Markets and Traders Pt. 2
Published: 2012-06-30
Author: Teddi
In the last post we explored how basic currencies worked hundreds of years ago (and in some respects, today as well).
Charlie has gotten itself into a daft war that it can’t actually win and it wants support from an ally, Alpha. As a typical town, Alpha doesn’t want to go to war and it has even more reason as the markets there would be completely affected by the war.
As I said earlier, most currencies are backed up by a Gold Standard. However if Alpha needs to start spending money (and remember, they prefer to trade via coin instead of goods) then they’re going to have to start selling some of the Gold reserves they have. This then has to be reflected by a change of the percent of gold in the coins. Suddenly the value of the Crown has gone from 75% Gold and 25% Copper to 60% Gold and 40% Copper.
This becomes a catastrophe for Alpha because they rely so much on Crowns. Typically they might alter the value of the coins every few years to reflect the market against other towns such as Beta, but with this it means that they can no longer buy as much in terms of quantity. Beta on the other hand is having a sudden ecnonomic boom. Because they prefer to trade by goods of which many are now in demand (weapons, armour, pelts to wear whilst fighting in cold areas). As they have the goods they’re able to increase their prices and can happily choose who they sell to. As a result of this boom not only have they become richer in terms of gaining new resources and stock but also in coin.
However in terms of coin they’re not as rich as raw materials. The reason behind this is most of the merchants buying their goods came from Alpha. The merchants from Alpha prefer to trade by coin if possible and as a result of the coin suddenly having a harsh devaluing the currency that Beta have received has also dropped in value. This doesn’t matter for Beta though as they still have various resources (spices, ores, silks) that they can use as commodity.
But how will this war start to affect Charlie and Alpha in the long run and how will Beta handle it? Check back tomorrow for Pt. 3.
Discussion Thread: http://www.bbservers.co.uk/forums/showthread.php?7912-Markets-and-Traders-Pt-2