Economics in Fantasy Land

[marycatelli]

What would happen if you released Smaug's hoard into the economy?

Tolkien didn't deal with economics much, considering that he frequently had his characters stranded in the wilderness unable to get any.  They wondered who funded it.  (Though in the Appendices, we learned the dwarves did blacksmithy.)  I did bring up how gold discoveries have often brought booms because they had economies that strained at the limit of the amount of coinage they had.

The usefulness of money as opposed to say sheep, how coins were debased because of the lack of gold, how bank notes were discounted according to reports of how solvent banks were in various periods in American history

Middle class or not.  One panelist thought it was more modern, but I brought up the rich merchants of the middle of the Middle Ages.  (You can tell when it happened because knights, instead of just being men who fought, started to be dubbed knights.  The rich merchants had too much clout, you had to differentiate yourself -- and they thereby opened a great gap, because fighting is in fact a harder qualification than being dubbed.)

Some talk of good examples, none of which I remember also.  I brought up Poul Anderson's "Fairy Gold" where it vanishes after making a lot of people happy by letting them unload a white elephant and get what they needed.  It even comes back to the original hands.

Comments

[philmophlegm.livejournal.com]

A sudden injection of gold into an economy short on labour (like Rhovanion in TA 2941)? There is a similar situation in real history - the conquistadors bringing New World gold back to a Europe still underpopulated from the Black Death.

The results?

1. INFLATION.
2. Skilled workers able to charge more for their services - increasing the numbers of affluent artisans.
3. Cleverer merchants able to exploit price instability in an economy where information flows were slow (i.e. the prices had shot up in one country, but not yet in another).

[marycatelli]

And yet more. . .

The Spaniards went the route of buying everything instead of developing it, but it could be put to use funding things.

[bunn.livejournal.com]

Not the same scenario though? The gold flooding into Spain was not previously part of the European economy, whereas the Middle Earth economy had been using Smaug's hoard for currency until it was forcibly removed.

171 years is quite a long time, but still within living memory for many people in the area.

[philmophlegm.livejournal.com]

Ah, but when the Smaug horde was in circulation, Rhovanion / Dale / Erebor was a thriving economy, and the gold is actually spread among more people.

[marycatelli]

Yes, but then it adjusted to its absence. It might thrive again in its presence, but there would be a period of -- adjustment.

[marycatelli]

I don't think it was gathered by Smaug, I think he just moved in on the dwarves.

Which gives you another limit: the dwarves aren't going to hand it about like candy. Yes, the thirteenth part will spread far and wide, but the rest?

[mythusmage.livejournal.com]

I got to thinking about the subject of a world where alchemists can turn lead into gold. It occured to me that if the process produced gold that was cheaper than the real thing, then gold would drop in value drastically, while lead would shoot up in price as it became scarce.

If the price of conversion was high, then converted gold would be pricier than natural gold, and being inditinguishable from the later, difficult to sell at its actual value.

Then you get to consider the process of converting it, such as the cost of conversion, and the toxicity of conversion.

Then I decided that converting lead to gold produces radioactive gold, and that leads to serious health problems. See Pat Frank's "Alas Babylon" for an example of this.

[marycatelli]

Toxicity? Nonsense! You would be immortal!

Rowling was in fact drawing on genuine history and folklore when creating Nicolas Flamel. Because gold is imperishable, it does not rust, or corrode, or tarnish, obviously turning base metal into gold means you have the way to turn ordinary humans into immortal ones.

[alan kellogg (from livejournal.com)]

The toxicity only comes into effect after the transformation, before then the alchemist's toast is grass.

Remember the old poster with a frog saying, "Kill me and you'll live forever. You'll be a frog but you'll live forever."?

Think of the transformation as something like that.

Now, to make matters even worse; what if physical immortality means you live long enough to complete the transformation from juvenile form to adult form, and all immortals face the possibility of turning into giant tunicates who eat their brain, and change their internal skeleton into an external shell.

Now image the price of maintaining billions of these in good health.

[marycatelli]

There are always complications, aren't there?