Why is Money Energy?

[robertqin]

If you think about it energy based currency actually doesn't make sense in some way,as energy is a kind of consumable and can be produced or used, which makes its value fluctuates a lot, and that is bad for currency.

Think about this scenario. You are paid 10 units of energy for your hard work each day. You saved that energy for ten days, now you have 100 units of energy credits in your bank account.

For simplicity, let's say your society only produces hamburgers, and today there are 100 hamburgers in the market. Similarly, your society has 100 units of energy in total, and thus each hamburger costs 1 unit of energy. You can afford 100 hamburgers with your saving.

Tomorrow, a new power plant is operational, and producing tons of energy. Now your society has 1000 energy so in total, and still 100 hamburgers in the market, making each hamburgers cost 10 units of energy. Now,even if you get a raise according to the inflation and get paid 100, your total saving is still only 200 units of energy, equivalent to 20 hamburgers. You are much poorer than you were today.

A reversed situation can happen if your society lost energy, and neither is good for your economy.

And that is why our currecy is based on precious metal that has a limited amount on earth. Its amount can't fluctuate a lot. And if its amount fluctuates, dire consequences will happen.
Historically, the influx of precious metal (silver and gold) from the new world kind of destroyed the economy of Spain due to declined value of gold.

Energy is kind of different, as it has intrinsic value as well, but that means its value can fluctuates even more violently as the means of producing energy can change dramatically.

 

[ZomgK3tchup]

I assume it's like the gold standard except with energy instead of gold. Every empire probably has its own currency, but:

Because if the game had fiat currencies, 90% of its computing code would relate to making those currencies interact with one another and having economically sane prices.

This.

 

[Alblaka]

If you think about it energy based currency actually doesn't make sense in some way,as energy is a kind of consumable and can be produced or used, which makes its value fluctuates a lot, and that is bad for currency.

Technically correct, but you forget a more important aspect:

Imagine several different alien races, each with completely unique evolution on both biological and technological level. Different ideologies. Different definitions of value or posession. Compare a capitalistic slave-trader species vs a Hive-Mind that doesn't even have a concept of 'this item belongs to me, not you'.
Now try to establish any kind of trade between those empires.

There is no true common currency, heck, some empires may never have had any form of 'currency' at all. At best you could go with a basic good-based trading economy (aka, pre-Ancient levels).
HOWEVER, as Stellaris abstracts somewhat realistically, ALL forms of advanced (FTL) intelligent life will have a need for some form of 'energy', to fuel machinery, enable propulsion, etc.

Thus, one 'thing' that will always hold guarantueed value for every single empire, is energy.
Of course, realistically, it would fluctuate a lot more then it does in Stellaris, but that's a level of realism the game just can't model.

 

[robertqin]

Technically correct, but you forget a more important aspect:

Imagine several different alien races, each with completely unique evolution on both biological and technological level. Different ideologies. Different definitions of value or posession. Compare a capitalistic slave-trader species vs a Hive-Mind that doesn't even have a concept of 'this item belongs to me, not you'.
Now try to establish any kind of trade between those empires.

There is no true common currency, heck, some empires may never have had any form of 'currency' at all. At best you could go with a basic good-based trading economy (aka, pre-Ancient levels).
HOWEVER, as Stellaris abstracts somewhat realistically, ALL forms of advanced (FTL) intelligent life will have a need for some form of 'energy', to fuel machinery, enable propulsion, etc.

Thus, one 'thing' that will always hold guarantueed value for every single empire, is energy.
Of course, realistically, it would fluctuate a lot more then it does in Stellaris, but that's a level of realism the game just can't model.

True, for game's purpose it is perfectly fine, but game can also just call it credits, which is a trope in many science fiction where the author doesn't want to tackle with currency problems. What I want to say is that this doesn't make sense for domestic economy, where we use energy credits the most (maintenance, buy ships and stuff)

As for international trading, use of energy and minerals actually makes perfect sense, as energy in this case is not used as currency, but product. If my memory serves me right, the value of a unit of energy for an alien civ depends on their current balance. If they are in need of energy, they are willing to trade a lot of strategic resources for a small amount of energy, but if they are overflowing with energy, they won't take even thousands of energy credits for one single resource. The price of resource differs from nation to nation, which implies that they uses energy as a trading product with intrinsic value instead of currency with assigned value.

 

[Subcomandante]

It's broken down to a few things, quite ingeniously.

- Matter, some of which is used by pops to reproduce.
- The energy to use that matter.

Energy isn't money. It's the physical means to use and move stuff. Without energy, you can have all the money in the world, still nothing would happen. Currency might be somewhere in there if you want to imagine it, but it is not relevant on an interstellar galactic stage, it's only a psychological trick to convince us to do certain things.

 

[robertqin]

It's broken down to a few things, quite ingeniously.

- Matter, some of which is used by pops to reproduce.
- The energy to use that matter.

Energy isn't money. It's the physical means to use and move stuff. Without energy, you can have all the money in the world, still nothing would happen. Currency might be somewhere in there if you want to imagine it, but it is not relevant on an interstellar galactic stage, it's only a psychological trick to convince us to do certain things.

Money (coins, paper bills) is a representation of currency which in our world is precious metal. Currency is a kind of product that represents certain value for ease of trading. Currency itself can have little intrinsic value (like gold) or high intrinsic value (like energy), but it mainly serves as a medium for exchanging products . It might be a psychological trick, but it is extremely important for a trading network involving multiple members. let's say a farmer wants pants, a tailor wants meat, a butcher wants wheat, how do they trade if they want input and output at the same time if there is no medium with assigned value? There are just three members, but imagine you have hundreds if not thousands of members of the trading network, what would happen if there is no medium?

Money economy solves the problem by abstracting the value of products into currency, making value easily carried and thus making long-range, multi-side trading possible. Other than that, money makes investing possible, makes saving possible, and makes a financial economy feasible. Of course it is possible that in a highly advanced civ, currency can serve no purposes, if they have the methods to distribute products and assign means of production efficiently among all their population, like actual communism.

 

[nestorius]

Energy is just a commodity (I myself am working at a energy utility where we are just trading power and gas) currently it is traded in europe in EUR/MWh where the main issue is that you cannot store it as you supposedly can in Stellaris. Most currencies are at a basic level based on the economy of the country which is just what energy is. You just need something that everyone wants and can use. For this Energy would be ideal though if you are looking at the Stellaris market and are really trying to figure out what this represents then likely energy isnt beeing traded between the countries and rather Energy is seen as the ultimate exchange rate a little bit like the dollar. Overall countries can still use normal currencies just that the currency is exchangable with energy or something exchangable with energy.

Your argument if a society has 100 hamburgers and 100 energy and suddenly a new plant is built that there is 1000 Energy but still 100 hamburgers well that is just inflation and happens in our world also just not really with hamburgers, which can probably be easily created with more energy but with land or anything else. If resources dont increase and the market increases price will increases its pure supply and demand.

Of course you have the whole e=mc2 that you could transfer that energy can be made into matter but I dont think we really need to have matter transformers in place for the mode that energy represents a exchangable currency in Stellaris

 

[Trithemius]

Sid Meier's Alpha Centauri?

 

[prismaticmarcus]

If you think about it energy based currency actually doesn't make sense in some way,as energy is a kind of consumable and can be produced or used, which makes its value fluctuates a lot, and that is bad for currency.

Think about this scenario. You are paid 10 units of energy for your hard work each day. You saved that energy for ten days, now you have 100 units of energy credits in your bank account.

For simplicity, let's say your society only produces hamburgers, and today there are 100 hamburgers in the market. Similarly, your society has 100 units of energy in total, and thus each hamburger costs 1 unit of energy. You can afford 100 hamburgers with your saving.

Tomorrow, a new power plant is operational, and producing tons of energy. Now your society has 1000 energy so in total, and still 100 hamburgers in the market, making each hamburgers cost 10 units of energy. Now,even if you get a raise according to the inflation and get paid 100, your total saving is still only 200 units of energy, equivalent to 20 hamburgers. You are much poorer than you were today.

A reversed situation can happen if your society lost energy, and neither is good for your economy.

And that is why our currecy is based on precious metal that has a limited amount on earth. Its amount can't fluctuate a lot. And if its amount fluctuates, dire consequences will happen.
Historically, the influx of precious metal (silver and gold) from the new world kind of destroyed the economy of Spain due to declined value of gold.

Energy is kind of different, as it has intrinsic value as well, but that means its value can fluctuates even more violently as the means of producing energy can change dramatically.

i do like hamburgers...

 

[The Founder]

I call bullshit.

Just the other day I went to my bank and tried to deposit a bag of AA batteries.

They were all like "I'm sorry, that's not legal tender" And I'm like "If it's good enough for the Carithen Alliance of space fungi then it's good enough for you!"

My court appearance is next Friday

Your mistake was the year. It is 2017. Not 2217.

But why would stock exchanges increase your energy stockpiles?

Same way it works with the other Stock Exchanges.

The part that doesn't actually make sense is where this private, taxed economic activity comes if the government builds, owns, and directs Pops to operate all of the economic buildings. (Also, how am I expected to believe that a species that can travel the stars can only manage to make on its initial colonies a hydroponics farm so inefficient that it not only requires the farming efforts of everyone it feeds, it also requires additional upkeep from outside of the colony? One Pop eats one unit of food, and that's all a basic farm produces unless it's on an especially fertile tile.)

Wich is why the Capitol produces 2+tilenbonus. And there is orbital Farms. And somehow certain governors or happiness result in more food being produced.
The colony center part will be fixed with Galactic Food.

It's a genre convention.
Many other SciFi games do it like that, thus Paradox decided to roll with the flow.

Indeed. Earliest I saw it was Sid Meiers Alpha Centauri, but it might predate it.

For simplicity, let's say your society only produces hamburgers, and today there are 100 hamburgers in the market. Similarly, your society has 100 units of energy in total, and thus each hamburger costs 1 unit of energy. You can afford 100 hamburgers with your saving.

Your example is so simple, is it utterly wrong on a mater of scale. What you just described is bog-standart inflation.
If your government/the banks add 0.1% currency to the pool, every unit in circulation is reduced by 0.1% of value (or something around that).
Multiplying the amount of energy by 10 would be so insanely deep into hyperinflation, it is not viable.


Re Energy Standart:
Actually it makes sense. There is a fixed production, but also a certain fixed demand. Every building, every ship needs energy to be maintained.
There is a inherent value/inherent use. Limited production*, intrinsic use/value, impossible to counterfeit. That is are the requirements for backing our Currency on anything.

*The only thing with a noticeably high income would be the Dyson Sphere. And it costs literall gigatons of minerals to build. And might only produce around 1000, when the universal economy is in the 10K's.

I would highly advise Extra Credits "History of Paper Money" for a short overview of why we even use paper money to begin with. A concept that is actually ludicrous upon closer inspection:

 

[GC13]

Wich is why the Capitol produces 2+tilenbonus. And there is orbital Farms. And somehow certain governors or happiness result in more food being produced.

I don't consider it particularly impressive that the initial colony module only requires the constant labor of half of the population it feeds.

 

[Derp]

If you think about it energy based currency actually doesn't make sense in some way,as energy is a kind of consumable and can be produced or used, which makes its value fluctuates a lot, and that is bad for currency.

Think about this scenario. You are paid 10 units of energy for your hard work each day. You saved that energy for ten days, now you have 100 units of energy credits in your bank account.

For simplicity, let's say your society only produces hamburgers, and today there are 100 hamburgers in the market. Similarly, your society has 100 units of energy in total, and thus each hamburger costs 1 unit of energy. You can afford 100 hamburgers with your saving.

Tomorrow, a new power plant is operational, and producing tons of energy. Now your society has 1000 energy so in total, and still 100 hamburgers in the market, making each hamburgers cost 10 units of energy. Now,even if you get a raise according to the inflation and get paid 100, your total saving is still only 200 units of energy, equivalent to 20 hamburgers. You are much poorer than you were today.

A reversed situation can happen if your society lost energy, and neither is good for your economy.

And that is why our currecy is based on precious metal that has a limited amount on earth. Its amount can't fluctuate a lot. And if its amount fluctuates, dire consequences will happen.
Historically, the influx of precious metal (silver and gold) from the new world kind of destroyed the economy of Spain due to declined value of gold.

Energy is kind of different, as it has intrinsic value as well, but that means its value can fluctuates even more violently as the means of producing energy can change dramatically.

you are making a pretty big assumption that a future energy economy operates like existing or historical economies

 

[Scourgeclaw]

It's become the galactic standard currency.

Rather than using a squintillion different currencies, the species of the galaxy use energy production as a means of measuring the economic "power" (pun intended) of a given nation's economy.

 

[scaper12123]

at the end of the day, he who has the most money has the most power

 

[The Founder]

I don't consider it particularly impressive that the initial colony module only requires the constant labor of half of the population it feeds.

You sir are terrible at finding proper colonies and doing tile planning, if that happens. Building a Farm on a tile with not at least +1 from Adjacency once you upgrade? Poor planning.
They have more advantaced techniques (all the other farms), but they can not produce and maintain them in place.

And the whole issues ceases to exist with Migration/Resettlement, and Galactic Food in either case.

 

[praftd]

Energy is an abstraction. It doesn't literally represent electricity.

It represents "the stuff that makes the economy work".

Same for minerals which don't literally represent just things mined from the ground, but rather all materials used to build and create things.

 

[Lemont Elwood]

Commodity currencies are incredibly stupid. There's reasons we don't use them nowadays.

Here's a summary I got from somebody else:
"
Energy is one of the worst ideas for a currency that anyone's had.

It's not fungible, it's not a store of value, and has absolutely no scarcity. Let's look at the details.

Commodity currencies are problematic
jmbjera has listed core problems with the gold standard, and with commodity currencies generally: its supply is managed not by a democratically-elected government, but by one industry, so you remove a hugely useful tool from the policy-makers' toolbox; and you expose yourself to very high short-term volatility.

But even amongst commodities, energy has unique issues that make it worse than useless as a currency.

Energy is ubiquitous and bountiful
There's absolutely enormous quantities of it lying around everywhere. One kilogramme of anything contains mind-boggling amounts of energy - E=mc2" role="presentation" style="margin: 0px; padding: 0px; border: 0px; display: inline; line-height: normal; word-spacing: normal; word-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; position: relative;">E=mc2E=mc2, right? c, the speed of light, is huge. Squaring it makes it a lot bigger (when we're in SI units). 3×108m/s" role="presentation" style="margin: 0px; padding: 0px; border: 0px; display: inline; line-height: normal; word-spacing: normal; word-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; position: relative;">3×108m/s3×108m/s squared becomes 9×1016" role="presentation" style="margin: 0px; padding: 0px; border: 0px; display: inline; line-height: normal; word-spacing: normal; word-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; position: relative;">9×10169×1016 - that's how many joules of energy in 1kg of matter. Any matter. Soil, platinum, flesh and blood, it doesn't matter, it's all the same amount of energy: 90 Petajoules; aka 25 Terawatt-hours. That's a few weeks worth of electricity supply in Britain. So an energy currency means one kilogramme of sand is equivalent value to sufficient electricity to power that G7 country for a few weeks.

Additional energy arrives on Earth every second of the day
So not only is there immense quantities of energy lying around for free, but vast amounts arrive every second from our friendly neighbourhood fusion reactor, the sun. Irradiation on the earth is about 130 Petawatts. That's about four orders of magnitude more than human energy consumption. Or, to put it another way, sunlight on one ten-thousandth of the Earth's surface brings energy in at about the same average rate as global energy demand.

Energy's value varies hugely in time and space
But it gets worse, as far as currencies are concerned. See, energy's value differs constantly in time, in space and in form. You must have noticed that wind and sunlight are free - no one's charging you for them - and they're energy. Whereas you have to pay for natural gas. You probably pay even more, joule for joule, for diesel or petrol (gasoline). And you will pay a lot more for electricity. On top of that, one unit of electricity has a very different price depending on where and when you buy it, and the quantity you're buying it in.

Energy's form drives its economic value. 1 Joule is rarely worth 1 Joule
Electricity is a really high quality vector of energy: it can do huge amounts of work. But you can only use it in the instant it's generated (ok, you can store it briefly in a capacitor, but that will cost you, too). Heat is a really low quality vector of energy: and the closer the temperature is to ambient temperature, the less work it can do. i.e. the less economic value it has. Now, we've got enough problems with variable marginal values of money as it is, without this scale of problem. The other thing is, if you're storing your currency of energy as heat, it's losing its value every second as it cools off. Yet, at the same time, cooling has economic value, in aircon and in refrigeration. So that's a lack of energy that has economic value.

Many energy transformations add economic value but consume energy
Refining crude oil costs you energy and other resources. And the end product is more valuable, which is why people do it, and make a profit at it. But that would be absurd if energy were the currency.

On sophistry
I've seen the argument for an energy currency before. Usually, when you dig deeper, they're not really talking about an energy currency. They're actually trying to sell something. Typically, but not always, fossil gas. So their proposed energy currency turns out to be something very like gas futures contracts (which have the usual commodity-currency problems: control of supply lies with one industry, not democratically-elected governments; and the whole economy is exposed to high short-term volatility). Now, as we know, we've got far more gas than we can possibly burn (see my colleagues' paper in Nature on this), and the gas industry is starting to get nervous. And so it should. This desparate bid for a "gas currency" is just one more bit of special pleading and rent-seeking from what must become a dying industry."

 

[Lemont Elwood]

So, yes, energy currencies are a sci-fi staple, but they're a BAD sci-fi staple.

And there are actual gameplay reasons to want to separate them, too. For example, the game generally seems to imply that your energy production represents your actual ability to produce energy. However, things like the old Individualist ethos increase energy production, the Stock Exchange increases energy production... so if Energy is meant to be currency, natural deposits on planets and the like shouldn't really be giving you more money outright, while if it's meant to be raw resources, why would capitalism make you more efficient at it?

 

[The Founder]

Energy is one of the worst ideas for a currency that anyone's had.

It's not fungible, it's not a store of value, and has absolutely no scarcity. Let's look at the details.

It is not fungible? Oh that is why my Laptops keep xploding everytime I plug them into the wall! Because it is impossible to distribute Electrical current over thousands of households so that everyone gets a save-for use amount!

Batteries do not store Energy? Then why is it called "Chemical Energy" ever since Newtons times? How do batteries work if they do not store electrical energy transformed into chemical energy and back?

If it has no scarcity, why don't you show me your magical device that outputs the power of the Sun with no maintenance or fuelcosts?


Especially "No Scarcity" is frankly BS. In case you are not aware, but there is actually a company that you have to pay money to get electricity RIGHT NOW.
It is not a lot of money, because they have to produce for the industry. Like the Bauxite-to-Aluminum Processing plants that eat more energy per day the any larger city per year.

 

[Cruxador]

Pretty sure the main reason is just so that our buildings and stations and etc. only have one resource to pay upkeep in. Energy and money would work about the same if they were separate currencies, so instead of having two, we have one instead. Sure, it doesn't make sense if you think about it too hard, but that's true about a lot of Stellaris.