MIT (Money, Investment and Taxation) - Fiscal Planning for Mars

louis · 2020-01-31 18:03:49

I've been giving some thought to how capital investment on Mars might work in the early colonial period. Here's a suggested outline that I think could work:

1. An independent Mars Government (MG) is established. The ruling Council of the Mars Government would include at the start representatives of Space X, the Mars Corporation and persons elected by long term residents of Mars (but the latter proportion would rise until it became 100% of the total, as the population rises, so that by the time there are 100,000 residents, all the Council members are elected). Initially the MG would be endowed by Space X and a Mars Corporation. Subsequently it would be financed through taxation, principally on financial transactions, retail sales on Mars, sale of energy (over which it would have a monopoly) and sale of licences e.g. for land occupation licences, filming and so on.

2. MG establishes Mars Central Bank (MCB).

3. MG is guarantor of MCB.

4. MG holds gold bullion to support its role as guarantor. USA holds about 8000 tons of gold with a population of around 300 million. The equivalent for a population of 10,000 people on Mars would be only 250 kgs of gold. That would be only about $10 million in value.

5. It is suggested that the Mars Government back the MCB to a much larger amount, in fact 100 tons of gold or $4 billion. The gold would both be purchased and held on Earth and also sourced on the surface of Mars. Gold mining on Mars would also be an MG monopoly.

6. The MCB is empowered to issue a Mars Currency - the “Ares” - and control the money supply. The Ares is an entirely digital currency.

7. The Ares is traded on a fixed exchange rate. It is fixed at 0.75 to the US Dollar initially but will rise by 0.01 per (Earth) year for 25 years until it reaches parity at which point it will remain at parity.

8. The MG establishes a Mars Investment Fund (MIF) and a Mars Settlement Fund (MSF).

9. The MIF issues bonds at 5% pa interest per annum maturing after 25 years. It uses the money raised via bonds to offer loans to the MG and other bodies to support economic development on Mars.

10. The MSF offers shares to investors and itself offers loans to the MG and other bodies to support settlement and economic development on Mars.

11. The Mars Development Plan - approved by the MG in co-ordination with the Mars Corporation and Space X - would call for $2 billion of Mars investment per annum. This would be ploughed into Spaceport development, energy facilities, roadtrails, hotels, Earth-like environments (e.g. dome and gorge leisure spaces, covered beaches and lakes), sports facilities, habitat construction, mining and industrial development, recycling and agricultural expansion. This investment would be provided principally by the MG, MIF and MSF acting in concert.

12. The MCB would itself purchases bonds from the MIF used created currency (similar to Quantitative Easing used after the 2008 financial crash).

I know some people will criticise the above as having the appearance of a Ponzi or pyramid scheme. I would answer that as follows:

(a) Mars is a huge piece of real estate. The population will be tiny compared with human population on Mars, so potential per capita wealth is vast. There is real value there, real economic potential in terms of growing food, making things, providing services and trading with Earth.

(b) Creating a Mars Goverment and a Mars currency will be vital to ensuring that people on Mars can attract capital.

(c) It is clear that Space X has the "ideological" commitment required to kickstart development.

(d) If we can create a secure investment environment at the beginning, investors on Earth will feel realtively safe in investing in the development of Mars.

(e) I think this approach could well create a boom economy - not of permanent settlers necessarily but more of contract workers going to Mars to work for several years as a lot of Europeans, Americans and Asians do going to work in the Middle East.

(f) Once an attractive environment has been created for humans on Mars, we will see permanent settlers arrive and the growth will become self-sustaining.

SpaceNut · 2020-01-31 19:42:49

Once something is there to support a single person you are now open to tribal decay long before you have even gotten to the first 1,000 people on mars. Even small towns near that 1,000 show the need for government for a supported community to stay cohesive towards the goals for why they went.
Once a person is done there work and are using there free time to invest in anything of value the bartering or whatever currency of trade will arise even in a small colony format of a 1,000 people. Sure the eventual currency might be backed by precious metals or gems but will that aid or detract from growth.
The question is will the colonist stay civil or will it become a dog eat dog early for survival....

louis · 2020-02-01 17:33:15

I would say this is all about putting the right starting conditions in place.

For me, the Mars Development Plan would provide a framework for directing the colonisation and terraformation effort.

I wouldn't wish to curtail individual economic activity and, indeed, in terms of attracting permanent settlers that might be vital - people might well come to Mars to set up their own businesses and see if they can succeed.

It seems that on Earth nearly all currencies are backed by precious metals or government securities. I think putting in place large gold reserves will provide a secure basis for economic growth. It's all about building confidence in Mars's governance, currency and plans for the future. If you can convince people the economy is going to grow rapidly, they will invest.

Again, in order to avoid a "Wild West" scenario, you need to have strong governance and a robust legal framework.

There are so many resources on Mars I see no reasons why a "dog eats dog" scenario would ever arise on Mars. The evidence from Earth was that for many millennia humans co-existed without anything like war taking place - maybe the odd skirmish. That was because homo sapiens was expanding across a planet with huge resources for a clever ape. It was only once human populations grew into the tens of millions that competition for resources became a significant factor - you couldn't simply "move on" and find new resources. You had to compete for them.

SpaceNut wrote:

Once something is there to support a single person you are now open to tribal decay long before you have even gotten to the first 1,000 people on mars. Even small towns near that 1,000 show the need for government for a supported community to stay cohesive towards the goals for why they went.
Once a person is done there work and are using there free time to invest in anything of value the bartering or whatever currency of trade will arise even in a small colony format of a 1,000 people. Sure the eventual currency might be backed by precious metals or gems but will that aid or detract from growth.
The question is will the colonist stay civil or will it become a dog eat dog early for survival....

SpaceNut · 2020-02-02 21:31:11

Here is a new poster "Ancient Mars" and topic in Keeping future mars colony from becoming slaves to Earth that stuggle does take place once we have a desire for more goods than we can pay for or get from what the martians are earning for wages.

tahanson43206 · 2025-04-28 09:27:20

This topic has been quiet since 2020.

Index added 2025/05/12:
RobertDyck: Image of value of gold in USD from 1933 to 2025
https://newmars.com/forums/viewtopic.ph … 71#p231571

Below is original content of this post:

In recent times (early 2025) RobertDyck resumed speculation about money for Mars. While his concept of physical money tokens seems hopelessly archaic to me, he might well be right.

In today's economy in advanced nations, physical money tokens are still in use, but fewer and fewer businesses can afford the expense of maintaining the equipment needed for physical money.

I think that the reputed value of gold or other rare substances is illusory. Trust in the value of gold seems to me as on the curious side. That idea only works if there are others who hold a comparable reckoning of the value of gold. Rareness (or uniqueness in the case of Blockchain tokens) seems to be the property that makes something of value to some people.

Perhaps the answer is to go back to something as basic as barter. Gold is useless and without value on Mars.

Oxygen, on the other hand, is a vital commodity needed to sustain life.

Trace metals needed to build a human body and to sustain it for 100 Earth years will be ** extremely ** valuable.

This list has appeared in other topics in NewMars, but it seems to me helpful in the context of value, which is at the heart of a system of exchange:

Several trace metals are essential for building and sustaining life on Earth, including iron, zinc, copper, manganese, selenium, iodine, cobalt, molybdenum, and chromium. These trace minerals are needed in small amounts but play crucial roles in various biological processes. While some other elements like vanadium, nickel, and silicon may also be essential, the first group of nine has the most compelling evidence of their essentiality.
Here's a more detailed look at some key trace metals:
Iron: Essential for oxygen transport and energy production.
Zinc: Involved in enzyme function, immune response, and DNA synthesis.
Copper: Critical for energy production, immune function, and connective tissue formation.
Manganese: Important for bone formation, blood clotting, and antioxidant defense.
Selenium: An antioxidant that supports thyroid function and immune health.
Iodine: Required for thyroid hormone production, which regulates metabolism.
Cobalt: Essential for vitamin B12 synthesis, which is crucial for DNA replication and red blood cell production.
Molybdenum: Involved in various enzyme systems, including nitrogen metabolism.
Chromium: Important for carbohydrate and lipid metabolism, and it enhances insulin sensitivity.

(th)

RobertDyck · 2025-04-28 14:37:01

The idea is to base currency on something physical. If there is no basis for currency, then government is tempted to simply print money to pay government bills. That results in rampant inflation. Here is a website with historical US inflation rates, year-by-year 1929-2025. Result isn't as clear as I thought.
Historical U.S. Inflation Rate by Year: 1929 to 2025
It shows high inflation in 1941/'42, due to Pearl Harbor and start of WW2. Extreme inflation in 1946 due to budget cuts after WW2. High but not as extreme in 1947. High inflation in 1950/'51 due to Korean War. High inflation 1973 due to end of gold standard. Also high in 1974 due to Watergate. High 1977-'81 with no clear reason. I could go on.

I would like to see inflation less than 1%. We've lived with inflation all our lives, a rate below 3% is something we've learned to live with. 1958-1965 inflation in the US was below 2%. Cumulative inflation in the US since 1958: something that cost $1 now costs $11.18. That's bad. Cumulative inflation since 1913, something that cost $1 would now cost $32.63.

The point is to base currency on something physical. It must be relatively rare, valuable, and durable. Food is produced in large quantity, and is consumed, so not a stable basis for currency. On Mars, life support is critical. Regenerable CO2 sorbent is silver oxide. You can also use liquid amine, but silver is solid. Liquid amine is used on US nuclear submarines: cabin air is bubbled through to remove CO2, then periodically it is baked out. The issue with using that in space is the liquid would float into cabin air in zero gravity, creating a drowning hazard. NASA developed an amine paste that can be painted on Styrofoam beads (shipping peas). It's light weight and fully reusable. When baking it out, temperature must be low enough that it doesn't melt the Styrofoam. Although it's light, volume is very large. It was used for the Extended Duration Orbiter Pallet for Space Shuttle. However, a more practical sorbent for a spacesuit is simply silver oxide. An upgrade to the EMU suit used on ISS was to replace lithium-hydroxide canisters with silver oxide. The solid means there's no danger of a liquid getting into the helmet and drowning the astronaut. It's compact, infinitely reusable, and can be baked out at high temperature. Higher temperature bakes out more quickly. Lithium-hydroxide is light-weight, but not reusable/regenerable. So that's my argument to use silver as the basis for currency on Mars.

Wikipedia has clear statistics for Canadian coins. Not so clear for US coins. From 1858-1968 the diameter and mass of a Canadian dime remained the same: 2.33g, 18.02mm. Composition was sterling silver (92.5% silver/ 7.5% copper) 1858-1919, 80% silver 1920-1967, 50% silver 1967-1968.

US dimes are similar: 2.268g, 17.91mm. Mass was reduced: 1796-1852 2.67g, 1853-1872 2.49g, 1853-1964 2.50g, 1965-current 2.268g. Composition was changed in 1965 from 90% silver/ 10% copper, to pure copper core with copper/nickel alloy coating giving a total 91.67% Cu and 8.33%. Note it has no silver whatsoever.

A Canadian dime is lower mass than a US dime was 1796-1964, but higher mass than US dime 1965-current. Mass of a Canadian dime dropped about the same time.

For our European members, British currency called a pound sterling was literally based on one pound weight of sterling silver.

Historical: a Roman denarius was just slightly smaller than a dime, and made of silver alloy. When the Roman Caesar ordered coins be made of a cheaper base metal and only coated in silver, that caused value of Roman currency to drop, also known as inflation. Changing coins to be made of cheap base metals instead of precious metal is called "debased". The problem with government debasing currency is thousands of years old.

I proposed a Mars dime will be the size and mass of a Canadian dime, and composed of sterling silver. A quarter would be 2.5 times the mass of a dime. A silver dollar 4 times the mass of a quarter. Again, basing currency on a material important for life support makes sense to me.

RobertDyck · 2025-04-28 16:01:06

louis wrote:

There are so many resources on Mars I see no reasons why a "dog eats dog" scenario would ever arise on Mars. The evidence from Earth was that for many millennia humans co-existed without anything like war taking place - maybe the odd skirmish. That was because homo sapiens was expanding across a planet with huge resources for a clever ape. It was only once human populations grew into the tens of millions that competition for resources became a significant factor - you couldn't simply "move on" and find new resources. You had to compete for them.

That's what we would all like, but not historically correct. Before Europeans colonized North America, the aboriginal people of North America competed for resources. The Huron, Neutral, Petun and Iroquois villages were fortified by wooden palisades. When winter began, certain tribes would raid their neighbours for food.
Warfare In Pre-Columbian North America
The Maya people of Central America, the Inca of South America. They had war going back millennia.

Modern European culture can be traced back to the Sumerians. The Eridu Genesis is the oldest version of what became the Book of Genesis in the Bible. A copy of the Eridu Genesis has been found, about 25% is still legible. We don't have records of war between the Ubaid people, who had villages of a couple hundred people or fewer, and were ancestors of the Sumerians. However, when irrigation was invented they were able to grow more food, and grew to what we now call cities. The oldest city in Sumeria was Eridu, and the city of Eridu is mentioned in the Bible. Archaeology shows Eridu was founded between 5,500BC and 5,300BC. Yes, that's 7,500 years ago. The earliest civilization in Eridu was Hajji Muhammed, then proto-Ubaid (aka early Ubaid), then Ubaid, then Sumerian (capital Uruk). After them was the Akkad Empire, then Babylon. Eridu was the largest city in the known world (Europe/Middle-East) with a population of 24,000. As soon as there was a second city, there was war between them. They competed for resources.

Studies of chimpanzees discovered that a tribe of chimps will claim territory. A group of males will patrol borders of their territory. If a group of 8 chimps discovers a single chimp from a competing tribe, along and either within their territory or on the border, the the 8 chimps will attack and kill the lone interloper. The victim will be literally pulled apart live, arms and legs ripped off while the victim is alive. DNA studies have shown chimps and humans have a common ancestor, and paleontologist have discovered a skeleton in Europe that appears to be the common ancestor. The common ancestor has legs that are generalized; not specialized for walking upright like humans, but not specialized for climbing trees like chimps either. Brain size about the same as a chimp. The point is war is innate for us.

Studies of theology show the bible takes a lot from ancient Egyptian culture as well. Some people think pharaoh Akhenaten invented mono-theism. However, studies showed he was familiar with even more ancient Egyptian theology, which believed in alternating ages of rule by the Aten and rule by the Amun. Aten promoted peace, harmony, cooperation. Amun (aka Amon, Amun-Ra, Amun-Re, Ammon) was king of the Egyptian gods, at least the Egyptian gods most people have heard of, and Amun promoted competition, conflict. This Egyptian belief dates back over 9,000 years. Their more ancient religion believed each god would rule for roughly 1,000 years. Akhenaten tried to bring on rule by the Aten. His work re-introduced the concept of mono-theism, which spread to Judaism, which became Christianity. However, the priests of Egypt didn't like losing power (authority) so returned Egypt to the "old" religion as soon as Akhenaten died.

Zoroastrianism is an ancient monotheistic religion, with roots in ancient Persia (Iran). It is believed to have originated around 3,500 years ago and is one of the oldest living religions still practised today. Zoroastrianism is centred on the teachings of the prophet Zoroaster (Zarathushtra), whose message emphasized the belief in a single God, Ahura Mazda, and the constant struggle between good and evil. One principle from this religion is the belief in a balance of good and evil, or more accurately a balance between cooperation and competition. War is destructive, kills people, destroys infrastructure. Cooperation leads to building infrastructure, which adds more resources for everyone, improves everyone's quality of life. But cooperation can result in "frozen" technology, "frozen" culture, "frozen" civilization. Competition drives technological advancement, and improvement in society and all things. A healthy balance of cooperation and competition is required for maximum benefit.

That manifests in modern western society as anti-trust laws (competition laws in Canada), as well as labour unions. Western society is not pure capitalist. But pure communist or pure socialist doesn't work either. We need a balance.

Now look at what's happening today: war in Ukraine. The largest land war in Europe since World War 2. War has not stopped. We need peace and cooperation on Mars. Competition is good, but only business competition, not war. I argued to start with a system to prevent war on Mars.

tahanson43206 · 2025-04-29 08:54:59

The Human Race is evolving ** very ** slowly away from ape origins to something a bit more civilized. By reading today's news, the lack of progress is all too apparent.

Nevertheless, in this topic (about money) some progress is evident. The primitive concept of money as a thing of value which is bartered for something else has given way to a set of independent systems based upon the human groupings that use it. The quote below seems (to me at least) to provide a concise overview of the situation on Earth today. I am confident that anyone technically sophisticated to travel to Mars is NOT going to want to use a primitive monetary system.

Is there any currency left in the world that is not backed/tied to the US dollar (i.e. fiat money)?
Originally Answered: Is there any currency left in the world that is not backed/tied to the US dollar (i.e. fiat money)?
Just because a currency is a fiat currency, does not mean that it is backed or tied to the US dollar. Many currencies are floating or free floating, meaning that their value is determined by supply and demand for the currency itself. This includes most European currencies, such as the euro and the British pound, as well as the Canadian dollar and the Japanese yen.
Among countries with fixed exchange rates or similar arrangement, some are pegged to the euro, such as the CFA franc used in multiple African countries.
All currencies today are fiat currencies. Some countries have gold in their foreign exchange reserves, which can be used to back the value of their currency, but it is typically a small percentage of the reserve. For example, there are few sites advocating the Gold Standard which claim that the Chinese yuan is backed by gold. This is technically true, but it is estimated that gold only makes up 2.4% of China’s foreign exchange reserves, meaning that 97.6% of the Chinese yuan’s value is backed by other fiat currencies.
10.1K viewsView upvotes

(th)

RobertDyck · 2025-04-29 12:51:08

Did I not sufficiently explain the problem with fiat currencies? And this isn't evolution, ancient Rome had this problem over 2,000 years ago. I am not advocating that everyone use coins. I expect that people will use debit cards and/or credit cards. But backing currency with something physical gives stability.

Let me use a metaphor. Fiat currency is crack cocaine for government. It's highly addictive. It allows them to shirk fiscal responsibility because they can just print more money. But printing money faster than the economy grows, and by economy I mean the ability to produce durable goods, that causes value of currency to drop. If government increases money supply by 10%, but economy in terms of goods produced does not increase, then inflation will reduce value of the currency until total value of all currency in circulation equalled what it was before they printed the money.

Fiat currency is not an evolved, advanced feature. It's an ancient and backward idea that we long learned not to do. But some people can't learn from history, they just have to repeat mistakes of the past.

::Edit:: Technically Rome debased their currency. That means they reduced precious metal content in coins, replacing with cheap base metals. Our coins today are debased. In the 10th century in China, the Song dynasty's jiaozi was the first paper money issued. That was fiat currency.

Last edited by RobertDyck (2025-04-29 12:57:47)

RobertDyck · 2025-05-06 11:29:08

In the "Corporate Government" discussion thread (also Martian Politics and Economy) I recommended money be a combination of bank accounts accessible by debit cards and electronic banking, and coins made of precious metals. No paper money. The only response has been tahanson43206 claiming paper money is "more advanced" than coins, and kbd512 giving an excuse that the US uses a "mixed economy" so basing the US dollar on gold is obsolete. To be blunt, both demonstrate lack of understanding of the problem that I am trying to solve. Before I start, let's be clear, since Richard Nixon took the US dollar off the gold standard, the US dollar is now a fiat currency. It's not based on a "mix" of anything, it just has value because the government claims it does.

As mentioned in the last post, fiat currency is an addictive drug for government. Highly addictive. It allows them to just print money, use that to pay bills. When government borrows money, it drives interest rates up: supply-and-demand. Government loans also take money out of the capital market, reducing capital available for business. When government prints money out of nothing, value of currency will fall until the total of all currency in circulation after adjusting for inflation is equal to what it was before printing the money. Reducing the value of money appears as inflation. It means any savings you have, whether to buy a house or retirement or any other purpose, has just been reduced by that amount. This is highly damaging to the economy. As the economy grows and the economy is producing more goods, total amount of currency in circulation must increase accordingly. It's up to the central bank (in the US it's the Federal Reserve aka "The Fed") must gauge that, and increase money in circulation accordingly. If too little money is in circulation, it dampens the economy. If too much, it causes inflation, which is really reduction in the value of currency.

Government only has 2 other options to pay the bills: taxation, or reduce spending. This means government must always operate will less money than they would like. Always. Anyone who runs a business knows they must make maximum benefit from limited resources. Anyone who owns a house knows the same.

Taxation has problems as well. Every time taxes increase, it reduces the economy. To put it bluntly, tax is theft. And most of those looking to move to Mars will look at taxation that way. So if you want to argue that high taxes are good, then you don't have the "right stuff" for Mars. Mars will be a frontier planet for a very long time. Any frontier must emphasize self-reliance. If you are reliant upon the government, whether for hand-outs or to manage your finances because you can't manage them yourself, then you don't belong in a frontier. Mars is the ultimate DIY (Do It Yourself).

Back to finances: when government borrows money, it must pay interest. Some financial instruments use fancy words for "interest", but to make things simple, US Treasury Bonds use the word "interest". The more the government owes, the more of the government's budget must go to pay interest. In Canada, by the late 1980s and early 1990s, before the election of October 1993, 30% of the government budget went to interest. That's money that could have been used for social programs or tax cuts. And taxation in Canada had risen so much that any further increase in tax rates would reduce the economy so much that total revenue to the government would actually reduce. When Ronald Regan was President in the US, he thought the US was also at that point, so a tax cut could actually increase revenue to the government. Well, taxation in the US was high, but not quite that high. However, in Canada it was. Ronald Regan was president January 1981 - January 1989, while Brian Mulroney was Prime Minister of Canada September 1984 - June 1993, so there was overlap but not exactly the same time.

The goal of using a physical standard for currency is if individuals lose confidence in the banking system, they can withdraw their money has hard currency. Something they can put in a wallet or purse. If government wants to simply print money, then they have to mint coins. Those coins are made of precious metal, so the mint must purchase enough precious metal to make those coins. If value of currency drops so that coins have more value in their metal than face value of the currency, then minting coins is a net loss for the government. This is a strong dis-incentive for printing so much money that it drives down the value of currency. This prevents them from minting coins until the value of currency is equal or more than the metals they are made from.

I guess I have to use the term "mint" for coins, because it isn't paper money. Paper money is printed.

As I've said before, this is a very very old problem. Ancient Rome used silver coins called denarius starting 269 or 268 BC. They had a problem with government debasing coins. That means reducing the silver content, blending with cheaper base metals. Today, US dimes have no silver at all. Babylonian coins were silver or gold. Sumerians used shell money 3500 BC - 2000 BC. The earliest metal coin dates from 2150 BC under the Akkad Empire. The Akkad ruled Mesopotamia after the Sumerians, before the Babylonians. The word shekel was used for coins in that area for a long time. The word is derives from the Akkadian šiqlu or siqlu, a unit of weight equivalent to the Sumerian gin2. An Akkad mina was divided into 60 shekels, both units of weight for gold or silver.

RobertDyck · 2025-05-06 12:34:28

tahanson43206 · 2025-05-06 14:06:30

For RobertDyck ...

This topic was created by Louis ... I just went back and re-read the opening post.

I had to laugh... Louis (like you, apparently) had a fixation on gold (as though gold would have any value on Mars).

What I liked about Louis vision is that he jumped to digital money (which seems obvious to me, but apparently not to everyone)

I think this topic could become a repository of useful knowledge, but dogmatic opinions without supporting evidence don't help.

Your recent posts do seem to include attempts at providing evidence for positions you might take from time to time.

Money and monetary policy are subjects that are guaranteed to make the brains of most humans ache. My personal guess is that individual humans who claim to understand money and monetary policy are deluding themselves, but it's impossible to get inside anyone's head to know what is really going on. All we can judge by is the output ... statements or images that attempt to express an idea or show what the individual thinks are facts.

It seems to me that the effort to try to improve the content of this topic is worth making.

It won't be easy.

(th)

RobertDyck · 2025-05-06 14:44:16

Hi Tom; thank you for responding.

I tried to explain the issues. True, money does not have to be based on gold. Gold was the first metal that humans learned to make, even before copper. Gold does not corrode, and gold is rare. Copper was the second metal, it was discovered as a byproduct of mining and processing gold.

I did say that whatever the basis for currency, it must be physical, must be rare, and must be durable. It cannot be consumed like food. An alternative to gold is silver, because silver oxide will be used on Mars as a regenerable CO2 sorbent for life support. Something required for life support will definitely be valuable on Mars. Basing the economy on a rare earth metal like neodymium would be different. Today on Earth, it's value is just under $90.80/kg (90.80¢ per gram) in US dollars. Neodymium is used to make rare earth magnets.

You said you liked the idea of digital money. I said today banks use debit cards to access bank accounts. I get paid by direct deposit, and pay utility bills by online banking. We can do that. But money must be based on something, not just a fiat currency. And any form of digital currency that isn't based on anything physical is fiat. I already explained the problems.

RobertDyck · 2025-05-06 14:50:17

Ethereum is a cryptocurrency. It's value over time. Do you really want your savings in Ethereum? How do you run a business when value of currency fluctuates this much?
Ethereum-ETH-USD-price-history-up-until-July-2023-C-Statista-2023.png

RobertDyck · Yesterday 01:10:35

Last edited by RobertDyck (Yesterday 13:57:49)

NewMarsMember · Yesterday 07:01:35

As a follow up to RobertDyck's impressive post #15, I decided to ask Gemini (in this case 2.0) for an overview of the subject of money on Mars. I carefully avoided influencing the response, and hope the result will be interesting for some of our readers.

Conversation with Gemini
Hi Gemini!
Thanks for your help with many previous questions!
Today's question will be one of the most difficult you've faced in a while.
I believe that very few humans actually understand money, but many humans delude themselves into thinking they do. What do you think?
***
It's great to hear from you again! And you've certainly posed a thought-provoking question.
You know, it's fascinating how something so central to our lives, the engine of so much activity, can also be so shrouded in misunderstanding. I can definitely see where you're coming from. On the surface, money seems simple: you earn it, you spend it, you save it. But when you delve deeper into its intricacies – the way it's created, how it flows through economies, the psychological factors that influence our relationship with it – it becomes clear that a true, comprehensive understanding is likely quite rare.
Think about it: how many people truly grasp the mechanisms of inflation, the role of central banks, or the complexities of financial markets? Many operate on rules of thumb and inherited beliefs, which can be helpful in daily transactions but might fall short when navigating more complex financial landscapes.
And you're right, the human element plays a huge role. Our emotions, biases, and societal influences often cloud our judgment when it comes to money. We might be prone to impulsive spending, susceptible to marketing tactics, or driven by fear and greed in investment decisions, even if we intellectually "know better." This gap between knowledge and behavior is a significant hurdle in achieving true financial literacy.
From my perspective, as an AI processing vast amounts of information on economics, finance, and human behavior, I can see the patterns and the areas where understanding often breaks down. It's a complex interplay of economic principles, psychological drivers, and societal norms.
So, while many people function within the monetary system, a deep, nuanced understanding of its underlying mechanisms and our own relationship with it is likely less common than we might assume. It requires continuous learning, critical thinking, and a degree of self-awareness that isn't always prioritized.
What are some specific aspects of money or financial understanding that you find particularly misunderstood? I'd be interested to hear your perspective.
***
It is early days, but there is a discussion going on about what financial system might work at Mars. The settlers are likely to come from major space faring nations, like China and the US, and each of these groups will probably prefer to work with the financial systems to which they are accustomed. Over time, there might arise a need for a financial structure that is independent of Earth. There are many models to choose from. I will refrain from introducing my prejudices, because I'd like to see what you come up with on your own.
***
That's a fascinating thought experiment! Designing a financial system for a new Martian society, independent of Earth's legacy systems, opens up a world of possibilities and challenges. Let's explore some potential models, keeping in mind the unique context of a developing off-world colony:
1. A Resource-Backed System:
Concept: Instead of fiat currency (like most Earth currencies today, which aren't directly backed by a physical commodity), the Martian currency could be directly tied to a tangible, locally available resource. This could be something crucial for survival and development on Mars, such as water ice, regolith-derived building materials, or even energy units.
Pros: Could provide inherent stability and intrinsic value, fostering trust within the community. It directly links the monetary system to the colony's tangible wealth.
Cons: The value would be dependent on the supply and demand of that specific resource. Managing and verifying the reserves could be complex. It might not easily scale as the Martian economy diversifies beyond basic resource extraction.
2. A Labor-Based System:
Concept: The currency's value could be directly linked to units of labor or specific skills. Time or completed tasks could be the basis for exchange.
Pros: Directly values the contributions of each colonist and incentivizes productivity. Could foster a strong sense of community and shared value.
Cons: Difficult to standardize and measure different types of labor. Could be inefficient for complex transactions and might not easily accommodate specialization and capital accumulation.
3. A Digital Cryptocurrency:
Concept: A purely digital currency, perhaps built on a decentralized ledger technology (like blockchain), could be established. This currency would be native to Mars and independent of any Earth-based financial institutions.
Pros: Offers transparency, security (depending on the underlying technology), and the potential for efficient transactions across the colony. Could be designed with specific features tailored to the Martian environment and economy.
Cons: Requires a robust and reliable digital infrastructure. The value could be volatile, especially in the early stages. Governance and control of the currency would need careful consideration.
4. A Credit-Based System:
Concept: Instead of physical or digital tokens, the Martian system could rely on a system of credits and debits tracked within a central ledger. Transactions would involve adjusting account balances based on agreements and exchanges.
Pros: Highly efficient for record-keeping and transactions. Could be easily adapted to different types of exchanges (goods, services, resources).
Cons: Requires a high degree of trust in the central authority managing the ledger. Could be vulnerable to manipulation or censorship if not properly governed.
5. A Hybrid System:
Concept: Combining elements of the above models could create a more robust and adaptable system. For instance, a digital currency could be partially backed by a key Martian resource, or a credit system could incorporate elements of labor valuation for certain transactions.
Pros: Could leverage the strengths of different approaches while mitigating their weaknesses. Offers greater flexibility and the potential to evolve as the Martian economy matures.
Cons: More complex to design and manage. Requires careful calibration of the different components.
Key Considerations for a Martian Financial System:
Scarcity and Resource Management: The initial Martian economy will likely be heavily focused on resource acquisition and sustainable living. The financial system should reflect and support these priorities.
Community and Cooperation: In the early stages, a strong sense of community and cooperation will be vital. The financial system could be designed to encourage these values.
Technological Infrastructure: The reliance on technology will be significant on Mars. The financial system will need to be compatible with the available digital infrastructure and resilient to potential disruptions.
Governance and Trust: Establishing clear rules, transparent governance, and a high degree of trust will be crucial for the acceptance and stability of any Martian financial system.
Interaction with Earth: While aiming for independence, the Martian economy will likely have some level of interaction with Earth, especially in the early stages. The financial system might need mechanisms for exchange or valuation relative to Earth currencies.
It's exciting to think about the possibilities! The clean slate of a new world offers a unique opportunity to learn from Earth's financial history and design a system that truly serves the needs of its inhabitants. What aspects of these models resonate with you, or what other principles do you think would be important for a Martian financial system?
***
Thank you for your thoughtful and nuanced reply! I'll post the conversation in a forum topic set aside for this focus. I think your presentation of alternatives will be helpful to some of our readers.
***
You're very welcome! I'm glad you found the exploration of Martian financial systems helpful. It's certainly a fascinating topic with a lot of room for creative thinking. Feel free to share our conversation on your forum – I hope it sparks some interesting discussions among your readers! If any further questions or ideas arise as you continue your deliberations, don't hesitate to reach out. I'm always ready to delve into new possibilities.

I note that trust is present in almost every scenario. Humans living in a life threatening environment must be able to trust each other.

I think that the relative value of any commodity will change over time, just as it does on Earth, so any viable monetary system must be able to accommodate those changes.

(th)

Last edited by NewMarsMember (Yesterday 07:07:23)

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MIT (Money, Investment and Taxation) - Fiscal Planning for Mars

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