Pony ramblings about the economy of Equestria. (Patreon)

So first off, I'm now fully vaccinated.  Lost about 3 days of life to vaccine side effects but I'm good now and trying to make up for lost time.

I did have something I wrote today that was a reply to Sawtooth waves.  He was talking about the problem with unicorns here: https://www.youtube.com/watch?v=Xnqo-VKK8pA

It's probably dry and not terribly interesting, but it is something that fascinates me.

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Okay...  So for your economic speculation, you need to look at how money moves in Equestria.  The economics is somewhat fuzzy because it appears to be a hybrid system of economy (goods for money), obligation (goods for favors), with some good old command economy thrown in.  Take 'Fluttershy's hurricane'.  Several dozen pegasus got together, spent days of time training, performed a hazardous maneuver, all to transfer water to Cloudsdale.  WHY?  We don't see anyone getting paid for their labor here.  Did Celestia order them?  Did Rainbow Dash pay them?  Both?  Or is there an understanding of obligation, where in Ponyville provides the water so Cloudsdale will create rain so Ponyville farms get crops so Ponyville pegasus are provided food?  Or all three?  Or maybe each race of pony has a different economic system?  

Well let's consider money and focus on economics.  We have bits and gems, but the latter seem to be the inferior currency... like spare change.  Valuable for their tastiness or looks, but otherwise sort of cheap.  So if we have bits as coins, that means a mint.  If we have gold coins, it means a source for gold.  Both fit your theory of unicorns controlling the gold supply.  However, if the money just stayed with the unicorns, they'd have a lot of problems very quickly.  The production of money would be essentially more work.

I doubt Unicorns want to spend every second of the day trying to grow carrots in solid rock.  But by transferring money to Earth Ponies and pegasus, unicorns have access to goods and services that would otherwise be more onerous to achieve themselves.  So why would Earth ponies even accept bits?  I mean, they could use giant stone disks.  Rockhoof could probably carry a dozen!  Okay, so obviously small gold coins are easier to transport.  However, I suspect that it's also because the earth pony economy is far more diverse that it benefits from the efficiency that bits offer.  Barter is a pain in the hindquarters.  

So unicorns provide a steady stream of money, and earth ponies convert goods and services into financial transactions.  However, I have to speculate the liquidity of the Earth Pony society.  We see all of Ponyville can buy a cup of cider for two bits.  But a cherry goes for 2 as well?  Meanwhile a rent in Manehattan goes for 50,000.  (How much money does Rarity HAVE?) A good question is  can Equestrians just make gold?  If it's possible, then the bit is effectively a fiat currency, gold or not.  In that case, how is inflation managed?  Does Celestia just pass excess currency to local dragons to horde?  I mean, it would counteract inflation temporarily... till a dragon's horde is taken and suddenly cherries cost 10 bits...

Anyway, going back to pegasus, how would money move to them?  Are individual pegasus paid for weather work?  We see some are employed in logistics, which makes sense, but what about weather (arguably the most valuable service they render.)?  In fact, now that I think of it, DO pegasus have any exportable goods?  Everything seems to be made of cloud, unless their property is literally enchanted somehow to allow physical wealth to be accumulated in the clouds.  Still, I don't think the pegasus have any goods to export.  There's nothing to grow and nothing to mine.  So I suspect their economy is 100% service related: delivering goods or services to earth ponies.  

But there's a problem.  If pegasus are constantly providing services, what do they do with all their money?  Sure, some goes back to the earth ponies to purchase food, but this gets us to a problem of compensation: would you bust clouds for 2 bits a day?  Probably not.  So why do they do it?  If they're paid more, what do they do with all the excess inflation?  Well, it could be that pegasi are under some kind of mass obligation.  Perhaps Celestia pays Cloudsdale for weather and all that money is then distributed to all pegasi equally?  Certainly explain why Fluttershy doesn't starve.  And it would be a reason why Celestia could temporary compel pegasi for the tornado.  It could also be that a lot of it is lost to taxes, but I think that trying to tax pegasi would be a nightmare.  Hard enough to tax people who can't fly, let alone who can move their homes elsewhere in the sky.  

No, I suspect the key is in banking.  I'm fairly sure that all that income then returns to banks.  The pegasi are paid and excess is deposited in a bank, making pegasi extremely paper wealthy.  And if the banks are controlled by unicorns, well then the cycle is complete.  Unicorns mint money, money is traded to earth ponies who are producers of goods, and then the money moves to pegasi in exchange for services.  The pegasi bank the excess to be lent for goods, services, and investments.  For this model to work, I suspect there are many, many, many more earth ponies than pegasi or unicorns.

If weather control spells and mass teleportation become common, the pegasi economy is going to become very fragile.  Maybe even unsustainable, if the pull from expense is greater than the interest generated...

In reality, I know it's mostly because writers don't care about economics, but since when has that stopped speculation?