I just don't understand how the Equestrian economy works.

[Gatekeeper Giggle 2,902]

They use bits as currency, but they also accept gems as currency? How does that make sense? Equestria is loaded with gems, how come they don't have crazy inflation?

 

    

[Andaasonsan 3,205]

A diamond the size of your fist only seems to be worth about $5, so i think this is already the case.

[Shanks 10,811]

They don't have runaway inflation because their money cannot be continuously printed and backed by nothing like paper money and since dragons eat gems that also helps keep them at a manageable level. Equestria's economy is a lot more honest than 90% of economies on Earth, they don't have to deal with things like central banks and the state sanctioned counterfeiting that is the fiat paper money systems of way too many countries.

[Darker 1,351]

Another cartoon inconsistency. The more I discover in this cartoon, the less good it becomes.

 

From my critical standpoint, of course.

[Fawkes The Phoenix 737]

Another cartoon inconsistency. The more I discover in this cartoon, the less good it becomes.

 

From my critical standpoint, of course.

 

 

Sorry, i didn't know that every cartoon should have their own complex economic system to be good....

[Fluttershutter 2,134]

It's hard to determine the actual value of a gem. That's why we've only ever seen the gems used as gifts. The bits are their real money and they seem to use a gold standard. Much more sensible than most human economies.

[Red Cedar 1,407]

They don't have runaway inflation because the actual accepted Equestrian currency is bits, issued by the State (or its central bank) and regulated as being the only medium in which taxes can be rendered.

 

What they would have instead is gems that are worth very little, as noted in the comic above.

[Giygas 40]

Multiple currencies is a thing.

 

In real life, you have normal, boring fiat currency, but people are now starting to use cryptocurrencies such as bitcoin, litecoin, dogecoin, etc. So I think it makes a lot of sense that Equestria can exchange goods and services with bits and gems. The only question is, which one did they use first?

Edited September 27, 2014 by Giygas

[Darker 1,351]

Sorry, i didn't know that every cartoon should have their own complex economic system to be good....

I was kidding.

 

Children cartoons' simplicity like this is worth noticing.

[yeet 2,026]

They should use eggs I think.

[The Coffee Pony 1,390]

It could be using the old gold standard assuming bits are made of gold or some other ancient monetary system in combonation with the barter system. That's my best guess.

[hip-indeed 304]

Another cartoon inconsistency. The more I discover in this cartoon, the less good it becomes.

 

From my critical standpoint, of course.

 

It's a cartoon.  For kids.  Little kids, in particular.  Now, it's very, very good for a cartoon for little kids, so much so that adults can and do obviously enjoy it very much, but -- it's the same series and in the "intended viewing audience" category isn't all that different from the previous gens of MLP.  Look at Gen 2 or 3 and then back to Gen 4 and you'll retract that statement -- heck, compare it to *the vast majority of American cartoons* and you'll retract that statement, if only comparably. It's got its inconsistencies, but less than most.

 

Anyway, let's not forget that jewels are also dragon food, and no one seems to mind Spike eating them whereas people'd throw a hissy fit if a dog ate even a $1 bill irl.  Though at the same time Just For Sidekicks proves they are definitely of SOME value to ponies, in general it seems they're more like... fancy-looking but-not-worth-that-much baubles irl.. some people might like having them, some know they could trade it for other things but not really worth much real currency.

[Darker 1,351]

It's a cartoon.  For kids.  Little kids, in particular.  Now, it's very, very good for a cartoon for little kids, so much so that adults can and do obviously enjoy it very much, but -- it's the same series and in the "intended viewing audience" category isn't all that different from the previous gens of MLP.  Look at Gen 2 or 3 and then back to Gen 4 and you'll retract that statement -- heck, compare it to *the vast majority of American cartoons* and you'll retract that statement, if only comparably. It's got its inconsistencies, but less than most.

 

Anyway, let's not forget that jewels are also dragon food, and no one seems to mind Spike eating them whereas people'd throw a hissy fit if a dog ate even a $1 bill irl.  Though at the same time Just For Sidekicks proves they are definitely of SOME value to ponies, in general it seems they're more like... fancy-looking but-not-worth-that-much baubles irl.. some people might like having them, some know they could trade it for other things but not really worth much real currency.

 

First, let's not compare the previous gens to FiM. 

 

Second, like I said above, I was kidding, it's a children's cartoon inconsistency, there are lots of those everywhere. 

[Shadowking58 1,136]

Well maybe it's like how we have?
Like, for example, think of each bit as a one dollar bill, and each gem is like a 5 dollar bill.

I guess you can think of it like that.

[Buck Testa 5,503]

During the end of the feudal period when castles strewn the land and social classes were clearly defined a new group of people came into being. While wealth was usually reserved for the nobility and peasents toiled for enough to live these new folk calling themselves merchants made money performing services and supplying goods. The rules of purchacing power back then were fast and loose, and bartering was a common practice. In short the economy was changing into something new and eventually would require structured rules, but for that time it was a case by case basis.

 

I am pretty sure the Equestrian economy is similar from what I have seen.

[Nulln 754]

Gems don't seem any more abundant than they are in real life.  Rarity's special talent is actually finding them, which most ponies can't do.  They might not be as common as they seem.

[lelouch. 625]

I think you're expecting way too much from a little girls show

[Singe 2,109]

Bits aka gold coins are the main form of currency in the economy, gems appear to be a secondary substitute for trade/services, and bartering also exists. Inflation is limited to the merchants themselves charging whatever they want.

 

Gems do have value as there are jewelry stores.

[Jeric 46,835]

Equestria loaded with ....

Dude! So is freaking Earth. Also it's canon that there are rare and valuable gems. Do I really need to quote the show. And explain the common lattice of carbon diamonds and artificial supply controls

---

 

You know what, I'm doing it anyway.  I know that there are rare gems in Equestria. It's mentioned in dialog by Rarity in Sisterhooves Social (Rare baby blue sapphires). We also know that like IRL that gem size is not synonymous with value as Just For Sidekicks shows that the smallest gem can buy you an industrial sized pet dryer. The presence of a jewler in Hearts in Hooves day show that there is value in gems in that standard, and possibly proof that gems can be appropriately valued through gemology. Also, the reaction that Rarity and everyone has to the gems in Cutie Mark Chronicles also shows ... not that common. Finally the Diamond Dogs have a natural mining ability, yet they freaking loved the fact that there is a pony that can magically locate gems for what may be a DeBeers esque operation. Also proof that they are fairly uncommon. Some are more rare though. It is also an aspect that adds to Rarity's generosity if she is in fact using rare gems on affordable dresses and accessories. Just saying.

 

Likely in Rarity Takes Manehattan, the bellhop (who is pleasantly surprised to receive the gem tip) just walks a few blocks down to a gemologist pony and exchanged the gem for bits.

 

 

:comeatus:

[Fluttershutter 2,134]

Gems don't seem any more abundant than they are in real life.  Rarity's special talent is actually finding them, which most ponies can't do.  They might not be as common as they seem.

Then her clothes would be worth millions. Equestria is loaded with gems and they're all huge.

[Nulln 754]

Then her clothes would be worth millions. Equestria is loaded with gems and they're all huge.

She is also the element of generosity. 

[LZRD WZRD 1,929]

Smh MLP exposed again. Show confirmed WOAT

[Fluttershutter 2,134]

She is also the element of generosity. 

But you'd get mugged wearing clothes that were worth that much. 

[TheJLeeTeam 914]

Gems are like gold. There is plenty of gold in our world and it's all natural. Back in ancient times and in the 1800's gold was common currency. And I believe it's still being used in some form. But bits are being used as public currency such as dollars.

[GenderIsAnIllusion 2,177]

I really don't think they have an economy..... Atleast not like we do......

 

Ok so our economy works like this: we buy and sell goods using printed bills and minted coins. The money goes higher and higher, and at all levels the government takes it's fair share, and eventually it goes back down when the big companies pay their workers. This is a verrry basic model, but you get the picture.....

 

In equestria, it just seems like the bits are simply traded among ponies for goods and services, and never really flows upwards too much, and the government dosent take taxes from what I've seen in the show...... So....yeah I'm just as lost as you about it.