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[JohnieRWilkins]

Why do you think diamonds were valued?

One reason their price is high is the effort that goes into obtaining them. Labor costs of mining, safeguarding, and transporting diamonds makes them expensive to own. And there's people who just want stuff because it's expensive.

Diamonds became expensive because a certain corporation had a successful marketing campaign and is now holding a complete monopoly over diamond production. The street price of diamonds in West Africa is a tiny fraction of what it is in the rest of the world. They're not very rare and they're certainly not very hard to get out of the ground, although the coffee cup diamond thing was a troll. I seriously hope it was a troll.

http://en.wikipedia.org/wiki/De_Beers#Gem_diamonds

Diamonds only became valued in the 19th century.

[forsaken1111]

Why would it be a troll? A troll is something said to incite strong emotion or whip up tension in a thread. Claiming to make a diamond in a microwave is hardly a troll.

Also, it's true.

http://www.instructables.com/id/How-to-Make-a-Synthetic-Diamond/

[Sheepherder]

My last line? If so I will clarify by saying that I'd rather not carry lots of heavy gold bars around if I could easily change them into diamonds and back again without much loss of value. I will further clarify by saying I got the idea from elsewhere; I don't know if he knew his history but I once heard a Jewish diamond dealer claiming that so many diamond dealers are Jewish because it's easier to flee in the night with your wealth in diamonds than in bags of cement (his example).

No, the line I snipped off of Forsaken1111's post, I was initially not going to even bother responding to it, changed my mind, but didn't change the quote.  You're talking sense.

http://www.instructables.com/id/How-to-Prank-the-Instructables-Community/

[ZebioLizard2]

Why would it be a troll? A troll is something said to incite strong emotion or whip up tension in a thread. Claiming to make a diamond in a microwave is hardly a troll.

Also, it's true.

http://www.instructables.com/id/How-to-Make-a-Synthetic-Diamond/

OK, I admit it: This WAS an April Fool's Day prank. In fact, it's the basis for my entry into the Instructables' April Fools Contest, "How to Prank the Instructables Community".

I appreciate all the comments. To those who weren't fooled, bravo. And to those who were, take comfort that you made a great contribution to this effort.

Thanks.

Anyways..Back onto the topic, we generally need an overhaul, at least the caravans is a step in the right step as things seem to be centered around taking and consuming resources (at least the world does)

[forsaken1111]

Hah, well that's me looking like an ass. I read this a while back and just remembered it when this topic came up, I didn't check the text at the top. Sorry about that. 

[fractalman]

forgive me if I necro'd the wrong thread...I *think* this is the most recent of the economy threads...
OK...
tl:dr: real money is not tied directly to one good. it is loosely tied to several goods simultaneously. 
a bit of thought dumping:

Spoiler (click to show/hide)

Money is "worth" something when it can be used to pay taxes, and/or when people accept it, and/or when people can trade it for gold..
oh. right. gold is worthless if your'e starving.  Truth be told, an economy that ties money to food would actually make more sense...aside from the fact that food spoils and there are so many varieties of food.  gold was used simply because it had been previously used in gold coins.  [extreme speculation]previously, basksets of pebbles could have been used as a way to keep track of how many chicken eggs were promised in exchange for the sheep; people switched to prettier rocks when they got suspicious, and eventually people switched to the prettiest rocks around to make it impossible to lie about how many chicken eggs they'd been promised...and then forgot it was originally about chicken eggs.  [/extreme speculation]





ok.  Real life "money" is not tied down to any ONE item; it is loosely tied to a bajillion items at once, many of which have substitues.  This means supply and demand may kick in for any object; the value of any one currency may then drift over time...
lets say it takes 6 apples, or 3 corn, or 2 bread, to get you through the day. there is enough food production that any two of these will be enough, and if there is excess it can be fed to livestock. 
lets say the government says an apple is worth 1 dollar. 
* a pest eats all the corn; the economy is fine
* a pest eats all the apples instead; the economy becomes a distorted mess once you include supply and demand.


so lets switch to a different option: 6 dollars buys you enough food to get you through the day.

*a pest comes around and eats all the corn; the other two items retain their value because there's still enough supply to meet the demand.  we can then include what little corn was stored away to make corn worth 50 dollars or so, simply because some people really, really like corn; this doesn't cause the economy to cease making sense. 
*the same thing happens with any particular crop eaten; it takes eliminating two crops at once to cause this economy to crash.

Another option, perhaps, is saying that 6 dollars buys you an hour's worth of human labor-aka, a minimum wage law. If we assume that 1/24th of the available labor is all that's needed to produce the food in the previous scenarious, this could be introduced with, essentially, no distortion.


*distortion: a term i will not bother to define here.  I can only hope that it is sufficiently self-evident.

Now, dwarf fortress already has a system of value, the dwarfbuck.  Each item is assigned a value that is completely static, with NO room for supply and demand...and either a caravan can bring you something or it can't.  furthermore, the ONLY place you could get supply and demand was with liason requests, and even that was pretty broken when a few meals can buy out the entire caravan.  extending it to individual dwarves...


SO.  Why NOT use the existing system?...oh. right.   Because in the old system, the dwarves got no credit for items produced prior to economy kick-in, and they suddenly couldn't afford the royal bedroom your engravers painstakingly created.  furthermore, money used for rent...vanished.  Money came in whenever ANY dwarf pulled a lever.  even if the lever wasn't connected to anything. 



SO. 

To seriously introduce an economy...you need taxes. And they need to be balanced somehow.
the room-rent was a property tax, but it was horribly broken.

The current model includes only a very limited supply/demand; mostly, the player may increase the caravan supply of iron anvils by paying more for them.  Everything is still based around the dwarfbuck, though...and the individual-dwarf economy is horribly broken...unlike with humans, dwarves seem to do incredibly well with communism...it's as if they were in a hive-mind controlled by the player. 


now

the original individual economy was a disaster.  I propose the following modifications:

1.  "room rent" fix: 1x1 rooms are free or super cheap.
2. raw food is free.
3.  Dwarves should be permitted to automatically expand or contract their room. (I EXPECT the king to grow his room to cover an entire, only to find himself selling his clothes, getting laughed at, and experiencing fun first hand when he runs into magma to escape the shame.  )
4.  Dormitories should give mild happy thoughts if they are of throne-room quality, and prevent grumbling about sleeping quarters at modest or decent quality.   
5. coin fix; dwarves need to restack their coins over time. 
6.  the player (aka the king/hive mind) can controll fortress goods without causing grumbling, and can decide which of these are sold.  Forcibly purchasing a dwarf's ownded shirt will frequently cause an unhappy thought. 
7.  that which is produced is a fortress good by default
8.  Dwarves receive a fraction of the value added by their labor...modified by existing supply-demand factors...PLUS a value dictated artificially by the player. Dwarves will grumble a bit if they think someone is being payed ridiculous sums for lever pulling, regardless of how important that lever is to the safety of the fort.  They will not grumble much about the king being payed. 
9.  The player controlls which types of fort goods are purchaseable by dwarves; the military seriously needs those wooden bolts after all.
10.  The player may dictate whether the price of a good is pinned to a specific value, or allowed to change based on supply and demand.
11. Dwarves prefer coins and will grumble more and more about not having them over time.  But the player says when there are enough coins minted to make the switch.

12. dwarves who want something will occasionally grumble if its not to be found.  They will grumble even more if they want something that's in the fortress stocks but have not been able to purchase it for some time.  may be allieviated in the short run by letting them admire the object if it is a placeable object.