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We need the Interplanetary Monetary Fund now!

So finally SpaceX made it and soft-landed its booster rocket. An epochal achievement. And Bezos’ Blue Origin did much the same although on a lower orbit. So now the race is on. Next it will be the Russians, Chinese, Japanese, maybe even the North Koreans, God forbid.

It’s now obvious that we have pretty much everything we need up there to keep body and soul together. Water, methane, minerals, solar energy, inflatable boudoirs. Drop in a few 3D printers and voila, you’re off to the races. Fully formed colonies with hardy colonists. Probably making huge loot from capturing and mining asteroids and selling the stuff to those insufferable and weakly Earthlings. New billionaires being minted far from Earth every day.

There might be free trade with the space colonizing powers like the US, Russia and China but it’s a long way to Tipperary; so the pressure will be on to be self-sufficient. Since there will be colonies on several planets – the Moon, Mars, Titan, Europa it’s gonna be a lot easier to trade with them rather than the Earth guys. Sure you can barter but it’s a long way to truck a rocket-load of nickel from Mars to Titan. Easier to just pay with good hard cash.

Hmm but whose cash? Which currency? Will the American colonies on Mars use dollars when they trade with the Russian colonists on Titan? Or rubles? Now there’s an issue. Not just which currency but who will back it and manage it? Make sure that it doesn’t get out of whack with the fundamentals, too much currency chasing too few goods for example.

Once you have several colonies they’re going to need to levy taxes to pay for the infrastructure that’s going to be badly needed as the colonies develop and expand. The home offices back at the ranch (Earth) are going to want some of that cash to shore up their failing finances as the Earth goes bankrupt.

The colonists are not going to like that one little bit. So some of them are going to revolt and announce their own forms of self-government and independence. No taxation without representation, remember? We’ve see this movie before, right?

So get ready for the new macro-macro-economy; the economies of the countries of Earth and the colonies of the planets. It’s probably just around the corner.

It’s a moot point whether it will be set up by the doughty colonists or Earthlings. One thing’s for sure; if the colonists don’t buy into it it’s not going to work and they’re going to go it alone.

Which will it be – the Interplanetary Monetary Fund or the Monetary Fund for the United Planetary Colonies? The former headed by a prominent, highly educated Earthling, the latter by a hardy, bold, insolent adventurer like Jeff Bezos or Elon Musk? Now that’s gonna be an interesting election…

It’s inevitable that global finance is going to have to make way to interplanetary finance. There will have to be a new currency – spacecoins anyone? There will need to be a Financial Stability Board for Space. The governors of the board will have boondoggles on Titan for meetings. Naturally there will be Ted talks on the Moon.

There’s going to be interminable arguments about how expansive interplanetary financial policy should be and what support mechanism the space colonists should set up to prevent them from going bust. There’s going to be a profusion of words about being too big to fail.

Inevitably there’s going to be busts as a space-based business cycle takes hold. It’s going to be cool to do your degree in space finance at the Martian Institute of Solar Finance. Keynes will now have the same reputation as Marx or even Engels. There will be new types of financial studies such as quantum economics and finance to replace the now-unutterably old-hat disciplines of behavioral economic and finance.

We are about to enter the next Golden Age of growth. Ever since the world was colonized several hundred years ago, growth has been great except for a couple of world wars and a few recessions. That growth has now come to an end. Space colonization will jump-start the next great growth surge.

This time around it would be better to do things right. That means in particular getting the household finances of the planets in order so we don’t repeat the mistakes of the last few hundred years. We don’t want a repeat of the Dutch tulip manias on Mars or Scottish land scams in Titan.

Time for the eggheads of the international financial institutions to get their noggins together to plan this one out in advance. Get the ball rolling on the Interplanetary Monetary Institute now, before we inadvertently discover extra-terrestrial hyper-inflation.

 

 

 

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Saturday, 04 July 2020

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