What happens when your currency is worth more than what it's buying?

[gofunkiertti]

So very soon in the Stormlight world people with superpowers are going to essentially start hoarding money so they can have access to it's stormlight. This means that very soon the currency itself will be worth far more than what it buys.

There is a very real world problem in reality where copper based coins can have copper worth more than the actual value denomination of the coin. So people gather the coins on mass and melt them down and sell them at a profit. Now imagine if all your currency is coins and all of it is worth 100 times more.

What happens when every single unit of your currency is worth more than it's stated value? So that diamond chip that used to buy you say a loaf of bread (I suddenly can't remember anyone eating bread, do they have flour?) now has the equivalent of 100 loafs of bread in value.

What happens when your smallest denomination now is worth more than a weeks worth of shopping?What do you do when the main thing you want to trade with your currency is the currency itself? Do you make a new currency or does the price rise across the board even it out?

Do the rich suddenly become much much richer and the poor unable to buy basic necessities?

Edited March 10, 2014 by gofunkiertti

[Moogle]

When this happens, the currency deflates as people sell the raw form. Anyone with a large store of spheres will find their value increase. That said, I doubt the deflation effect will be significant. Stormlight is constantly renewed, so I think Shallan was being a bit hasty when she said that Stormlight would be just as valuable as spheres.

Edited March 10, 2014 by Moogle

[Edgedancer he/him]

Stormlight is still rather worthless to the average person and I doubt extorting the few people that need the magic to save the world is a very smart move. Also gems are already of magical value, because of Soulcasting, and the economy seems to work, so I doubt problems will arise in the near future.

[RShara she/her]

At the most, I think that infused spheres will be worth even more than dun ones, even to money changers and the like.

[Aleksiel]

In Mistborn series Mistborns and some Mistings use coins, yet there were no problems with the currency. I imagine the case in Roshar to be the same. Also, stormlight is not what defies the value of spheres, but the gems, and this is why dun and infused ones have equal value.

Edited March 10, 2014 by Aleksiel

[PudgyNinja]

In Mistborn series Mistborns and some Mistings use coins, yet there were no problems with the currency. I imagine the case in Roshar to be the same. Also, stormlight is not what defies the value of spheres, but the gems, and this is why dun and infused ones have equal value.

 

Well, the real basis of the economy in Mistborn was Atium, not other precious metal coins.

[Krenn]

no need to hoard gems.  their stormlight is only valuable for very rare and specific purposes. Shallan's pretty much covered the worst case scenario already.

In Shallan's Scenario:
She needed to move an entire army.

Using stored stormlight

when there had been no recent high storms to replenish stormlight, nor were future high storms expected anytime soon.

 

right there, that was probably the highest demand and least supply of stormlight-infused gems she's ever likely to face, and she solved it by stripping the stormlight out of the gems people were already carrying.  Stormlit gems were rationed as flashlights after they arrived, but the next highstorm will recover the market.

in the future, the market will be a lot more stable.  persons needing to travel by stormlight platform will bring their own lit gems, and arrive at their destination with unlit gems. no real problem there.

for the routine use of stormlight by knights radiant, you'll just need to make a deal with a moneychanger. for less than 1% markup, he should be willing to exchange dun spheres for stormlit ones indefinitely. the army-scale supply of lit spheres completely dwarfs any possible demands by three knight radiants, once the next high storm arrives.

There might be a SMALL market correction, if the Alethi Treasury is ordered to maintain a strategic stormlight reserve for future emergencies, but it shouldn't be a very big one, and they can easily correct for it once they have reliable contact with outside markets.

[gofunkiertti]

That assumes that there will be 4 radiants. What happens when there are hundreds of radiants who can consume an armies worth of stormlight (from relatively rich soldiers too) from one portal jump.

[luminos]

I agree that lit spheres are likely to become more valuable than dun spheres once knights and applications of stormlight consuming fabrials become more common.  But there are a few tricky issues to monetizing stormlight.

 

1.  You don't need to be in possession of a sphere to drain stormlight from it.  All you need is physical proximity.  So knights would value having access to more spheres, not necessarily owning more though. 

 

2.  Lit spheres are only more valuable if it is at least conceivable that they could be drained for use before the next highstorm comes.  This means that for most people, lit versus dun won't matter most the time, and only on occasions where they know ahead of time that they'll need it for teleportation or whatnot. 

 

3.  Spheres of similar cut, size and type likely drain stormlight at an equal rate.  This means that all spheres would depreciate equally over time between highstorms, which would mean that only completely dun spheres would have a different value than lit spheres at any one given time.  Larger gems may become more valuable relative to smaller ones due to stormlight capacity. 

 

From these points, I hypothesize that a mature economy that sees monetary value in stormlight as well as in gems would have some small variations in monetary value from the amount of stormlight a gem currently holds, but the much larger impact would be that trading schedules would become much more strategic with relation to a highstorm.  You would want to maneuver you selling and buying in such a way as to maximize your on hand cash during a highstorm, work towards getting a few very large gems that can hold enough stormlight to last between storms for desperate cases.  Merchants would likely play games around trying to get advantage this way, and cultural institutions would likely be subtly influenced in ways that encouraged trade right before a highstorm and discouraged it immediately afterwards.