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[sockless]

With the caravan arc, we should have inflation and deflation.
So if my fortress mints millions of coins, they should be worth a lot less that if I only mint a thousand. Yet if I melt them down again, they should start to be worth more.
In a similar vein, we should be able to horde gold and stuff, so that the value goes up.

[Granite26]

With the caravan arc, we should have inflation and deflation.
So if my fortress mints millions of coins, they should be worth a lot less that if I only mint a thousand. Yet if I melt them down again, they should start to be worth more.
In a similar vein, we should be able to horde gold and stuff, so that the value goes up.

Value backed currency doesn't float

[Girlinhat]

Value does float.  Gold in itself isn't very useful, not for weapons or armor or doing anything, it's just shiny.  Food and weapons are the only things with intrinsic value, so all of your coins should be backed by axes.  But they are anyways, right?

[Grimlocke]

Spain has a spectacular historic example of this. They discovered the new world, started looting the place for gold and silver, and nearly ruined themselves as the stuff kept on devaluating.

[Granite26]

Yet if I melt them down again, they should start to be worth more.

You guys were saying?

I'm not saying the value of the underlying metals shouldn't float, just the currency itself doesn't.

[IT 000]

The economy has been gone for a while. There have been several topics on supply and demand/inflation deflation and other economy things. While its good to discuss and all, we should save specific requests for a broader topics or start a new topic with a dozen ideas, not just one. Or wait until the economy comes back before we start requesting things from something that doesn't even exist at the moment.

[Unfrozen Caveman]

If prices aren't fixed and are realistically determined by supply and demand, the amount of coins in circulation (the size of the money supply) should determine how many coins goods are worth so that doubling the money supply should double the money value of all goods.  When dwarves are using coins to purchase goods, getting coins to dwarves and then getting them back (from room rents or taxes) should be at least a minor concern for the player.  If a player fails to recoup currency from dwarves, and instead mints more coins to pay for labor, he should face the problems that inflation causes.  Dwarves who've amassed a significant collection of coins should be displeased when their coins won't buy as much as before.

IRL, inflation (especially if it's unexpected) hurts creditors while it benefits debtors, so if dwarven banking ever comes into play, that would matter.  Though, the dwarf bank is not a feature I desire to see.  Inflation also hurts savers and retirees on fixed incomes, which also isn't part of the current dwarf world, and need not be.

[Neonivek]

With the caravan arc, we should have inflation and deflation.
So if my fortress mints millions of coins, they should be worth a lot less that if I only mint a thousand. Yet if I melt them down again, they should start to be worth more.
In a similar vein, we should be able to horde gold and stuff, so that the value goes up.

Except that the coins are worth what they are made out of for the most part.

The inflation and deflation of coins usually had a lot to do with the inflation and deflation of the material, dilusion of the elements, or the wear and tear of the coins.

[sockless]

But if the coins were to be made using a special, tightly controlled press, as they are, then they become more than just the metal they are made on. That's why your cupronickel coins are worth more than the materials are.

[Neonivek]

It depends on the economic system.

That's why your cupronickel coins are worth more than the materials are

That is because our money represents value rather then having a value themselves. On the same merit why our Pennies are worth less then their materials.

Coins generally have a value based on their material outside of specific collectors. They don't have inflation or deflation because a kingdom decided to mint a lot of cold coins (it can have deflation if the kingdom decided to dilute the gold coins with copper though)

[blizzerd]

But if the coins were to be made using a special, tightly controlled press, as they are, then they become more than just the metal they are made on. That's why your cupronickel coins are worth more than the materials are.

or less, in antient times it happened a certain coin became less worth then its material value, partially giving rise to and being caused by chipping*


*taking off corners of the coin, making it less worth in materials but it remains "1 coin" so the value remains, the chippings are  remolten (by the money handler) to be worth a new bar of metal without losing value on the coin thus creating value out of nothing

[sockless]

A good example of being worth less is that penny of yours (assuming you are from the US), which costs 1.79 cents to make.

[Neonivek]

One reason why Coin bags became so popular is because you could collect gold dust from it, which was legal.

[Maklak]

The way I see it, Dwarf Fortress has controlled economy, rather than supply and demand. The central government sets prices and wages for everything.

As for creating value out of nothing: It is much worse with our current banking system. Watch "Money as debt".

[Unfrozen Caveman]

It depends on the economic system.

That's why your cupronickel coins are worth more than the materials are

That is because our money represents value rather then having a value themselves. On the same merit why our Pennies are worth less then their materials.

No.  Money is valued for it's utility as money, for what it can buy.  Making a distinction between "representing value" and having value is a pointless semantic distraction. 

Coins generally have a value based on their material outside of specific collectors. They don't have inflation or deflation because a kingdom decided to mint a lot of cold coins (it can have deflation if the kingdom decided to dilute the gold coins with copper though)

Coins used as currency are almost always valued at their face value, such that four quarters will trade for exactly the same amount of good x as one paper dollar.  The size of the money supply is inversely proportional to the value of one unit of said money supply, so increasing it (whether by dwarves minting more coins or by a central bank purchasing assets) essentially is inflation.

Coins with face values significantly below their material values will cease to be used as money.  You will never see someone use a $50 US gold coin (currently worth about $1400) to pay for something that costs $50.