Is a spacefaring solution to the global economy possible?

August 12, 2009 9:03 AM

So...the global economy is in the toilet. How about this solution?

We can't print more paper money, as it'll only lead to inflation. Why haven't we looked at the long-term prospects of exploring and mining other planets? If a currency needs something to back it, and we happen to find an asteroid with quadrillions of dollars worth of industrial grade diamonds in it, isn't the problem solved? Or if we find iron ore, etc.
I know this is a layman's example, but please consider the overall theme. Thoughts?

posted by Biglew to work & money (20 answers total)

chat... filter?
posted by squorch at 9:09 AM on August 12, 2009

It doesn't work that way.
posted by Optimus Chyme at 9:13 AM on August 12, 2009 [2 favorites]

Rarity => value. Less rarity => less value.
posted by smackfu at 9:14 AM on August 12, 2009 [2 favorites]

What if, like, instead of money, we used, like, love to buy stuff and stuff.
posted by billysumday at 9:14 AM on August 12, 2009 [5 favorites]

1) With existing technology the expense involved in moving large amounts of mass into and out of orbit would make any large-scale (or small-scale) mining cost-ineffective.

2) The current economic crisis was not caused by scarcity of raw materials.
posted by ook at 9:16 AM on August 12, 2009 [1 favorite]

Fine, but that beacon is not a distress signal. It's a warning to stay away!
posted by The Deej at 9:19 AM on August 12, 2009

I'm not an economist, but the one problem I see is that you talk about "long-term prospects". We need a more short-term solution; by the time we actually get diamonds back here from asteroids, the recession will long be over. Or we'll be in a new recession by then, who knows? I think there are also a lot of other problems with your idea too though, but someone else will have to explain them.
posted by creasy boy at 9:21 AM on August 12, 2009

Breaking out of earth's gravity is horrendously expensive. Bringing stuff back is no easy task either. The value of any minerals mined from asteroids will pale in comparison to the cost of retrieving them.
posted by chrisamiller at 9:23 AM on August 12, 2009 [3 favorites]

Sadly, the shuttle does not qualify for the Cash for Clunkers program.
posted by bondcliff at 9:25 AM on August 12, 2009 [6 favorites]

What's the most massive thing (or "most mass") we've brought back from any space flight? Hell... what's the combined mass of all things we've successfully brought back to earth? (Don't know the answer, but have an order-of-magnitude guess... would be interested if anyone knows this offhand). Now--what's the most expensive substance that we're likely to find in the places we've returned samples from.

Also: Space flight is expensive. Amazingly expensive. "Hard-to-fathom-how" expensive.
posted by jjjjjjjijjjjjjj at 9:27 AM on August 12, 2009

If a currency needs something to back it, and we happen to find an asteroid with quadrillions of dollars worth of industrial grade diamonds in it, isn't the problem solved?

No, because the price of industrial grade diamonds would drop to match demand.
posted by Civil_Disobedient at 9:27 AM on August 12, 2009

If a currency needs something to back it, and we happen to find an asteroid with quadrillions of dollars worth of industrial grade diamonds in it, isn't the problem solved

OK, then what? You haven't found "quadrillions of dollars" worth of diamonds, you've dramatically increased the world's supply of diamonds, which will, in turn, dramatically bring them down in value.

Side note: The high price of diamonds is a completely artificial construct that has nothing to do with actual scarcity.
posted by mkultra at 9:30 AM on August 12, 2009

We can't print more paper money, as it'll only lead to inflation.

Or less deflation. Theoretically. At any rate sometimes printing is better than the alternative of economic cardiac arrest. Arguably. YMMV. Not valid in all states.

Why haven't we looked at the long-term prospects of exploring and mining other planets?

Why not explore and mine the seabed? Antarctica?

If a currency needs something to back it, and we happen to find an asteroid with quadrillions of dollars worth of industrial grade diamonds in it

Wealth is that which satisfies human needs and wants..

We have enough access to mineral wealth at the moment (but the long-term picture isn't so rosy). Your diamond example is interesting since the supply is still one of artificial scarcity propping up prices thanks to the DeBeers cartel.

The current economic dislocation is based on disruptions in global trade with China and the recent real estate boom causing the economy to over-extend itself with too much credit relative to the inherent productivity of the nation.

Or if we find iron ore, etc.

Last I checked the earth itself had a molten core of iron. No need to go gallavanting among the planets.

To support the present monetary base we just need to become more productive / less destructive .
posted by @troy at 9:30 AM on August 12, 2009

Our economy is in the toilet. Our air and water and land are polluted. Our cities are overpopulated and crime-ridden. Global warming is destroying our farmland.
What we need is diamonds. Lots and lots of diamonds.
posted by weapons-grade pandemonium at 9:33 AM on August 12, 2009 [5 favorites]

chrisamiller has it right. If you're going to go to all that trouble, stay out there and manufature what you need. If you put people out there mining stuff for the home world, pretty soon they'll get to thinking -- Hey, why are we sending all the good stuff back to those assholes?
posted by Guy_Inamonkeysuit at 9:37 AM on August 12, 2009

If a currency needs something to back it, and we happen to find an asteroid with quadrillions of dollars worth of industrial grade diamonds in it, isn't the problem solved?

No. A currency needs something to back it because a currency is a value store. The backing is there so people trust that the currency is storing value. When people can be encouraged to trust that the currency will store value by some other means, backing it with something like precious metals, which are also just a value store, becomes superfluous. Example: if your SO gives you a piece of paper that says "IOU 1 massage" for Christmas, you don't need that IOU to be backed by one massage's worth of gold, because you trust the issuing authority for other reasons. Frequent flyer miles, gift certificates, and the US dollar are not backed by precious metals/gems as value stores any more.

To greatly oversimplify, the global economy is in the toilet not because it lacks stores of value, but because it is essentially overdrawn on its future productivity and it has squandered too much productivity on non-valuable projects. Put it this way, think of a dollar as a store of work or production of some kind: every dollar represents 10 minutes of labor you can buy from a person, some beans grown from soil, entertaining jokes told by a comedian, etc.

Through the creation of money substitutes, primarily complicated debt securities, we've borrowed a huge amount of future productivity from each other. Unfortunately, we've invested it in lots of stupid things, like miles and miles of unneeded residential housing in the United States. The work it takes to build those houses, meaning spinning all that fiberglass insulation, chopping down all those trees and milling them into lumber, firing all that portland and pouring all that concrete has been done. To a great degree, this work was paid for with some form of IOU, ultimately, mortgages. However, the creation of all this junk has not enabled us to pay back these IOUs, they are not economically productive junk piles. The treatment of these debt instruments (bundles of mortgages) as being fungible with money (as a value store) turned out to be a really bad call: now we're overdrawn on our productivity, and we've allocated tons of our productivity to foolish ends.

The real danger comes when, lacking investible spare capital, we stop investing in projects that actually _are_ economically productive. During the depths of the credit crisis, we saw this when shipping companies couldn't get finance to ship useful commodities from countries where they were abundant to countries where they were scarce. This is where the death spiral of a credit bubble starts, the lack of capital causes productive activities to go un-invested in, which reduces overall production, which means there's even less product to use to invest with. We eat our seed corn, so to speak. For example: you get laid off from your house building job because there's too many houses. Fine. But then you don't buy a car. So the guy at the car factory gets laid off. That means he can't buy the house he was saving for. That means even _less_ houses get built, meaning your buddies get laid off. They don't buy cars either, etc. etc.

This is, of course, a great oversimplification. The way this looks from the macro level is that things that used to be pretty damn close to 'money' (e.g. mortgages backed by houses, car loans) become non-money. No one wants to use them to store value. Eventually, somehow, someone will add some productivity somewhere in the economy, and people will start trusting something as being close to money, a passable money substitute: say orders for a product. This will expand credit again, and people will invest in productive projects again. The productivity will grow, and then our GDP will grow, and people will become less and less picky about what they use as a money substitute, and credit will expand, and the whole grand gyre will whirl again.
posted by jeb at 9:39 AM on August 12, 2009 [3 favorites]

If we found an asteroid with quadrillions of dollars worth of diamonds on it, DeBeers would start having people killed.
posted by box at 9:50 AM on August 12, 2009 [1 favorite]

Previously.

Nah, just kiddin.
posted by nineRED at 9:58 AM on August 12, 2009

Unfortunately, we've invested it in lots of stupid things, like miles and miles of unneeded residential housing in the United States. The work it takes to build those houses, meaning spinning all that fiberglass insulation, chopping down all those trees and milling them into lumber, firing all that portland and pouring all that concrete has been done. To a great degree, this work was paid for with some form of IOU, ultimately, mortgages. However, the creation of all this junk has not enabled us to pay back these IOUs, they are not economically productive junk piles.

Given that, wouldn't an "open doors" policy on immigration to anyone who showed enough potential or wealth to be able to at least afford a home therefore resolve much of the US part of the crisis? If so, why isn't this policy being routinely suggested? I suspect there are plenty of average wealth folks who'd like to move to the US but who can't due to the draconian immigration policies.
posted by wackybrit at 9:58 AM on August 12, 2009

Money, and even gold and diamonds, as currency, isn't real. It's just a bunch of tokens for keeping track of things, like how much "work" you've done and how much "work" is equivalent to a loaf of bread or a house.

Money exists because it's easier to carry around and keep track of than a bunch of complicated barters (e.g. "OK, I'll give you three goats, you give Mr. Adams sixteen bushels of corn, then he'll send his son over to help me build my barn." vs. "I have 200 tokens [dollars], so I can hire whomever's available to help me build my barn.").

Of course, the relationship of work to stuff is sufficiently complex that we have the whole field of economics.

But introducing more token isn't necessarily a simple solution.
posted by amtho at 10:09 AM on August 12, 2009