Market Discussions

would encourage the hoarding of ISK balances (unless eve is dying)

one purpose of money is to reduce transaction costs and thus facilitate "complex" transactions (that could not realistically be resolved through barter).

A currency that disincentivizes its own use for transactions in favor of hoarding is imo a bad currency - but some people seem to like that concept for whatever reasons... (*cough* bitcoin *cough*).

They did it in the very early days, there's an interview kicking around I'll dig a link for but at one early stage it was a totally balanced isk goes in = isk goes out scenario.

/scurries off to find linky

edit: found at http://virtual-economy.org/blog/interview_with_ccp_eve_currenc though that's having some bandwidth issues at present so google cache at http://webcache.googleusercontent.com/search?hl=en&biw=1187&bih=745&gs_sm=e&gs_upl=7202l12222l0l12689l24l23l0l11l11l0l224l1726l4.7.1l12l0&q=cache:8zCVOMHT2-kJ:http://virtual-economy.org/blog/interview_with_ccp_eve_currenc+eve+interview+hilmar+isk&ct=clnk

Relevant bit below

Let's start with the in-game economy. Is EVE a closed system where a fixed set of assets circulates, or is it more like an open "faucet/drain" system where inputs and outputs are regulated to maintain balance?

Hilmar: Originally, we tried to develop the game under a closed economy concept: each time you manufacture something, you use up minerals, and when the thing is destroyed, the minerals return to the pool again. We operated under this concept for quite a long time, but it is very difficult to balance this with the influx of newcomers and the rat-packing of the old hammers. At the end of the day we saw now added value in having a closed economy as opposed to controlling the material inputs in a more loosely defined manner.

The delfationary force of a fixed money supply is very different from the deflation caused by a credit crunch in fiat debt regime. I am very sure that your pro-keynsian text books tell you that deflation is the devil, but it is a lie.

With the desire to keep this thread unocked, and not devolve into a semi-political disciussion, I won't get into it. But feel free to mail me if you want.

of course I won't mail you - you use loaded language, make stupid assumptions and don't seem interested in an eve-related discussion at all.

but to respond in kind:

(oops, I quoted Keynes)

You seem to agree with Lenin, therefore you are a communist (and a Keynesian).

Central banks (like the Fed, ECB and Concord) influence the money supply as a means to influence inflation. Inflation is the key issue.

Many RL economists believe that inflation should not be allowed to rise above ~3%. In Eve we have 10-20%. The Eve economy might work differently, so it might not be a problem, but it's a good point of reference.

A potential problem is that some of the isk sinks are not inflation proof: BPOs and items are sold at a fixed price. On the other hand broker fees are a percentage of the transaction fees.
Fixed prices for seeded items in combination with inflation means that the relative value of produced and seeded items changes. This affects the game design.

If CCP feels that a small amount of inflation is healthy for the Eve economy then they should also let prices for seeded items rise.
To combat inflation they can reduce the money supply. This can be done by introducing new isk sinks (new tier III battlecruiser BPOs, Custom Office Gantry BPCs). But it can be challenging to introduce sufficient new content people will want to spend their isk on.
Another solution is reducing the rate at which new isk is introduced into the game. This can be done by simply reducing all bounties and bonusses by a certain %.

Surely such a system would lead to wealth ending up in the hands of a select few? Those who have the means to produce?

As a miner, if I was careful (Not getting my ships blown up all the time and not wasting money on unneeded purchases) then in theory once I had all the equipment I needed, then I'd make money, but not use it - rather I'd just slowly watch my wealth grow. And in a closed system this would surely be essentially equal to money being taken out of the game. As I would not likely utilize it. Multiply this by however many other players could do similar (and also the heads of alliances and that, which get paid via tax) then the ISK 'in circulation' would slowly decrease. And I can't decide whether this would be a good or bad thing.

Nonetheless, I think it would be a good idea - make it more like a RL economy - which is always interesting!

What if concord or the NPC corp for which you ran missions paid out in LP instead? There's still a reward. It's wouldn't be the most saleable item, ISK, but LPs that cuold be converted into goods and possibly services.

I like Hilmar's phrase "rat-packing of the old hammers."

Limiting the amount of ISK is equal to shutting down a part of the economy.

Let's suppose I'm a miner. I mine a lot of Trit, but I'm not able to sell it.
If I can't get ISK, I have two options: either hoard my Trit, or offer my goods via contract. Maybe, we will get a substitute for ISKs but that would certainly limit the market transactions and would destroy a part of the market...

To fix the money supply i personally think the following should happen:

1) STOP giving default insurance payouts. if you don't buy insurance you don't get a ISK back. If you want any kind of insurance money back you will have to buy a plan (make insurance its own closed system).

2) Make the Mission/Ratting bounties/rewards a closed system. Is not hard... you just take ALL the isk sinks BPO/Skillbook pruchases, Sell/buy order TAXes, Etc, (everything but INSURANCE) and put it into the CONCORD wallet. For new player compensation take the other have of the 500m average wallet (EI 250m) and put that directly into the CONCORD wallet when they join.

3) I konw the minerals supply use to be closed and i say go back to it, And as far as "hard" to conpensate for new players is bullcrap. All they have to do is take the "average player wealth which i was was like 500m last QEN and devide it in half and then put that 250m worth of minerals (split evenly via average basket) and put it to the mineral pool.

I can see in the way back in the "begining" of eve when there was little isk in the in the universe and alot of players and OPEN system worked best... but now I think there is pleanty of isk in the universe to support a closed system.

Enjoy,
ISK Hoarder
Loney