Wednesday, November 21, 2007

No Fiat Money in Star Trek

Note: I'm not a Trekkie, so there may be errors on the sci-fi front...feel free to correct me.

Nick watches Star Trek sometimes. I've seen parts of episodes. We got in a discussion about the Federation's economy. He said that they don't have money because there's a machine called the Replicator that will reproduce anything that you put in it. Therefore, currency would become worthless because anyone could just make more and more currency. I asked how trade was possible. He said that there's a little bit of barter, but being a solitary ship in space pretty much limits how much interaction you have with other groups of people and you have to be mostly self-sufficient. I inquired if there weren't a sporadically exploitable comparative advantage in producing different goods by different societies. He said "only a little bit."

It took me until the next day to decide that all money would have to be commodity money as opposed to fiat money. Nick highlighted the obvious inflationary problems associated with fiat money. I will recognize a supply-side effect which would potentially decrease the selling price of commodity money, but I think that it could work.

I guess what the whole problem boils down to is what kind of trade-offs are made when you replicate an object. I would guess that you just have to give up the atoms that comprise the molecules that make up that object, so you can't use those same atoms to replicate other things. Perhaps in the throes of deep space, the demand structure changes inter(space)temporally frequently and unpredictably enough that the best thing to replicate is what's needed right now. Perhaps people could recycle old objects and take the atoms out to make new objects in the replicator. That would make a really cool situation where your consumption could double as savings (could you collect your poo, stick it in the replicator, and get an apple to pop back out??).
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