Assuming a Commodity-Backed Currency Capable Of Various Production Grades, What Problems Or Eccentricities Might Arise? [duplicate]

Question

I'm working on a science fiction setting right now that takes place in the distant future (several millennia from now) and the human race is ruled by a loosely allied collection of noble houses - in interregnum after the overthrow of the previously ruling dynasty. In the 3rd millennium (still measured from CE-0 in the Julian Calendar), Imperial Geneticists used ancient genetic maps of Earthbound Honey Bees to recreate the honey producing insects, giving real honey back to the human race. Since 2400, the only honey available was produced by the Karling Ant, a genetic splice of honey bees with attini tribe ants that combined the hardiness of the ants with the honey-producing and pollinating properties of the bees.

Now, the Solar Economy is centered around Karling Honey and Royal Honey, Karling Honey is produced industrially in large farming operations, Royal Honey (produced by the revived honey bees) is strictly regulated, with the only bee-hives under the direct control of the Royal Family and some noble houses. I've been postulating a system where the amount of Karling Honey produced is set at a certain ratio of that produced by the Royal Bees, with the value (and the relative value) of both being an arbitrary constant established by the Imperial Treasury.

Which brings me around to my question. Modern honey production is poorly regulated (at least in the United States, the USDA grading system for it is strictly voluntary and poorly enforced), with two varieties of honey (one being exceedingly more valuable than the other) but a wide range of possible grades or variations possible in the production honey. What are some issues that the currency backer would need to address in order to keep the honey-based economy viable?

Answer 1

First, definitions. Currency is not backed by hard goods, money is.

Currency has a value independent of anything but the perceived ability of the issuer to provide value to the holder of the note. In other words, the value of currency is just what everyone agrees it is. It is a lie that we choose to believe because it is convenient.

Money is a coin made from hard assets or a note/token backed by hard assets; typically, gold or silver but there are exceptions.

The sheckle was traditionally a wooden token given the value of 1 bushel of grain. A farmer could give his grain to the city and get a sheckle for every bushel. Then he could pay people with those sheckles and the people paid could use that to either buy other things or to withdraw a bushel of grain to make bread. The city would create as many sheckles as it needed but only hand out as many as they had grain. Note that these cities also used metal money for bigger purchases so sheckles were only used by the poor classes. Could the city distribute more sheckles than they had grain? Sure but the value was so low that it wasn't worth getting caught. Cities were much more likely to shave gold off of their coins.

I think that the ancient sheckle is a good match for what you want to do.

Answer 2

I'm about as far from fluent in economics as a person can get, but it occurs to me that honey has no exclusive role in our life processes which cannot just as easily be filled by other sugars and/or sticky substances. It stores better than most, but other than longevity, it seems a strange choice to base an economy on.

To be honest, gold, silver and platinum also seem like strange choices to this self-admitted non-economist.

It seems much more sensible to base a future economy on something vital to the life process. Water seems like a good choice, especially since you can survive a few days without it, so you have some time to earn more should you unexpectedly go broke (dry). Regulating rainstorms might be a problem though. It was a cloudy day, so everybody skipped work, staying home instead to put out rain-barrels in hopes of striking it rich.

It also seems to me that honey (like water) is rather space consuming compared to its apparent value. A person wanting to pay "cash" for a major purchase, would probably have to hire a tanker truck to deliver the payment. ...and mailing in a mortgage payment would incur prohibitively high shipping costs.

In the end, I think we are very fortunate that most countries today prefer to back their currencies with absolute nothingness. After all, it's very space efficient, light weight and it doesn't periodically fall from the skies.