God of Technology: Creating the Internet in Another World-Chapter 421: We Need to Get Credit Currency Going

"I’ve already sent the dragons documents on how the futures market should operate. Actually, it’s pretty similar to the stock exchange and bond exchange, so they’ll pick it up fast. No need to overthink it."

Ren said with a laugh, "Honestly, compared to that, getting them to set up a gold trading market and paper currency is way harder."

"Gold trading market? Paper currency?" The Goddess of Magic was somewhat confused. "You’re really going to do that? It wasn’t just talk to fool those dragons?"

"Why would I fool the dragons? Everything I told them was real."

Ren was actually a bit surprised. "As magic-tech industrialization develops, there won’t be enough gold, silver, and copper coins. Eventually it’ll limit industrial development."

"Why is magic-tech industry developing so fast right now? It’s because tons of nobles have been hoarding more and more gold, silver, and copper coins in their castles for generations."

"For these nobles, storing more precious metal currency like gold, silver, and copper is hugely valuable, because these precious metals are super rare, which means they’ll always hold value."

"You could say that aside from buying more land, for traditional nobles, these precious metal currencies are the most valuable thing."

"Earlier, the appearance of high-yield grain varieties caused land prices to drop. Getting back the cost of land through growing grain has become pretty much impossible for them."

"So they’ll choose other investment methods, like putting money into the stock exchange and bond exchange."

"Or they’ll invest in workshops and factories and stuff."

"At that point, all the gold, silver, and copper coins—all those precious metal currencies—in their warehouses will all come out. So right now, there’s still quite a bit of precious metal currency on the market."

"When there’s more currency, prices naturally go up, and wages need to be higher too. Actually, this isn’t a bad thing. Money that’s circulating is real money—how can money sitting in warehouses count as money?"

"But soon you’ll find that currency really isn’t enough. Prices go up, wages go up, costs go up, prices keep going up—it’s a cycle."

"The only variable here is that magic-tech industrial production is creating more stuff too, so naturally the increased production will stabilize prices a bit. But how long can that last?"

"In short, it’s a super complex process, and during this process, the currency circulating on the market will seem more and more insufficient."

"But gold, silver, and other precious metals are ultimately limited in supply, and they’re incredibly difficult to produce. Even a highly capable race like the dragons can’t mine them infinitely."

"Let’s say there’s only one pound of gold in this world. Then the total currency supply from gold coins is one pound. But social wealth keeps growing."

"Let’s say right now all the wealth in the world adds up to one pound of gold. What about ten years from now? In previous eras, actually not much would change. After all, there was only so much farmland, only so much food produced, and the population barely changed. But the future is different."

"Magic-tech industrialization means people are producing more and more stuff. How could social wealth not increase? What if social wealth exceeds the value of one pound of gold?" 𝙛𝓻𝒆𝓮𝒘𝙚𝙗𝒏𝙤𝙫𝓮𝒍.𝓬𝒐𝙢

"Either gold prices start skyrocketing and we enter that vicious cycle I mentioned—rich people hoard gold at home and sit back counting money, while poor people can’t do anything about rising prices, and eventually the whole society collapses."

"Or we make currency separate from precious metals like gold, silver, and copper. We make currency credit-based."

"In simple terms, we make currency pegged to something else. This thing must be needed by most people, and this thing must be able to grow. An equivalent amount of currency can always buy an equivalent amount of this thing. As this thing keeps increasing, the total currency supply naturally keeps increasing too."

"This way, we can avoid the earlier problems. The paper currency I’m having the dragons issue follows this logic."

The Goddess of Magic listened in a daze. There were so many concepts appearing for the first time, so many terms appearing for the first time.

It was really difficult to understand. She spent a long time before she roughly understood what Ren meant.

"I think I get what you’re trying to say, but I still have one question. You said credit currency must have something as an anchor to peg to, so what’s the dragons’ anchor?"

The Goddess of Magic asked with some curiosity, "This anchor must be able to keep growing and must be needed by most people. It’s kind of mind-blowing."

"Actually, my first thought was magic power. As magic-tech industry develops, magic power is becoming more and more important. If we could manage and supply all the magic power in the world in a coordinated way, then magic power could totally become the anchor."

Ren said with a smile.

"First thought? So you have other ideas? Or are you saying you’ve already given up on the magic power idea?"

The Goddess of Magic was slightly stunned after hearing that Ren’s first idea was actually magic power.

But thinking carefully about it, magic power did seem like it could potentially work as this anchor.

But there was one problem—magic power was everywhere, everyone could use it, and you just needed to build a self-charging magic array to use it more conveniently.

In that situation, using it as currency seemed a bit difficult.

You couldn’t possibly restrict all humans from using self-charging magic arrays and only let the dragons distribute it, right?

If you did that, magic-tech industry development would be limited.

Unless this restriction was managed by her, the Goddess of Magic, letting everyone access it fairly. Then this paper currency shouldn’t be issued by the dragons—it should be issued by the Goddess of Magic.

Similar to the carbon trading market in Ren’s previous life—each country’s carbon emissions were limited. Excess could be sold to countries that didn’t have enough, and countries without enough could buy from countries with excess.

If the Goddess of Magic issued this paper currency, the effect would probably be like that.

In Ren’s view, maybe this could be done in the future, when magic-tech industrialization was basically complete and the era was entering the next phase.

But right now, magic-tech industrialization had just started. If they used this method, it would only limit industrial progress.

So this credit currency definitely needed the dragons to find another anchor and issue it themselves.

So what was suitable to be this anchor?