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I want to use mana, used to fuel spells, as a sort of currency. Basically you pay for items not with a fiat currency but with your mana, which someone may later use to cast a spell. I don't have a specific world in mind for this yet, I'm mostly trying to figure out if a system could be viable at all.

A person can store on their person the equivalent of roughly 100$ worth of mana before they become uncomfortable. There are coins in various denominations that act as mana batteries that you can charge with your ambient mana. The governments of the world regulate the manufacture of these coins to prevent counterfeit coins that hold more/less mana, just like they had to prevent counterfeit gold coins.

The key catch is that everyone produces mana all the time, just by existing. This has an interesting affect on scarcity if that much mana is constantly being added into the system. Presumably mana is being spent for casting spells at roughly the same rate as mana as is being generated, and thus added to your economy, by all the folks living in a country, though some inflation or deflation may be possible.

Could this system result in a stable currency? I'm giving a good amount of free reign to answers to adjust how this world's magic system works, such as how much mana a human generates relative to the current available mana in circulation, what kind of magic mana is used for and thus how it adjusts to supply and demand, and if there are other sources of mana besides what humans produce. Given that leeway is it possible to create a stable mana economy?

If it is are there any peculiarities to such an economy vs the fiat currency of today? What does it mean to be rich or poor if your poor are able to generate currency by their mere existence?

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    $\begingroup$ The notional inflation target in a modern developed economy is about 2% per year. For example, the GDP of the USA in 2022 is estimated at about 25 trillion dollars; 2% of that is about 500 billion dollars. The USA has about 330 million inhabitants, so that the inflation target is about 1500 dollars per inhabitant per year. If each inhabitant of the USA produces 100 dollar per month just by existing, this means that the Federal Reserve Bank would need to inject only 100 billion dollars in the economy each year instead of 500 billion. $\endgroup$
    – AlexP
    Commented Nov 23, 2022 at 22:55
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    $\begingroup$ ... In other words, it all depends on (1) the rate at which each person produces 100 dollars out of thin air, and (2) what is the general level of prices in the country. For the USA, 100 free dollars per person per month is fine, no problem at all; 100 funny dollars per person per day would be rampant inflation and collapse of the economy. $\endgroup$
    – AlexP
    Commented Nov 23, 2022 at 23:00
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    $\begingroup$ "mana, which someone may later use to cast a spell" - so the mana is actually destroyed when spent? $\endgroup$
    – Alexander
    Commented Nov 23, 2022 at 23:06
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    $\begingroup$ Analogously: does gold mining affect the stability of gold as a currency? Most of the time, at the scale it happens in reality, no it doesn't. Very occasionally (Spanish gold imports from the new world) it does. But unless you're in a gold rush, very few people generate gold, so it's slightly different when everyone has access to it. $\endgroup$ Commented Nov 24, 2022 at 10:50
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    $\begingroup$ This concept as laid out is similar to the notion of labour as a unit of exchange. Many people trade labor for money, which is then exchanged for goods and services. Like mana, my labor is a finite but rapidly replenishing resource, and I can comfortably trade about 8 hours of labor per day. $\endgroup$
    – Izzy
    Commented Nov 25, 2022 at 15:25

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Characteristics of money / unit of exchange

Characteristics to consider: Acceptable, divisible, durable, portable, scarce, and stable.

  • Scarcity this might come into question since majority of the populace can produce mana. Then it matters how this rate compares to consumption rate. Based upon description there is demand to consume more mana that is produced each day. So mana is scarce.

If one could dial up the mana production per person and there was a point where it would supply all need and much of want. then it would start failing the scarcity test.

  • Acceptable do people accept it as unit of exchange, since people generally want more mana then they can produce, it is acceptable

  • Divisible can man be split up into smallest usable portion or grouped into large aggregates. ie able to trade 123.4 mana. Not explicit from description. presuming the 'mana coin' container can have various denominations or can somehow know contained amount.

  • Durable, can a 'mana coin' be used in many transactions? Presuming the answer is yes, or at least the mana can be transferred to another coin.

  • Portable can various units be readily transported. The 'mana coins' would fit this bill especially if there are coins that can scale to carrying million mana or above.

  • Stable does it have same value over time. Mana fits this bill while more efficient spells over time might be created it would be reasonable to believe that a spell powered by one mana today will still be able to be powered by one mana hundred years later.

Another consideration that is why some commodities are not good money when considered in detail ie cows, grain or shells.

  • Fungible is one unit of the commodity the same or as good as any other unit of that commodity.

Conclusion

Yes mana would make a good money. The primary concern is the scarcity of mana. So as long as the aggregate rate of production is below aggregate rate of consumption it is scarce and is usable as money/unit of exchange.

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  • $\begingroup$ In the Scholomance series by Naomi Novik, the wizarding world actually does use mana as part of their bartering economy. And gathering mana is a chore that you get tired of. $\endgroup$
    – Arthur
    Commented Nov 24, 2022 at 8:36
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    $\begingroup$ I don't think "scarcity" is quite so strict that production must be less than consumption. In fact, fiat currencies intentionally increase the amount in circulation over time (both physical cash through mints and the virtual supply through central banks), for various reasons, and doing so doesn't automatically tank the currency. I'm not sure of the theory exactly, but scarcity just has to mean the thing is sufficiently limited that it won't catastrophically lose value. $\endgroup$ Commented Nov 24, 2022 at 10:58
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    $\begingroup$ @SteveJessop: The idea behind a positive inflation target (1.5% to 2%) is that you want your economy to grow. So if a dollar buys an egg, and you want the production of eggs to increase by 2% per year you would want to inject 2% extra dollars in the economy. (The hard truth is that nobody knows how to run a large-scale economy in a world of falling prices, and this is why governments want to avoid deflation at all costs.) $\endgroup$
    – AlexP
    Commented Nov 24, 2022 at 12:13
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    $\begingroup$ @AlexP: sure, although governments also have been known in the past to increase the currency supply for other reasons. Such as printing money to pay their bills, or the truly old-school version which is to debase the coinage. Not saying economists necessarily approve, just that it happens, and that it only ruins the currency when taken too far. $\endgroup$ Commented Nov 24, 2022 at 13:02
  • $\begingroup$ Ancient Egypt is said to have used loaves of bread as the standard currency. All that is really needed is a standardization of the unit of exchange. Scarcity is not needed. $\endgroup$
    – David R
    Commented Nov 24, 2022 at 16:51
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Consider mana as labor and you will see the system is fine.

Suppose I want some of the fine decorated pants you make. I offer to pay you with my labor. I can only do so much before I get tired so I will pay you by doing work over a couple of days.

I make cookies, and fix your toilet. I brush the cat and clip its claws. Then I am spent, and so come back the next day. I make more cookies (you ate them all?) and fix the toilet again (too many cookies for you!). The cat shows up and gets more brushing.

On the third day I set out your collection of miniature anime girls in a fetching display, make some healthful granola brownies and brush the cat (who will miss me). You gratefully pay me with your embroidered pants which I promptly put on.

-- It is a barter system. We both use our labor to add value to things and we trade those things.

You could do that with mana. I put my mana to use adding value to the mana coin (does it have to be a coin? could it not be something more interesting, like a cookie?) and you later use the mana item to accomplish your own ends. Perhaps by eating it, temporarily charging your mana to more than 100 and then spending it all in a flurry of manariffic activity.

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  • $\begingroup$ However, a voucher for one hour of labour might be more or less stable as a currency depending on various economic factors. For example I don't know how to predict roughly what the inflation rate "should" be, but perhaps an economist can. For that matter, either gold or fiat currencies have proven to be fairly unstable given the "wrong" circumstances :-) $\endgroup$ Commented Nov 24, 2022 at 10:47
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    $\begingroup$ @SteveJessop OP assumes Mana is spent, and the currency is gone. The inflationary pressure lessens because the supply of currency remains somewhat stable. You can also assume that, since the currency is also the fuel for say, combat magic, that governments will stockpile mana to wage wars. $\endgroup$ Commented Nov 24, 2022 at 12:14
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    $\begingroup$ @SteveJessop The good point about the mana is that it is so incredibly stable. The same value of mana isn't going to increase/decrease in provided labour. I expect everybody to have a use for the mana, even if it is just to clean their homes magically to save time. And as versatile as mana would be, if it can provide food/water/shelter, it should be a decent fallback, which would likely prevent a total collapse of the economy. $\endgroup$
    – vinzzz001
    Commented Nov 24, 2022 at 12:39
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    $\begingroup$ @Mindwin: right, so if government stockpiling starts to hog the supply (which could well happen if the government values national defense more highly than I value not sweeping my own floors manually), then mana would tend to increase in value over time compared to other goods with less demand pressure, and inflation would be negative. It's not clear to me that significant negative inflation makes for a currency the questioner would consider stable. Fiat currencies work in part because the central bank doesn't hoard it. $\endgroup$ Commented Nov 24, 2022 at 13:07
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    $\begingroup$ Do you have a picture of those embroidered pants? I realize they're analogous, but I'm so curious now. $\endgroup$
    – Joachim
    Commented Nov 24, 2022 at 17:31
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Money is printed but does not get destroyed. Mana is 'printed' with the intent of destroying it.

Imagine we would pay with electricity. All homes have generators (as you need electricity to buy food). Some homes don't use any. They just pay with it. Some homes have lights that use electricity. Some homes have even bigger lights. So big in fact that they need to work in order to get enough electricity to power them. Now maybe someone wants to do the biggest lightshow in history. They eat up all reserves of electricity and now electricity is scarce. You need to work more for less electricity. The lightshow is over. Actually all lightshows are over because a famous influencer has said that candlelight is more beautiful than electric light (he gets a cent for every candle sold). Now there is more electricity than ever. For the same work you get a lot more electricity. Also it is worth less. You can of course still power things with it but the exchange rate of electricity to bread for example is now much worse.

Your system would likely work, but have heavy inflation/deflation unless the magic use would remain constant.

By that I mean if the amount of mana spent daily remains the same, your Manacoins would slowly gain or loose value depending on if the amount spent is more or less than the amount generated. If it is equal then your currency would even keep its value. But the appearance of a high mage that needs insane amounts of mana could impact the worth of your currency. Such a high mage that has been around for a while dying, would in turn also impact the worth. Honestly, that could make for an interesting story.

tl;dr: Supply and demand determine the value of your currency!

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    $\begingroup$ In fact, nowadays money does get destroyed a lot (when you repay a loan for instance). $\endgroup$
    – Argemione
    Commented Nov 24, 2022 at 12:42
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Only if stronger mages produce a lot more.

Gold and silver were not stable resources because you could randomly find gold mines and silver mines and massively swell the supply of mana. If you can just find a group of a thousand peasants and massively swell the mana supply with them then the value of mana is gonna surge up and down depending on how many people you can sway.

As such, the best mana producers need to be uncommon. Some people, perhaps from birth or from difficult training, can consistently produce more mana. They produce a substantial percentage of the total production, and are not easy to quickly generate. Mana would as such be a nice side income for the average person, but it wouldn't be worth just birthing huge numbers of humans for extra mana batteries.

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  • $\begingroup$ In the real world, people conquered and encouraged birth of huge numbers of humans to produce large amounts of wealth. So I'm not sure where your theory comes from. $\endgroup$
    – Yakk
    Commented Nov 26, 2022 at 5:09
  • $\begingroup$ Developing a region to have a lot of wealth and have the tax collectors to collect it was an enormously long and hard action which could take centuries. $\endgroup$
    – Nepene Nep
    Commented Nov 26, 2022 at 11:51
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Yes.

The key condition is that demand for free mana is higher than aggregate supply of everyone's "just by existing" production plus other free sources.

It will have a price that makes demand meet supply.

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I could actually see this becoming a pretty interesting magic user-centric society. Perhaps more advanced magic users generate and can hold more mana, becoming the financial elite of this society in addition to their powerful magics. This would make it so that the common people who have no or very little magical ability make the least mana and are the poorest, while the elite are powerful magic-users. This would prevent everyone from making the same amount of money and giving you a nice clean social class system.

The only issue I see with this is paying a large number of people, such as an army or a large workforce like in a post-Industrial era corporation, but this could likely be subverted as a problem by simply having an extremely powerful magic-user at the helm, and/or ensuring systems of revenue are in place like taxes and profits. Additionally, since mana comes from people, this could imply that as a natural force it could be found in nature. Maybe mana extraction will be almost like the oil industry of your world, with the only difference essentially being that this is etherial gold, not liquid.

If you prefer everyone naturally producing the same quantities of mana, I could see this going two ways; 1, this leads to a classless sort of proto-communist society where everyone's needs are met and this currency is only used for the purchases of like luxuries or something of the sort, or 2, a brutal society in which great quantities of slaves are used as mana-cattle, feeding the insatiable appetites for wealth of a nightmarishly uncaring and ruthless ruling class. This could also take a slightly less grim but still brutal form, with this world's elite placing exorbitantly high taxes on its people to increase their own wealth and keep the poorest people poor and the richest people absolutely swimming in mana. Non-ruling elite could also maintain wealth by having workers, whom they take the lion's share of the profits of these workers' labour, in some twisted reflection of modern day capitalism.

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  • $\begingroup$ More powerful people in our world don't generate more labour. Yet they have huge amounts of money. Powerful mages with lots of mana need not generate large amounts of mana, they can simply own lots of mana. Our world has every human being pretty similar in their ability to do labour, yet we have billionaires, and have had kings for 1000s of years. $\endgroup$
    – Yakk
    Commented Nov 26, 2022 at 5:10
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I think you need to refine the mechanics a little more before you can ask meaningful questions about it. And I have so many questions.

Let's assume the following:

  • Rate: All sentients (and many Beasts) generate mana at varying rates depending on multiple factors.
  • Capacity: Everyone has a limit (also varying between individuals) to their mana capacity and won't regenerate past that limit - no exploding if you don't 'spend' your mana.
  • Transfer: Mana can be transferred between people at little or no loss.
  • Storage: Mana can be stored in specially prepared objects, quality and size determining how much is lost, whether or not it leaks and maximum capacity.
  • Restriction: while everyone can produce and transfer mana, not everyone can work with it well enough to perform magic.
  • Purity: no fire mana here, just a neutral source of magical energy.
  • Balance: you find some way to make this work as a system of economics.

The details of these points could get quite interesting. Regeneration rates might be affected by your health and how well fed you are for instance. Eating high-quality magical beasts might give you a boost to your regeneration, etc. Can you exercise your magic in some way to increase your capacity? Does mana have to be stored in constructed devices or can you produce crystalized or liquid mana that is stable and of uniform density?

What use does mana have to a person other than as a source of currency? It seems unlikely that we'd be constantly generating this magical power without some good reason for it. Surely it's useful for something in and of itself. Physical enhancement? Healing? What are the physical and mental effects of high or low mana saturation?

I know, I ask a lot of questions. But there's a reason for it. Well, let's call it a reason... it's certainly not because I'm trying to find a loophole, or expose a horrific consequence of the situation.

OK, fine, I'm a horrible person who can't help but look for ways to twist a system into dark and terrible things.

In this world where mana is currency and even the lowest beggar on the street generates it all the time, albeit in small quantities, all it takes is a tiny bit of greed and your whole world goes dark faster than dropping your last torch in an underground lake.

Let's start small, shall we? While small-time criminals will strip you of your mana in a back alley, the more enterprisingly nasty types will kidnap your entire family and farm them for mana. You're kept like cattle and drained constantly, so you'll never have enough mana to break free. Meanwhile your captors are living high on the wealth they're generating from your misery.

But hey, criminals, am I right?

Perhaps you're more concerned that the Evil Wizard (and there's always one) will raid your town, capture everyone and stick them in one of his generator towers, where your life force will be gradually burned to radically increase your mana generation, all to power his evil rituals. Or pay off his gambling debts. Or something. We don't really know his motivations here.

And don't even get me started on how this would affect warfare. Or pyramid schemes.

In an idyllic world where people like me didn't exist, this might work out OK. All it takes is one bad apple to spoil the bushel though. Or one well-meaning but short sighted person who thinks that his plan to create a better world is worth a little suffering by people he personally will never meet.

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  • $\begingroup$ This presumes the cost of feeding, storing, and guarding a peasant was lower then the value of mana produced, significantly lower when you factor in the risk of being caught and punished. I think it's unlikely to be the case regardless of how much mana a peasant produces. Mana's value is decided by supply and demand. if you raise the supply you lower the demand and thus it's value/unit. The demand would have to be huge and inelastic for price of a days worth of mana alone to fully cover peasant's room and board; and were it so this would not be a stable currency for other economic reasons. $\endgroup$
    – dsollen
    Commented Nov 25, 2022 at 15:10
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Consider mana electricity

I will expand the answer by Willk and say that the mana can be considered paying by electricity. If - for example the mana can be used to fuel energetically intensive spell works (the shield defending the city, the alarm in the prison, the teleportation network, the industrial appliaction - smelters, waste disposal...anything done in our world by electricity can be powered by mana), then the demand will always be great IMO.

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I think this question is a bit hard to answer without more details on the limitation of magic usage.

The main difference between this 'Mana' currency and fiat currency, is that fiat currency is useless on it's own. It's value is derived entirely externally to itself. This changes a lot of the perceived value of the currency. Mainly that in moving Mana around, you aren't just moving currency around but also labor.

If there are 100 families and only enough food to feed 50, then you could be a billionaire and you still couldn't feed everyone. Some people will starve. But if you were the billionaire equivalent in Mana, then you could just 'magic up' some food and could literally fix the problem. Money doesn't solve problems, mana solves problems all on it's own.

Money has no value in being accumulated and stored away. It is meant to be circulated and invested in ways that will bring value to the community. Mana may have massive value in being accumulated and not used. If an enemy launches a magical attack at you, can they use accumulated mana to strengthen or increase the number of attacks? Do you need to use accumulated mana equivalent to the attack to deflect it?

What about using mana to generate more mana? On it's face, it sounds like investing. But investing is possibly profitable only if it generates value for the community, it's also possible to lose all of their money. It cannot be used to directly create more money. But can you use mana to create a mana making machine? Can you use it to create life, which will itself create mana? Or use it to create more 'time' which causes those under it's effects to create more mana? Or to duplicate mana battery coins?

The more magical and omnipotent the 'magic' is, the more divorced from reality as a currency it would be.

My guess is that you will encounter issues with having mana be the sole currency of a location due to mana's ability to have a value in and of itself. It might be better off to have a magic system with a defined scope and capabilities which is enabled by a mana currency and a correlated system of fiat or backed currency which is used to enable trade of non-magic related items.

Maybe people need food and nourishment to generate mana, but you cannot use mana to create food. It must be done with labor and time which is paid for with hard currency. Mana can be used to assist in the labor via plowing the fields and picking the food, but it does not create the food directly. Or magic will not create a structurally sound house, but a carpenter can use magic to assist with their work. They would want mana related to the mana expenditure and currency related to the usage of their time and skills.

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    $\begingroup$ Modern Fiat currency is backed by debt. My house? It is tied to a debt. If I don't produce labour worth money and pay for the mortgage, I lose my house, which is a real asset, to whomever has the money to buy it. Most major companies are also heavily leveraged with debt; if they don't produce money to service their debt, their assets are transferred to whomever is willing to service that debt (possibly at distressed rates). So while fiat money doesn't do things, it in practice represents a real obligation by millions of people to do you a service. $\endgroup$
    – Yakk
    Commented Nov 26, 2022 at 5:14
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There is one big issue with this system - mana powers magic, which means that it is an incredibly flexible, useful, consumable resource. This is pretty much the exact opposite of what you want in a currency.

From a certain point of view, money is a token representing value provided or effort performed. Magic, presumably, can be used to perform useful work and produce resources. A mana-based currency system means that the easiest way for a person to gain wealth is to do less work. This is not a great situation for society to be in.

You can, of course, have people who pay other people in basic resources in order to use their mana to create larger magical effects. But since literally anyone can be "mana cattle" this would be pretty much the absolute lowest-paid job anyone could have.

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