New Mars Forums

Official discussion forum of The Mars Society and MarsNews.com

You are not logged in.

Announcement

Announcement: We've recently made changes to our user database and have removed inactive and spam users. If you can not login, please re-register.

#1 2017-10-05 01:46:29

louis
Member
From: UK
Registered: 2008-03-24
Posts: 2,681

A Mars currency

A Mars currency could be set up fairly easily in my view and it would probably be desirable for it to be done, for a number of reasons:

1. Some way of rationing imported products will have to be found. You can't have a system where one person can simply grab as many clothes or soap or tomato ketchup as they want. It won't be long before the Mars community is quite a complex set up with Space X employees, contractors, university faculty members, space agency operatives, private individuals, TV crews,tourists and others mixing together. It would be difficult to maintain an army-style ration and supply system. A Mars currency would allow for rationing via price of scarce goods.

2. The currency could be entirely digital. This would obviate the need to transport and handle Earth based currencies that use paper/plastic  and coin on Mars.

3. The creation of a single Mars currency would send  a powerful message about the planet's future unified development.

4. The currency could  be made stable by linking the amount in circulation to a known factor such as the amount of electricity generated on Mars. This would ensure there was a reasonably smooth growth in the money supply in line with growth in the Mars economy.

5. The currency could be freely exchanged with earth currencies or at a fixed rate. Initially it might only trade with the US dollar at a fixed rate e.g. 1 for 1. However, eventually it would be best if it was traded freely.

6.  The currency could be attractive to Earth investors and this might provide a boost to the Mars economy.

As for its name, I favour the Ares, Mars's Greek name.


Let's Go to Mars...Google on: Fast Track to Mars blogspot.com

Offline

#2 2017-10-05 08:11:13

IanM
Member
From: Chicago
Registered: 2015-12-14
Posts: 174

Re: A Mars currency

As I've speculated earlier the US Dollar could likely be used in the very earliest days, though an independent currency would be a boon for the nascent nation-state. Perhaps Mars could simply use Bitcoin or other cryptocurrency, or at least be on a "bitcoin standard" akin to the Gold standard of old if the economy's not good enough for a fiat currency. I'm fine with your name. I would also suggest that it not have any subunits (so no cents, shillings, pence, etc.) since any subunit would probably be rendered obsolete with inflation.


The Earth is the cradle of the mind, but one cannot live in a cradle forever. -Paraphrased from Tsiolkovsky

Offline

#3 2017-10-05 10:21:13

louis
Member
From: UK
Registered: 2008-03-24
Posts: 2,681

Re: A Mars currency

I heard a radio programme about Bitcoin recently.  The presenter explained it isn't really a currency, it's really more like a shareholding...and that means it is subject to pretty big fluctuations up and down, so probably not that suitable for a currency. With a digital currency there isn't really any need for sub-units...you can just have decimal fractions of the currency unit - to as many places as you like.


IanM wrote:

As I've speculated earlier the US Dollar could likely be used in the very earliest days, though an independent currency would be a boon for the nascent nation-state. Perhaps Mars could simply use Bitcoin or other cryptocurrency, or at least be on a "bitcoin standard" akin to the Gold standard of old if the economy's not good enough for a fiat currency. I'm fine with your name. I would also suggest that it not have any subunits (so no cents, shillings, pence, etc.) since any subunit would probably be rendered obsolete with inflation.


Let's Go to Mars...Google on: Fast Track to Mars blogspot.com

Offline

#4 2017-10-12 19:02:32

Komiyama
Member
From: Earth
Registered: 2017-10-12
Posts: 8

Re: A Mars currency

I agree with Ian about avoiding subunits and with Louis about the potential positive effects of having a single planetary currency. Much as the Europeans were allegedly trying to do when they came to America, people on Mars should adopt some sort of economy (and political life) that eschews the garbage of Earth, inasmuch as that would be possible.
Particularly in the early days when Mars is underpopulated, it would be beneficial to have something akin to ancient Greek democracy (excluding its reliance on slavery, of course) where everyone has an equal say in how things ought to be run. If I'm one of only 100 people in a group for anything, for example, I'd like to think that my opinion would be heard since I have a vested interest in maintaining the survival of that group of 100.


Earthling. Unprofessional writer. Bromancer.

Offline

#5 2017-10-13 16:19:30

louis
Member
From: UK
Registered: 2008-03-24
Posts: 2,681

Re: A Mars currency

I am completely with you on that. smile Mars has the potential to be an effective democracy.

Komiyama wrote:

I agree with Ian about avoiding subunits and with Louis about the potential positive effects of having a single planetary currency. Much as the Europeans were allegedly trying to do when they came to America, people on Mars should adopt some sort of economy (and political life) that eschews the garbage of Earth, inasmuch as that would be possible.
Particularly in the early days when Mars is underpopulated, it would be beneficial to have something akin to ancient Greek democracy (excluding its reliance on slavery, of course) where everyone has an equal say in how things ought to be run. If I'm one of only 100 people in a group for anything, for example, I'd like to think that my opinion would be heard since I have a vested interest in maintaining the survival of that group of 100.


Let's Go to Mars...Google on: Fast Track to Mars blogspot.com

Offline

#6 2017-12-02 16:45:21

IanM
Member
From: Chicago
Registered: 2015-12-14
Posts: 174

Re: A Mars currency

It's somewhat obvious that eventually Mars will have to have its own currency, even without "nationalistic"/cultural concerns, since being in an Optimal Currency Area with any particular country on Earth would imply having some level of economic integration with that country that Mars is unlikely to have.

I was wondering when "eventually" was. Assuming that Mars does start out with using the United States Dollar, at what point would it be advantageous to switch to its own currency, pegged to USD or otherwise? I'll play economist here and assert that Mars ought to switch to its own currency when the benefits outweigh the costs. Having an independent currency does have costs. Many credit (and I would assume debit, but don't quote me on that) cards charge a foreign transaction fee of around 3% for transactions outside of the country of issue (https://www.nerdwallet.com/blog/credit- … ifference/). Since Mars (probably) wouldn't be a part of any Terran country, and it would likely be a while before there are Mars-issued credit cards, this would be an invariant part of the financial world on Mars regardless of what currency is used. However, a currency conversion fee, which is charged by the merchant according to a rate set by the card issuer, does depend on what currency is used. Fee rates tend to be ~9-15% (https://www.creditcards.com/credit-card … d-1267.php), which would be costs for an American going to a non-USD using Mars that wouldn't apply for a USD-using Mars. However, both these fees would still apply for non-Americans, so currency conversion costs will always be around 12-18% for non-Americans.

Assuming a Martian colony where everybody comes from a Terran country (i.e., there are no native Martians) and given fraction a of Martians of American origin, the total currency conversion costs for a USD-using Mars would range from .03a+(1-a)*.12 to .03a+(1-a)*.18. For a non-USD using Mars they would range from .12 to .18 for everyone. Solving only these equations would imply that keeping the USD would reduce total conversion costs for any nonzero amount of Americans. But while the USD seems the natural choice as the original currency, one could use what I just did to argue for adopting any given currency on Earth, and if we want to minimize currency conversion costs and do nothing else all of them. While Mars might indeed have a law decreeing that anything used to pay for something is legal tender if both parties agree to it, having a monetary free-for-all for official purposes would produce pecuniary pandemonium.

So when IS the right time to introduce a new currency? If we introduce "native Martians", which includes anybody with a Martian bank account or card such as "stayers", currency conversion costs become increasingly irrelevant. To have a bank account one needs a bank or other comparable institution. I doubt the very first missions would be too preoccupied with finance or the finer points of monetary policy, but I'd say meaningful domestic banking would appear when the settlement has a population of around 20-30, or within 3-4 missions, or 1-2 years of the first settlement. After the bank is established most people would likely join it immediately, so currency conversion costs would dramatically drop.

As for the benefits of a new currency, Mars wouldn't have to depend on the United States Federal Reserve to decide its monetary policy, so symbolic independence would be good, as would economic independence given that Martian economic goals and those of the US would very likely diverge considerably (Mars might be more export-dependent than the US, for example). So I'd say that a new currency would probably be adopted within the first 5 years of settlement once a sufficient financial infrastructure is in place.


The Earth is the cradle of the mind, but one cannot live in a cradle forever. -Paraphrased from Tsiolkovsky

Offline

#7 2017-12-02 17:59:14

SpaceNut
Administrator
From: New Hampshire
Registered: 2004-07-22
Posts: 10,650

Re: A Mars currency

The martian currency will start with control of personel produced food, water, air, power and shelter with some sort of precious commodity that can be found and mined that others want. Cash will be meaningless for decades. Credit will be used in great demand for items from earth in exchange for what earth wants.

Offline

#8 2017-12-02 18:18:14

louis
Member
From: UK
Registered: 2008-03-24
Posts: 2,681

Re: A Mars currency

Interesting points.  Some observations:

1. This is the situation on Antarctica - money is used:


https://antarcticfudgesicles.wordpress. … for-stuff/

"While we can buy this currency down here, it is not legal tender.  There is no official Antarctic currency.  At McMurdo, we use the US dollar.  While there is not a bank, there are ATM machines available.  The store also accepts credit cards.   Scott Base, uses either the New Zealand dollar or the US dollar (probably because there are so many US visitors from McMurdo).  I believe each Antarctica base uses its home currency.  Our pay checks are automatically deposited to our individual bank accounts in the US.

Could there be ATM machines on Mars?  (I guess it wouldn't be that difficult to arrange...though data might be sent periodically rather than instantaneously??)

2.  If the Mars Corporation was legally based in the US, I am not sure there would be significant additional transaction costs. Import costs and revenue generation would pass through US based institutions.

3.  Clearly at some stage, the case for a Mars currency becomes strong. If it was a world state with a GDP say, 20% of the USA's, then it would definitely, I think, want to be able to control its money supply and its own interest rates more effectively.

4. I think really though it is as much about making a political statement.  Is Mars going to be a self-governing entity or is it going to be a glorified US base? If the former, then it needs its own currency, its own commercial law, its own banking system and so on. Mars could do things very differently. For instance, there is no reason why all banks by law should not be co-operative enterprises owned by Mars citizens.

5.  A fully digital currency would allow huge savings in physical infrastructure (ATM machines, security measures etc).


IanM wrote:

It's somewhat obvious that eventually Mars will have to have its own currency, even without "nationalistic"/cultural concerns, since being in an Optimal Currency Area with any particular country on Earth would imply having some level of economic integration with that country that Mars is unlikely to have.

I was wondering when "eventually" was. Assuming that Mars does start out with using the United States Dollar, at what point would it be advantageous to switch to its own currency, pegged to USD or otherwise? I'll play economist here and assert that Mars ought to switch to its own currency when the benefits outweigh the costs. Having an independent currency does have costs. Many credit (and I would assume debit, but don't quote me on that) cards charge a foreign transaction fee of around 3% for transactions outside of the country of issue (https://www.nerdwallet.com/blog/credit- … ifference/). Since Mars (probably) wouldn't be a part of any Terran country, and it would likely be a while before there are Mars-issued credit cards, this would be an invariant part of the financial world on Mars regardless of what currency is used. However, a currency conversion fee, which is charged by the merchant according to a rate set by the card issuer, does depend on what currency is used. Fee rates tend to be ~9-15% (https://www.creditcards.com/credit-card … d-1267.php), which would be costs for an American going to a non-USD using Mars that wouldn't apply for a USD-using Mars. However, both these fees would still apply for non-Americans, so currency conversion costs will always be around 12-18% for non-Americans.

Assuming a Martian colony where everybody comes from a Terran country (i.e., there are no native Martians) and given fraction a of Martians of American origin, the total currency conversion costs for a USD-using Mars would range from .03a+(1-a)*.12 to .03a+(1-a)*.18. For a non-USD using Mars they would range from .12 to .18 for everyone. Solving only these equations would imply that keeping the USD would reduce total conversion costs for any nonzero amount of Americans. But while the USD seems the natural choice as the original currency, one could use what I just did to argue for adopting any given currency on Earth, and if we want to minimize currency conversion costs and do nothing else all of them. While Mars might indeed have a law decreeing that anything used to pay for something is legal tender if both parties agree to it, having a monetary free-for-all for official purposes would produce pecuniary pandemonium.

So when IS the right time to introduce a new currency? If we introduce "native Martians", which includes anybody with a Martian bank account or card such as "stayers", currency conversion costs become increasingly irrelevant. To have a bank account one needs a bank or other comparable institution. I doubt the very first missions would be too preoccupied with finance or the finer points of monetary policy, but I'd say meaningful domestic banking would appear when the settlement has a population of around 20-30, or within 3-4 missions, or 1-2 years of the first settlement. After the bank is established most people would likely join it immediately, so currency conversion costs would dramatically drop.

As for the benefits of a new currency, Mars wouldn't have to depend on the United States Federal Reserve to decide its monetary policy, so symbolic independence would be good, as would economic independence given that Martian economic goals and those of the US would very likely diverge considerably (Mars might be more export-dependent than the US, for example). So I'd say that a new currency would probably be adopted within the first 5 years of settlement once a sufficient financial infrastructure is in place.

Last edited by louis (2017-12-02 18:19:51)


Let's Go to Mars...Google on: Fast Track to Mars blogspot.com

Offline

#9 2017-12-02 18:25:14

SpaceNut
Administrator
From: New Hampshire
Registered: 2004-07-22
Posts: 10,650

Re: A Mars currency

look out for ATM scimmers and other such methods to hack an account....Securing a data stream as well since that seems to be something that is happening now with the WIFI system here on Earth since we will not be hard wired. The lag time between asking for funds from the ATM and being approve would be a sure way to slow an economy. A deposit as well could be hell is no local hub is used to control that data to cut the loop time on the data movement.

Offline

#10 2017-12-02 19:33:30

IanM
Member
From: Chicago
Registered: 2015-12-14
Posts: 174

Re: A Mars currency

Responding to louis:
1) If we do have an all-digital currency (which I can get behind), I don't see the need for ATMs, especially with the issues SpaceNut brings up.

2) Perhaps, but then again this might be at odds with your point at #4, about Mars not being a glorified US base, although realistically it is true that Mars would likely have closer ties to the US than most other Earth countries. In any case I'd think transaction fees would be at the discretion of the card issuers.

3)Agreed.

4)I agree, once any particular expedience in using the US Dollar fades off.

5)Agreed.


The Earth is the cradle of the mind, but one cannot live in a cradle forever. -Paraphrased from Tsiolkovsky

Offline

#11 2017-12-03 02:52:00

elderflower
Member
Registered: 2016-06-19
Posts: 558

Re: A Mars currency

Given NASA's progress towards manned landings the first Mars base may turn out to be Chinese, Russian or even Indian.
Alternatively It may belong to whichever state decides to cough up Musk's transport charges, or no state if privately funded.

Offline

#12 2017-12-03 15:11:09

IanM
Member
From: Chicago
Registered: 2015-12-14
Posts: 174

Re: A Mars currency

elderflower wrote:

Given NASA's progress towards manned landings the first Mars base may turn out to be Chinese, Russian or even Indian.
Alternatively It may belong to whichever state decides to cough up Musk's transport charges, or no state if privately funded.

I still think it would be American-based if it's SpaceX, given how Musk has constantly praised the US, etc.


The Earth is the cradle of the mind, but one cannot live in a cradle forever. -Paraphrased from Tsiolkovsky

Offline

#13 2017-12-03 16:05:06

louis
Member
From: UK
Registered: 2008-03-24
Posts: 2,681

Re: A Mars currency

Yes, it would set him back 5 years if he had to relocate. He is going to stick with the USA as along as the USA does not actively frustrate his space programme.

IanM wrote:
elderflower wrote:

Given NASA's progress towards manned landings the first Mars base may turn out to be Chinese, Russian or even Indian.
Alternatively It may belong to whichever state decides to cough up Musk's transport charges, or no state if privately funded.

I still think it would be American-based if it's SpaceX, given how Musk has constantly praised the US, etc.


Let's Go to Mars...Google on: Fast Track to Mars blogspot.com

Offline

Board footer

Powered by FluxBB