How come the world doesn't run out of money?

[unmerged(3392)]

Finally got the game and played couple decades yesterday. I played peacefully and concentrated on my own country. I'm wondering about two things concerning the economy. Didn't find the answers in the manual.

1) How come the world doesn't run out of money?
i.e. where does new money enter the system?

Money changes hands when goods are sold and bought.
They are bought by the nations or their population.
The seller is always the population (the nation
taxes the population). Closed system so far,
money just changes hands.

But Nations have several daily money sinks that remove
money from the system: education, social spending,
military etc. Not to mention all the improvements
that nations build in their provinces.

The only things that I've seen that could create money
are the state bonds, but those are only fraction of the
daily expenses that a nation has.

So, how come the world doesn't run out of money?

2) When can the POPs do their shopping?
POPs buy their life-sustaining, everyday and luxury
consumption goods from the world market (if they can afford it).
Does the nation need to import (or have) the goods
for the population to be able to buy it?

 

[unmerged(5110)]

Those are two good questions!

1) Where does the new money enter the system?

The economic system is abstracted. So we don't have buyers and sellers, per se. Thus you don't need to worry about printing money, or debasing currency or any of that.

Pretend that the World Market is an entity, with unlimited capital. Thus when goods become available, the World Market quickly buys them - it gobbles them up, and depending on certain supply/demand values, adjusts the price accordingly. So the money will circulate through the system until it gets to the government in the form of tax dollars and state bonds where it will be "sinked" as you stated.

In addition, you can recirculate the money by subsidizing POPs.

2) When can the POPs do their shopping?

Your stockpile of goods and resources is the national stockpile. Its use is for the government exclusively. Thus, the POPs are NOT ALLOWED to touch it. (Think of it as like Fort Worth, where only the government can touch the money, I suppose) POPs will buy all of their subsistence, everyday and luxury goods from the World Market semi-directly (the price can be affected by your subsidies/tarrifs).

Therefore, the answer is NO. You do not need to stockpile goods in your personal stockpile in order for it to become available to POPs.

Hope this helps!

 

[Mozart41st]

Professor Xie, when is your class on Vicnomics going to begin?

 

[unmerged(5110)]

Originally posted by Mozart41st
Professor Xie, when is your class on Vicnomics going to begin?

As soon as I find the time to write up my lecture notes!

And... when Paradox gives me tenure!!! ^_^

 

[Sable_Rose]

....Its a game....

 

[unmerged(5110)]

....Its a joke....

 

[OriginalRafiki]

Originally posted by XieChengnuo
Your stockpile of goods and resources is the national stockpile. Its use is for the government exclusively. Thus, the POPs are NOT ALLOWED to touch it. (Think of it as like Fort Worth, where only the government can touch the money, I suppose) POPs will buy all of their subsistence, everyday and luxury goods from the World Market semi-directly (the price can be affected by your subsidies/tarrifs).

Therefore, the answer is NO. You do not need to stockpile goods in your personal stockpile in order for it to become available to POPs.

But does your prestige affect your POP's number in line when it comes to buying stuff from the WM?

If so, if I have high prestige when I sell stuff to the WM, there would be a fair chance for my POPs to get hold of it, and I would have a way of satisfying their needy little souls if there is stuff they're missing.

If not, how does it work?

Rafiki

 

[unmerged(11457)]

heh, i like the free lessons

 

[cocoa]

Originally posted by Petri
But Nations have several daily money sinks that remove
money from the system: education, social spending,
military etc. Not to mention all the improvements
that nations build in their provinces.

Unless the nation is using the currency directly for this things (fancy a factory made out of coins? Or a school made from notes?), then these activities are not reducing the money supply. In fact, ignoring taxation, they're an injection of money. Why? Say the government builds a school. It pays labourers to lay the bricks, who then spend the money on stuff in the market, it pays the brick makers, who then spend money in the market, it pays its bureacrats, who then spend money in the market. So it all goes back in.

Very crudely speaking (and this isn't strictly true), if the government runs a balanced budget (no surplus or deficit) then the money supply will remain unchanged. Although, technically this isn't true because a balanced budget isn't fiscally neutral, it expands the demand of the economy and so would drive prices up and devalue the economy. That's the claim at any rate, frankly I'm not sure it's true today (although it seems right) and I wouldn't like to bet it was true in the era that Victoria is played in.

The main way the government could shrink the money supply is by running a surplus. I'm not sure how sophisticated monetary intervention was at the time, but I'm guessing it wasn't very advanced and not deliberately used as a policy tool.

 

[Earl Uhtred]

I suppose it all goes on their credit cards

 

[unmerged(3392)]

external entity?

Thanks for the thoughtful answers XieChengnuo and Cocoa. But I'd prefer to keep the RL out of this discussion. I'd like to know how things work in this game.

The mechanism for a player run country is as I've described it (as far as I can observe it). I was assuming that the WM supply and demand is created by countries in the game and their population. And money used to build things is just removed from the system. If this is the case, then no new money can enter the system.

But XieChengnuo, are you hinting that something other than the countries and their population makes purchases on the WM? If Paradox has programmed this external entity then it would solve this. It would be a sink for the goods and generate money to the system. (But it would raise demand on goods)

And Cocoa are you discussing about RL or do you suspect that the money that nations spend on building stuff is not removed from the system, but distributed to your nations POPs? This can be tested since you can observe how much cash your POPs have. Also the military, crime fighting, social spending etc. could be delivered to your POPs? An easier solution for Paradox would be to just generate money for POPs out of nowhere. However the game manual states that the only income POPs have is from selling goods on the world market.

XieChengnuos idea sounds more viable to me: I've never had trouble to sell stuff in the world market and once I got my factories running I was flooded with money. But then again I've only played this game for 4 hours.