. He glanced at Saul’s briefcase, still gripped tightly in one hand. ‘And that’s the goods?’
     Saul nodded and stepped closer, shaking Tanner’s hand. Hsiu-Chuan gave every impression of ignoring them all, his attention apparently still fixed on the TriView, but Saul wasn’t fooled.
     Kwan just laughed, and nodded them towards the conference table, before addressing Saul in rapid-fire Mandarin and gesturing at his briefcase.
     ‘I already opened it,’ said Saul.
     ‘That was to check for weapons or surveillance devices,’ Tanner replied. ‘This time is for business.’
     Saul glanced towards Jacob, who favoured him with an encouraging nod. Feeling the rush of confidence from the loup-garou beginning to slip, he became acutely aware that the two street soldiers who had escorted them were now standing between him and the only exit.

     Saul nodded tightly and placed the briefcase on one end of the conference table, clicked it open and turned it around so all the others could see what was inside. He lifted out a couple of bundles of cash, as well as the box containing the arbitration unit. Kwan pushed him to one side, none too gently, and began expertly riffling the notes between his fingers, peering at them closely.
     Hsiu-Chuan finally stepped away from the TriView and picked up the box containing the arbitration unit. Nothing else, Saul knew, would have been sufficient to make him risk showing up here.
     ‘This is a clone, correct?’ Hsiu-Chuan asked, finally acknowledging Saul’s existence. His English was only lightly accented.
     ‘Of one of the most successful predictive AIs currently operating in the Coalition share markets, yes,’ Saul agreed. ‘It was … difficult to obtain.’
     ‘And you understand,’ Hsiu-Chuan continued, his manner still offhand, ‘what will happen to you personally if it’s a fake or if it fails to live up to expectations?’
     ‘I do,’ Saul replied levelly.

     Hsiu-Chuan nodded, pocketing the unit, then snapped his fingers at Kwan. Kwan responded by tossing a single bundle of cash underhand to one of the two street soldiers. Without another word to Saul or anyone else, Hsiu-Chuan departed the room, followed by the same street soldier.
     ‘Where have they gone?’ Saul demanded, turning to glare at Tanner.
     ‘Just making sure everything’s legitimate,’ Tanner replied with an easy shrug. ‘They’ll run some tests, won’t take more than a minute or two. Have a drink while we wait.’
     Tanner stepped back over to the couch and fetched a half-bottle of whisky and four glasses. He placed the glasses on the conference table and poured a hefty measure into each. He then put the bottle down and withdrew a pykrete gun from inside his voluminous coat, placing it next to the bottle (a pykrete bullet melts, so it cannot be forensically matched by the police to the weapon which fired it).
     ‘What the f*ck is that for?’ asked Saul, staring at the gun.
     ‘That?’ Tanner pretended to be surprised by the question. ‘That is in case your sample of money or your arbitration unit aren’t up to scratch.’ Tanner picked up his whisky, full to the brim, and drank it in one swallow, before slamming down the empty glass. ‘I hope that’s not a problem for you,’ he added, with a thin smile.
     ‘Not at all,’ Saul muttered, picking up his own glass to try and hide his agitation. He noticed that neither Jacob nor Hsingyun had made any move yet towards their own drinks.
     There was just enough loup-garou (illegal drug that makes you feel like a werewolf) still left circulating through Saul’s bloodstream to ratchet up his fight-or-flight responses, but he felt his nerves settle a bit as the whisky slithered down his throat. It had a pleasant, slightly honeyed texture.

     ‘Sometimes,’ said Tanner, refilling his own glass before raising it, as if in salute, ‘I wonder how it ever got to the point where good honest criminals were forced to print their own money.’
     ‘At least it’s real money,’ muttered Hsingyun, finally picking up his glass and taking a sip. ‘And not just numbers encoded on some f*cking computer’s memory.’
     ‘Ah,’ Tanner nodded, ‘that’s why I came here, to Kepler.’
     ‘For black-market cash?’ asked Saul.
     ‘That and freedom, too. Back there,’ he said, waving one hand towards the opposite wall, as if the entire planet Earth were lurking just on the other side of it, ‘there’s none. Back there it’s all invisible credit. But that,’ he gestured with his glass at Saul’s briefcase, ‘that’s real, tangible. You can hold it in your hands. Walk around the street stalls back in the city, you’ll see that stuff getting used. People here trust it more than they ever did UP-linked credit.’
     Saul nodded. The cash in the briefcase had been printed on black-market presses that had been impounded long ago by the ASI. They had been obliged to print their own or they’d never have been able to pay the network of informants they maintained throughout a dozen worlds. Tanner was right, of course: back on Earth and Luna, where the only legal currency had a purely virtual existence, you couldn’t do anything without leaving a trail of information behind you. The underground economy had no choice but to develop its own secret banking and credit system, replete with its very own currency.

From FINAL DAYS by Gary Gibson (2011)

…In the economist’s imagining of an idealised free market, rational individuals enter into monetary-exchange contracts with each other for their mutual benefit. One party — called the ‘buyer’ — passes money tokens to another party — called the ‘seller’ — who in turn gives real goods or services. So here I am, the tired individual rationally seeking sugar. The market is before me, fizzy drinks stacked on a shelf, presided over by a vending machine acting on behalf of the cola seller. It’s an obedient mechanical apparatus that is supposed to abide by a simple market contract: If you give money to my owner, I will give you a Coke. So why won’t this goddamn machine enter into this contract with me? This is market failure.

To understand this failure, we must first understand that we live with two modes of money. ‘Cash’ is the name given to our system of physical tokens that are manually passed on to complete transactions. This first mode of money is public. We might call it ‘state money’. Indeed, we experience cash like a public utility that is ‘just there’. Like other public utilities, it might feel grungy and unsexy — with inefficiencies and avenues for corruption — but it is in principle open-access. It can be passed directly by the richest of society to the poorest of society, or vice versa.

Alongside this, we have a separate system of digital fiat money, in which our money tokens take the form of ‘data objects’ recorded on a database by an authority — a bank — granted power to ‘keep score’ of them for us. We refer to this as our bank account and, rather than physically transporting this money, we ‘move’ it by sending messages to our banks — for example, via mobile phones or the internet — asking them to edit the data. Money ‘moves’ to your landlord if your two respective banks can agree to edit your accounts, reducing your score and increasing your landlord’s score.

This second mode of money is essentially private, running off an infrastructure collectively controlled by profit-seeking commercial banks and a host of private payment intermediaries — like Visa and Mastercard — that work with them. The data inscriptions in your bank account are not state money. Rather, your bank account records private promises issued to you by your bank, promising you access to state money should you wish. Having ‘£500’ in your Barclays account actually means ‘Barclays PLC promises you access to £500’. The ATM network is the main way by which you convert these private bank promises — ‘deposits’ — into the state cash that has been promised to you. The digital payments system, on the other hand, is a way to transfer — or reassign — those bank promises between ourselves.

This dual system allows us the option to use private digital bank money when buying pizza at a restaurant, but we can always resort to public state money drawn out of an ATM if the proprietor’s debit card system crashes. This choice seems fair. At different times, we might find either form more or less useful. As you read this, though, architects of a ‘cashless society’ are working to remove the option of resorting to state cash. They wish to completely privatise the movement of money tokens, pushing banks and private-payments intermediaries between all interactions of buyers and sellers.

The cashless society — which more accurately should be called the bank-payments society — is often presented as an inevitability, an outcome of ‘natural progress’. This claim is either naïve or disingenuous. Any future cashless bank-payments society will be the outcome of a deliberate war on cash waged by an alliance of three elite groups with deep interests in seeing it emerge.

The first is the banking industry, which controls the core digital fiat money system that our public system of cash currently competes with. It irritates banks that people do indeed act upon their right to convert their bank deposits into state money. It forces them to keep the ATM network running. The cashless society, in their eyes, is a utopia where money cannot leave — or even exist — outside the banking system, but can only be transferred from bank to bank.

The second is the private payments industry — the likes of Mastercard — that profits from running the infrastructure that services that bank system, streamlining the process via which we transfer digital money between bank accounts. They have self-serving reasons to push for the removal of the cash option. Cash transactions are peer-to-peer, requiring no intermediary, and are thus transactions that Visa cannot skim a cut off.

The third — perhaps ironically — is the state, and quasi-state entities such as central banks. They are united with the financial industry in forcing everyone to buy into this privatised bank-payments society for reasons of monitoring and control. The bank-money system forms a panopticon that enables — in theory — all transactions to be recorded, watched and analysed, good or bad. Furthermore, cash’s ‘offline’ nature means it cannot be remotely altered or frozen. This hampers central banks in implementing ‘innovative’ monetary policies, such as setting negative interest rates that slowly edit away bank deposits in order to coerce people into spending.

Governments don’t really mention that monetary policy agenda. It isn’t catchy enough. Rather, the key weapons used by the alliance are more classic shock-and-awe scare tactics. Cash is used by criminals! People buy drugs with cash! It’s the black economy! It supports tax evasion! The ability to present control as protection relies on constant calls to imagine an external enemy, the terrorist or Mafiosi. These cries of moral panic are set in contrast to the glossy smiling adverts about digital payment. The emerging cashless society looms like a futuristic sunrise, cleansing us of these dangerous filthy notes with rays of hygienic, convenient, digital salvation…

…The psychological assault is working. The Netherlands — where I face my vending machine — has become one key front in the war on cash. Here cash is becoming viewed like an illegal alien on the run, increasingly excluded from the formal economy, drawing dirty looks from shop assistants. Signs say ‘Card only’. Who is Card? Card is a glamorous socialite, welcomed into stores. Card is superior. Look at the bank adverts showcasing their accessories for Card. Nobody is building accessories for Cash.

The frontlines, though, are now creeping to poorer countries. India’s recent so-called ‘demonetisation’ was a brutal overnight retraction of rupee notes by the prime minister Narendra Modi to bring discipline to the ‘black economy’. It was an exercise that necessitated choking the poorest Indians, who depend on cash and who often lack access to bank accounts. Originally cast in popular terms as an attempt to stem corruption, the message was later ironically altered to cast cashlessness as a way to create economic progress for India’s poor.

This message is given humanitarian credentials by the UN-based Better Than Cash Alliance, which promotes ‘the shift from cash to digital payments to reduce poverty and drive inclusive growth’, and which counts Visa, Mastercard and Citi Foundation as key partners. The Modi action was also preceded by the initiation of the Cashless Catalyst programme, ‘an alliance between the Government of India and USAID, to expand digital payments in India’, backed by a panoply of digital payments companies. These official alliances of states, corporations and public academics are impressive. In India, well-heeled urban elites who applauded Modi’s actions from the sidelines can safely point to Rogoff’s Financial Times-nominated book of the year to justify it…

…The attempt to present the cashless bank-payments society as a benefit to marginalised people is tenuous at best. If you’re a vulnerable denizen of the informal economy, an off-the-grid hustler, or a low-income precarious worker, banks and payments intermediaries have little interest in prioritising you. The bank-payments society will not process the activity that takes place in the peripheral cracks that form the basis of your livelihood. Indeed, it is intended to shut down those spaces. That might be characterised as ‘progress’, but equally we might say you’re being firewalled out of the economy in an act of economic cleansing. Under the guise of destroying the ‘shadow economy’, the underclass, the unwatched, the eccentric and the untamed will be coercively corralled into the hands of the state-corporate mainstream.

…What I care about is the unaccountable callousness of this vending machine, the one that has just blocked me from engaging in free trade.

Old vending machines didn’t do this. They had a little slot for coins, one that allowed even a ragged beggar to convert his tiny income into sustenance. Look closely at the machine. It’s actually two machines. The Payter device fused into its body does not work for the cola seller. It works for payments corporations. You see, the cola seller has one bank account, but there are many people with many accounts at different banks approaching the vending machine. Those banks need to identify which of their account holders wishes to transfer how much money to which account at which other bank. The device is there to deliver my card information into the transmission lines of the card payments networks, where it will be — in theory — routed to facilitate the transfer of money tokens from my account into the seller’s account, for a small fee.

This is no longer a deal between me and the seller. I am now dealing with a complex of unknown third parties, profit-seeking money-passers who stand between us to act as facilitators of the money flow, but also as potential gatekeepers. If a gatekeeper doesn’t want to do business with me, I can’t do business with the seller. They have the ability to jam, monitor or place conditions upon that glorious core ritual of capitalism — the transfer of money for the transfer of goods. This innocuous device exudes mechanical indifference, reporting only to invisible bosses far away, running invisible algorithms in invisible black boxes that don’t like me.

If we are going to refer to bank payments as ‘cashless’, we should then refer to cash payments as ‘bankless’. Because that’s what cash is, and right now it is the only thing standing between us and a completely privatised money system…

…The most we can hope for, then, is a benign oligopoly of payments corporations, heavily exposed to the geopolitical aspirations of the states they reside within. The Chinese state encouraged the creation of China UnionPay precisely because they don’t want US payment megacorps installing themselves as gatekeepers into transactions made by Chinese citizens.

When mounting a defence, there are always two options. You either block an incoming attack, or you launch a strategic counterstrike, sometimes summed up as ‘offence is the best defence’.

In the former strategy, you focus on pointing out that the arguments against cash are either exaggerated, inaccurate or incomplete. Exaggeration and inaccuracy are both present in anti-cash tirades, but incompleteness is crucial. For example, let’s say we agree that criminals prefer cash. Does that translate into ‘We should ban cash’? Banning everything that criminals favoured would almost certainly lead to a constrained, suffocating existence for everyone. Congratulations, we ended crime, but only at the expense of ending privacy and free creative space too. The end of crime comes accompanied by an overbearing surveillance state, always standing next to you, reaching into your most private moments, treating you like a small child that cannot be trusted. Enjoy your life.

The second mode of defence-as-offence involves attacking the proposed alternative. We point out that the new bank-payments society, firstly, does not actually solve the old problems — crime just goes digital, and your account gets hacked rather than your wallet stolen — and, even worse, causes a whole range of new problems that were not explicitly mentioned in Mastercard’s marketing material. Let me reveal the fine-print written in invisible ink: Did we mention that in removing the ability to transact with cash we can now see everything you do and can also censor you? Cheer up, if you have nothing to hide, you have nothing to fear!

Oh yes, I can use scare tactics too. I can point out that removing cash takes us one step closer to potentially realising the most powerful and automated state-corporate financial control complex the world has ever seen. Very few people either seem to understand this, or care. Like a slow-boiled frog, we don’t seem to notice the process of locking ourselves into daily dependence on an alienating, unaccountable infrastructure that makes us increasingly subservient to bureaucratic processes we cannot see…


The core concept to remember I think is that there are two ways to pay for things:
  • Ways that involve cash or cash equivalents
  • Ways where a purchase requires the permission of someone else
Just think of the word authorization, which is a required element of essentially all non-cash transactions. It has the word authority embedded right in it. If you're OK with that concept, you are necessarily OK with the idea that someone you have never met and don't control has the ability to stop you from using your funds in the way you'd like to at any time.

A cashless society is, at a fundamental level, not free.


Such a system replaces a relationship between two parties with relationships between those parties and the bank. If either party falls out of favour with the bank, they can't do business with each other.


For an immediately ready example, I present Paypal Seller/Buyer disputes on eBay.
From IN PRAISE OF CASH by Brett Scott (2017)

…But this universe is missing one of the fundamental aspects of human civilization. A world without paper money is a world without money. Money belongs to its current holder1. It doesn’t matter if a banknote was lost or stolen at some point in the past. Money is current; that’s why it’s called currency! A bank deposit, however, grants custody of money to the bank. An account balance is not actually money, but a claim on money.

This is an important distinction. A claim is only as good as its enforceability, and in a cashless society every transaction must pass through a financial gatekeeper. Banks, being private institutions, have the right to refuse transactions at their discretion. We can’t expect every payment to be given due process.

This means that politically unpopular organizations could easily be deprived of economic access.2 Past attempts to curb money laundering have already inadvertently cut off financial services for legitimate individuals, businesses, and charities. The removal of paper currency would undoubtedly leave similar collateral damage.

The crime-fighting case against cash is overstated. Last year, a risk assessment of money laundering and terrorist financing conducted by the U.K. government found that regulated institutions such as banks (like HSBC) and accountancy service providers (like the Panamanian tax-shelter specialist Mossack Fonseca) posed the highest risk of facilitating the illicit storage or movement of funds. Cash came in a close third, but if we’re going to cite unlawful transactions as a rationale for banning cash, it only makes sense to ban banks and accounting firms first.

The one benefit of replacing cash with claims on cash is that a claim can be discounted, canceled or seized. That doesn’t sound terribly beneficial to most people, but this attribute is attractive to a growing contingent that wants to send interest rates into negative territory.

As Rogoff explains, negative-interest-rate policy is an important tool for central banks to restore macroeconomic stability. During times of slow economic growth, a lower cost of borrowing gives companies an incentive to invest and consumers to spend. Physical currency gets in the way of negative-interest-rate policy because people who don’t want to accrue negative interest can simply store their cash in a safe. By confining the national currency to regulated account holdings, the government can impose a tax on savings in the name of monetary policy.

Now if there’s one thing the population is good at, it’s tax avoidance. That’s a good part of why we’re having this conversation in the first place. If interest rates fall too far below zero, it’s possible that citizens would find an alternative form of cash. Drug traffickers certainly would. Money has been repeatedly reinvented throughout history, as shells, cigarettes and cryptographic code. Humans are resourceful.

Rogoff acknowledges this risk, and states that the removal of paper money will only be effective "provided the government is vigilant about playing Whac-a-mole as alternative transaction media come into being." This sounds a lot like a policy employed in 13th-century China, where the use of gold or silver as a medium of exchange was punishable by death. Such is not the hallmark of a free society, but neither is the abolition of cash.

A cashless economy violates the basic laws under which currency has operated since before the Industrial Revolution. The justification for giving up a fundamental freedom is that it would clear the way for an experimental policy designed to place a tax on currency. Money may be a shared illusion, but cash abolitionists are in a hallucination all their own.

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