Did the MBS corner the market on trade?

cthia wrote:First off, casinos are a closed system. A special case. Redemption is possible only at the casino and it is not an international form of currency.

The problem is that you aren't allowing for what is happening "behind the scenes" in bank transactions. Physical funds are always involved or banks can simply operate fraudulently by issuing their own credit chips. Only the Feds can do that. When these chips are purchased, physical funds will have to be moved, behind the scenes. The way I read it, they are appealing to slavers because there need not be a paper trail when using them. You simply need the PIN number.

Tlb, let me give you a more potent example. Let's say Hauptman decides to move to another system. Or, even better, let's say he becomes pissed off with his current bank (that's never happened to anyone), and decides he wants to withdraw all of his funds immediately. Well, surely he's not going to be foolish enough to try or risk physically carrying trillions of dollars out of the bank. Behind the scenes the bank is scurrying trying to gather trillions of dollars to send via armored vehicle to the bank of his choice.

An electronic credit chip could be the ticket. If he steps out of the bank and a pulser destroys the chip, who gets the trillions? If you say the bank, I can close my eyes and finger any bank with hit men waiting around the corner.

You are not considering that the Bank of Madrid is in essence a Federal Reserve Bank with the authority to produce money up to the limits of its reserve. And what would physical money look like in the future? Not paper or a metal disc, because that can be counterfeited; so something with a security protocol and a embedded amount that cannot be altered without destruction. I think you are confused because the Solarian currency is called a Credit, so you hear credit chip and think something like a credit card.

There is no need for a PIN with these things. Yes; if it is destroyed, then it cannot be redeemed; the same way that gold or silver certificates could not redeem gold or silver when destroyed. From the RFC quote earlier:

Each bank's credits are issued by that bank and backed by that bank's total reserves and deposits, and the League regulatory agencies with bank oversight are required to ensure that no bank issues a total number of credits in excess of its reserves and deposits. In the event that a bank should experience a failure anyway — as the result of a short-term run or for some other reason — the LDIA steps in to insure deposits and also to ensure that any legally issued credits of that institution will be honored. Obviously, the LDIA is legally required to maintain a fund which is huge in absolute terms although it is proportionately quite small in comparison to the overall League economy.

tlb wrote:On my trip to Scandinavia, I did not realize that the money changers would not deal with coins. Before getting on the train from Oslo to Stockholm, I bought a cup of coffee and a pastry and received coins back for my large bill. The food car on the train only took Swedish money, which I thought was strange since it ran back and forth between the two countries (my sister bought lunch, since she had both currencies). Finally when I flew home I changed my bills for Euros (plus a dollar or two thrown in to make up the difference) and I put the Norwegian coins into a can for UNICEF.

I don't know if you meant this some time ago or recently. But when I lived in Scandinavia 10 years ago, you just used debit/credit cards everywhere. Taxis, bars, restaurants, supermarket, cinema, public transportation vending machines (though minimum transaction required), etc. Reimbursing friends for shared expenses was as easy as sending your bank a text message, regardless of whether they had an account in the same bank or not. I managed to not have a single NOK bill in my wallet for two years, until I went to probably the only restaurant in all of Oslo that didn't take cards. "Kan jeg betale med kort?" (can I pay with a card?) was one of the first sentences I learnt, alongside "kan jeg få en pose?" (can I have a bag?) and "en øl, takk" (one beer, please [lit. "thank you", but "vær så snill" or "vennligst" aren't used that often, or so I understood as a foreigner]).

Everyone has cards, even if just simple bank debit cards. In fact, for the majority of banks, your card is also your ID and it's often the only ID a lot of people have, since they don't have driver's licences. Completely valid, legal ID, even; accepted even for entry into the US embassy when interviewing for visa. You also carry one thing when you go out at night (on the one night you can every month, since beer is terribly expensive).

Moving to the US after that felt like moving back to the 1980s, having to write cheques and send faxes in the first few months. And waiting for 2 days for the $5 I sent a friend to arrive.

tlb wrote:On my trip to Scandinavia, I did not realize that the money changers would not deal with coins. Before getting on the train from Oslo to Stockholm, I bought a cup of coffee and a pastry and received coins back for my large bill. The food car on the train only took Swedish money, which I thought was strange since it ran back and forth between the two countries (my sister bought lunch, since she had both currencies). Finally when I flew home I changed my bills for Euros (plus a dollar or two thrown in to make up the difference) and I put the Norwegian coins into a can for UNICEF.

ThinksMarkedly wrote:I don't know if you meant this some time ago or recently. But when I lived in Scandinavia 10 years ago, you just used debit/credit cards everywhere. Taxis, bars, restaurants, supermarket, cinema, public transportation vending machines (though minimum transaction required), etc. Reimbursing friends for shared expenses was as easy as sending your bank a text message, regardless of whether they had an account in the same bank or not. I managed to not have a single NOK bill in my wallet for two years, until I went to probably the only restaurant in all of Oslo that didn't take cards. "Kan jeg betale med kort?" (can I pay with a card?) was one of the first sentences I learnt, alongside "kan jeg få en pose?" (can I have a bag?) and "en øl, takk" (one beer, please [lit. "thank you", but "vær så snill" or "vennligst" aren't used that often, or so I understood as a foreigner]).

Everyone has cards, even if just simple bank debit cards. In fact, for the majority of banks, your card is also your ID and it's often the only ID a lot of people have, since they don't have driver's licences. Completely valid, legal ID, even; accepted even for entry into the US embassy when interviewing for visa. You also carry one thing when you go out at night (on the one night you can every month, since beer is terribly expensive).

Moving to the US after that felt like moving back to the 1980s, having to write cheques and send faxes in the first few months. And waiting for 2 days for the $5 I sent a friend to arrive.

March of last year I cruised up the Norwegian coast on a Hurtigruten ship (SS Finnmarken) and then spent several days in Oslo and Stockholm. I could have used my credit card, but did not want to do so. The mistake with the coins was for about thirty four dollars that went to UNICEF. I did use my card for the account on the ship.

MantiMerchie wrote:When travelling the chips are bit like the old Amex travellers checks. You get local currency back if the chip is worth more than the purchase price.

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Except that Traveler's Checks could be canceled if lost. These chips can't - because they're not linked to anybody (by design). There are lots of other ways to move money around such that it is moved bank to bank and then bank to retailer in traceable ways (though pre-planning is required for interstellar trip), and those kinds of transfers and linked to you at all times and so you don't have to worry about that money being lost, stolen, or destroyed.

But they also created these chips a cash, or bearer bond, equivalent for when secrecy and untracability (or the ability to make even large financial transaction with no bank involvement) is required. And because there's no bank involvement required to make a transaction with the chip, only if someone later wants to deposit it, the funds in a lot of ways really are on the physical chip. When you withdraw $50,000 dollars from a bank in exchange for a chip loaded with that amount the bank would have to remove that million dollars from their books immediately (just like they'd have to remove if it you withdrew $50,000 today in cash). They wouldn't get to hold those funds until that chip got redeemed; because it's not a debit card with a digital paper trail. It's specifically designed to be the equivalent of untracable cash. You wouldn't use these chips if you were worried about losing them and weren't worried about your purchase creating a data trail back to you.

So most people, most of the time, wouldn't be carrying large values of these chips - any more that most people today, most of the time, would be carrying around thousands of dollars of cash with them. Because most people, most of the time, don't need to hide their purchases and are understandably more worried about their cash being lost, stolen, or destroyed - and so they use payment methods with protection from loss or stealing and in exchange for the transactions being traceable.

Jonathan_S wrote: When you withdraw $50,000 dollars from a bank in exchange for a chip loaded with that amount the bank would have to remove that million dollars from their books immediately (just like they'd have to remove if it you withdrew $50,000 today in cash). They wouldn't get to hold those funds until that chip got redeemed; because it's not a debit card with a digital paper trail. It's specifically designed to be the equivalent of untracable cash.

A million or a hundred thousand (2 times fifty thousand)?

I personally think that the chip is the future of cash. So if you brought the chip to a bank and wanted money for it, they would just give you the chip back. The only time that would not be true; is if you brought in a chip for Solarian Credits and wanted Manticoran money instead, then they would have to give you a new set of chips based on a Manticoran Bank at the current exchange rate (less processing fees).

PS. It just occurred to me that would also occur if you brought in a large denomination chip and wanted the same amount in smaller denomination chips.

This would only be a problem if the chip was fraudulent, but the bank might be covered by deposit insurance depending on the laws.

cthia wrote:Tlb, let me give you a more potent example. Let's say Hauptman decides to move to another system. Or, even better, let's say he becomes pissed off with his current bank (that's never happened to anyone), and decides he wants to withdraw all of his funds immediately. Well, surely he's not going to be foolish enough to try or risk physically carrying trillions of dollars out of the bank. Behind the scenes the bank is scurrying trying to gather trillions of dollars to send via armored vehicle to the bank of his choice.

An electronic credit chip could be the ticket. If he steps out of the bank and a pulser destroys the chip, who gets the trillions? If you say the bank, I can close my eyes and finger any bank with hit men waiting around the corner.

You're right he wouldn't be foolish enough to physically carry trillions in cash and so he wouldn't use these untraceable chips to do that transfer. Because that would be physically carrying the trillions.

Instead he'd order the bank he was pulling the funds from to initiate a normal bank to bank transfer; sending the funds totally traceably to the new bank. As such he could, if he wanted, carry the cryptographically protected message to the new bank - because it would be useless to thieves if stolen, and could be reissued if destroyed. Also the bank could send as many duplicate copies of that cryptographically protected transfer as they liked; because it'd be a uniquely identifiable transfer and the receiving bank would know to just discard duplicates of that transaction. It'd probably be routine to send it on at least a couple different ships headed that way just to minimize the chance of it never being received. But even if every single copy was destroyed before reaching the other bank, that failure to be received could be established and a follow-up message canceling the transfer sent (so if the message did show up later the receiving bank would know it was now invalid and reject it). Once the issuing bank had confirmation that the transaction was void it would restore those funds, or being another transfer attempt.


For moving his bank accounts that kind of traceable, cancelable, transfer is far safer for Hauptman to than chips which are directly analogous to cash.

OTOH if he wanted to deniably slip the Audubon Ballroom a million bucks then, for that, the chips would be the correct option for him. He can far more easily afford to lose that much money (if the chips were stolen or destroyed) than he could afford to create proof he funded the terrorist wing of the Anti-slavery League.

Different methods, with different risk trade-offs, for different needs. Use each as appropriate.

So, they are electronic bearer bonds.

A reread of RFC's post also mentions bearer bonds.

cthia wrote:So, they are electronic bearer bonds.

A reread of RFC's post also mentions bearer bonds.

No, because they do not pay interest.

I continue to suggest that they are what passes for physical money in the Honorverse.

tlb wrote:

cthia wrote:So, they are electronic bearer bonds.

A reread of RFC's post also mentions bearer bonds.

No, because they do not pay interest.

I continue to suggest that they are what passes for physical money in the Honorverse.

They are akin to nonaccrual bearer bonds.

I can't accept that they are what passes as money in the HV just yet, because it opens a huge can of worms. They may pass for the HV equivalent of bearer bonds, of some sort. But not the standard currency itself.

Banks cannot print money as you seem to suggest. So I'm going to assume that you mean input money on the chip from their reserves held in the vault. I am also going to assume the data chips are blank until the banks issue them. Or robbing a bank would be very profitable if the large denomination chips are stolen.

There are more questions and concerns squirming around like little worms. Like, what does a "bank's reserve" actually mean in the HV, if you can simply print - "input" - currency on a chip.

RFC states that currency is based on something other than precious metals. Even the US is off the gold standard. I'd certainly like to know what that "something" is.

Very engaging posts everyone!

Jonathan_S wrote:

cthia wrote:House of Steel chronicles a lot of why Manticore leads the galaxy in trade. Of course, the MWJ allows it to do so. The MWJ forced Solarian transshipment companies to severely cut costs to compete. (If compete is what it's really doing after the dust settles.) As HoS agrees, no wonder the SL is pissed.

This is called "cornering the market." Which is illegal to do in the here and now, and certain steps are taken to prevent it.

Individual countries may have laws against cornering the market - but there aren't international laws against a country, or collusion of countries, cornering a market. See OPEC who for decades had effectively cornered the market on oil and still controls a very large part of it.

If Egypt wanted to charge enough for foreign container ships to go through the Suez canal they'd probably drive major container ports on each end that did little but transfer containers from foreign ships to Egyptian ones just to go down the canal. Because even with the cost and inefficiency of doing that, it's still better than paying to send those foreign ships all the way around Africa instead. That's basically how Manticore cornered the shipping market. For anything going through their wormhole network the fees for Manticoran hulls are enough lower than the fees for foreign hulls that it's cheaper to transfer the cargo to them even with League shippers handle the majority of the shipping on each end.

The League could raise prices on Manticore merchants making pick-ups or deliveries in League space. And that would trim back their operations some. But because Manticore sets the fees for Junction use (as well as use of some of the other wormholes they discovered that form the larger network) and because the orbital warehouses at the Beowulf junction are in Manticoran territorial space (they found it and Beowulf signed a treaty affirming that Manticore owns the area around that terminus) the League can't set fees there. So all that would happen is League shippers would pick up a bit more of the "last mile" shipping but the same volume of League to League goods would still flow through the Junction (because of the time savings) and for that hop the same overwhelming percentage would still travel on Manticoran hulls because it's cheaper to pay to transfer the cargo than it is to pay to take it yourself.

Actually there is. It's called war. Eisenhower effectively cornered the market on oil and it led to Pearl Harbor.

The MBS effectively cornered the market on trade and it eventually led to the biggest naval battle in HV history, after centuries of resentment were allowed to fester. And fester. And fester. While Manticorans live like fatted hogs.