“Welcome to Planetary Economics 102,” said the squat figure sitting in a comfortable chair and wearing starched blue shirt that matched his azure gills nicely. “I’m professor Blortstein.” He stared at a halo of images that floated around him and waved a long appendage which caused one of them to glow a bright green.
“Yuvurl,” he said with a glance at the image which had a long and flexible neck topped by a large head and bulbous eyes. “Last semester we discussed planetary economics leading to the demise of a commodity-based currency. Please give us a recap.”
“Improved medical technology increases live birth rates and extends life in general. This obviously results in a large increase in total population. This growth cannot be matched by new discoveries of the commodity to which the currency is tied.”
“Which results in …,” said Blortstein with another wave of his appendage causing a second image, this of a young woman with bright purple skin, a narrow head, two green eyes, and an unusually large number of metallic pieces attached to her face. “Miss Mie?”
“The total economic outlay the world requires is limited by the supply of the commodity and thus growth is restricted and becomes increasingly so as populations increase. One nation, generally the most populous, begins to distribute loans not backed by the commodity.”
“Very good,” said Blortstein. “Now, what happens next?”
Mie continued with a flick of her long hair, “The nations that original enforced the commodity-based economy, generally those that emerged victorious in some particular virulent and global conflict, are pressured into withdrawing the system.”
“What causes this pressure?” said Blortstein with a wave which caused yet another image to glow green.
That student, a golden creature with a long and narrow neck and a mouth capped by a narrow and sharp beak continued, “The pressure comes in several fashions. In one case the leaders of the country who are trying to enforce the commodity-based currency realize they are falling behind because they cannot proceed with enterprise projects. Another factor is many of the large business entities within that country see the enormous profits to be had and begin investing large sums in the aforementioned country.”
“Excellent,” said Blortstein with a nod of his head. “So, now we get to the subject of this semester’s class of Planetary Economics. What happens next?” Another wave of his hand and yet another student chosen to speak.
A round-faced fellow with many freckles on his pale skin took up the conversation, “The leaders of the various countries show sensible restraint and refuse to excessively commit the nation’s treasury to a fiat currency system and growth continues but at a sustainable pace.”
The class erupted in laughter.
“Very good, Mr. Lebushi. Very good. Now, Miss Mei, do you have an alternate conjecture?
“As a crisis arises …,” she started.
“A real crisis?” asked Blortstein.
The girl smiled and shook her head with a clink-clank of her adornments. “I suppose it might be a real crisis but more like a perceived crisis or even a manufactured crisis designed to enrich the friends and backers of the leaders of the country. In any case, the nature of the crisis little matters, what is important is that the nations of the world start an inevitable splurge of spending.”
Blortstein nodded his head and smiled, “This spending quickly outpaces the economic wealth of first one nation then the next and eventually the entire system of planetary economics. The new system relies on loaned money; that is to say, money promised to be repaid but not actually in existence. Enterprise projects proceed apace, loans to the general population for shelter, mobility, and other basic needs continue as well. Debt piles up in a manner that cannot possibly be repaid.”
There was silence in the class for a moment as they waited for the professor to proceed.
“Now,” continued Blortstein. “We come to the subject of this semester’s class. What happens next? Some worlds are able navigate this treacherous period and emerge with an economy based on abundance and join the galactic community. Others are not as fortunate.”