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Inflation

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Adunh Slavy
#21 - 2013-08-30 14:53:27 UTC
Claire Voyant wrote:
Citing the good doctor in support of your argument is a sign that you may be doing something wrong.


Do you always make these sort of assumptions, or are you just always an ass?

Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.  - William Pitt
SJ Astralana
Syncore
#22 - 2013-08-31 04:50:51 UTC
Adunh Slavy wrote:
Claire Voyant wrote:
Citing the good doctor in support of your argument is a sign that you may be doing something wrong.


Do you always make these sort of assumptions, or are you just always an ass?


Logical or or exclusive or?

Hyperdrive your production business: Eve Production Manager

Vaerah Vahrokha
Vahrokh Consulting
#23 - 2013-08-31 07:24:47 UTC  |  Edited by: Vaerah Vahrokha
The "Good Doctor" is right at being concerned with velocity of money, because controlling it is the only safety wall standing between EvE as we know it (good realistic economy, relatively steady etc.) and the out of control, spiralling bad economy model of most MMOs.

There are countless trillions ready to come in and melt EvE if it was not for "The Wall", which is a mix of real game mechanics and psychological pressure (exactly a bit like an influent Central Bank president would do in RL).

As for PLEX, isk wise they are a money sink. Taxes affect them quite a bit, plus they tend to get destroyed, possibly 72 at a time in some untanked, AFK piloted Badger.

PLEXes are an important Brick in The Wall.

EvE Online portal | EvE markets tutorials
Claire Voyant
#24 - 2013-09-01 17:25:17 UTC
Vaerah Vahrokha wrote:
The "Good Doctor" is right at being concerned with velocity of money, because controlling it is the only safety wall standing between EvE as we know it (good realistic economy, relatively steady etc.) and the out of control, spiralling bad economy model of most MMOs.

There are countless trillions ready to come in and melt EvE if it was not for "The Wall", which is a mix of real game mechanics and psychological pressure (exactly a bit like an influent Central Bank president would do in RL).

As for PLEX, isk wise they are a money sink. Taxes affect them quite a bit, plus they tend to get destroyed, possibly 72 at a time in some untanked, AFK piloted Badger.

PLEXes are an important Brick in The Wall.

No, the only thing standing between Eve and utter economic chaos is the stream of new players and players buying PLEX with RL money to support their habits. Dr. E's blather is all hand-having and mostly concerned about him keeping his job.

Also, PLEX in a cargohold destroyed in a gank is not an isk sink and nor is anything else destroyed in Eve.
L4V4
Native Freshfood
Minmatar Republic
#25 - 2013-09-03 16:30:48 UTC
One way to get an estimate of inflation is the average price of average items.. If all items on average used to cost 1 ISK and now cost 2 ISK, then the buying power of ISK has halved, so you could estimate that "inflation" has doubled..

The reverse of this is also true.
arabella blood
Keyboard Jihad
#26 - 2013-09-03 16:36:34 UTC
What if the change came from developers intervention? But the actual isk in game stayed the same?

Troll for hire. Cheap prices.

Vaerah Vahrokha
Vahrokh Consulting
#27 - 2013-09-03 18:19:32 UTC
Claire Voyant wrote:

No, the only thing standing between Eve and utter economic chaos is the stream of new players and players buying PLEX with RL money to support their habits. Dr. E's blather is all hand-having and mostly concerned about him keeping his job.

Also, PLEX in a cargohold destroyed in a gank is not an isk sink and nor is anything else destroyed in Eve.


ATM the PLEX market is quite tranquil, showing there is not a "stream of new players and players buying PLEX with RL money".

As for the ISK sink, many PLEXes get bought with missioned / incursion ISK, that ISK was a faucet and a destroyed PLEX makes that ISK go out and thus acts as a sink.

EvE Online portal | EvE markets tutorials
Adunh Slavy
#28 - 2013-09-03 19:57:03 UTC  |  Edited by: Adunh Slavy
Vaerah Vahrokha wrote:

As for the ISK sink, many PLEXes get bought with missioned / incursion ISK, that ISK was a faucet and a destroyed PLEX makes that ISK go out and thus acts as a sink.



No, that ISK, sans taxes and fees, goes from one player to another.

Example,

You run a mission and make 10 million ISK from doing so.
I buy a PLEX for $15 and then sell it on the market for 10 million ISK.
You buy that PLEX for 10 million ISK.
I now have that ISK minus a small percentage for taxes and fees, taxes and fees are the only sink.
You don't have 10 million ISK.

Now let's examine the other scenario, a destroyed PLEX ....

You run a mission and make 10 million ISK from doing so.
I buy a PLEX for $15 and sell it on the market.
You buy that PLEX for 10 million ISK.
I now have 10 million ISK and you have 1 PLEX
You undock from jita in an Ibis and someone blows you up and destroys the PLEX.
I still have your 10 million ISK you got from running missions.
You are out one ibis, a PLEX and kinda pissed off and likely will not undock in an ibis again with PLEX in the cargo, or perhaps never buy PLEX again, or any other number of scenarios.

When a PLEX is destroyed, what is destroyed is the PLEX and the subjective emotional impacts on the PLEX holder, and whatever ship they were stupid enough to be flying at the time.

What really matters, from a price inflation perspective is, what does the mission runner or the in-game PLEX seller do with that ISK. If the ISK sits in a wallet and does nothing at all for ever and ever, then it may as well not exist. If it is used on the market to purchase something, then it has an impact, but to what?

This is where the velocity theory peeks in its nose. If the ISK were going to sit in some mission runner's wallet forever and never be used vrs going into the wallet of someone who would use it to purchase something with ISK.

The consumer of PLEX values his real world money, his subscription fee more than he values in game ISK. The purchaser of ISK for real world money, values some amount of ISK more than he values $15 (or whatever it is).

It stands to reason, that one who would purchase ISK for real world money (the plex seller), has some planned use for that ISK. To let it just sit in a wallet is pretty stupid. Its only value then is an alteration of the marginal utility of ISK for that individual, which again would mean it becomes more likely to be exchanged for some other in-game item in the future.

Now let's assume that PLEX does increase the velocity of money, it is now being spent instead of sitting in a wallet. Does that necessarily mean prices will increase? not necessarily, because we do not know what someone will do with that money, and keep in mind, someone else has an almost equally less amount of ISK to spend in the economy - we don't know what he would have done either, we are assuming nothing, since he didn't value his ISK (and whatever it may have purchased in-game) as much as his subscription fee.

Suppose I sell a PLEX for 200 million ISK, I turn around and buy a bunch of mining equipment, an exhumer, T2 crystals blah blah blah. Those individual markets may experience a slight increase in price and volume during my initial activity, but I will be out of those markets quickly. The mission runner, from our example, who was not going to use it anyway, would have had zero impact on this market. I now go run around and mine ore and increase the overall productive capacity in the game. I will decrease prices for minerals when I want to sell them, more sellers, more product, prices go down.

Suppose I use that PLEX to buy a mission ship and farm ISK. Well now I am creating price inflation, more ISK creation capacity, more ISK chasing around the same amount of production, monetary inflation.

The velocity argument fails because we can not know what each individual will do with the ISK. All we can say for sure is the availability of ISK has increased, but the supply has remained the same. Can individual markets be impacted? Sure, but not over the long term. What one person in the scenario can purchase, the other can not. The Seen and Unseen, aka Broken Window.

Bottom line is this, PLEX can and does increase the velocity of money, this can create additional inflows to some market areas but at the expensive of outflows in other market areas. The result can be additional volatility in select markets, but not long term price trends that can be attributed to monetary activity.

Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.  - William Pitt
Rthor
Smugglers Inc.
#29 - 2013-09-04 00:10:38 UTC
Why does it matter whether isk is created.

Let's say I point my guns at a rat and get a bounty. Isk is created. This is supposedly inflationary.

Let's say I point my miner at a veldspar rock. Tritanium is created. This is supposedly not inflationary because it is not an "isk faucet." It is a trit faucet. Whatever is the difference.

What is the difference if we have an ever growing pile of isk or an ever growing pile of tritanium for the issue of whether we have inflation in game? What if isk were mentally reclassified as a mineral and guristas were viewed as an ore?

Pretty much everything in game is getting cheaper or easier to get with time. So we have deflation regardless of whether some prices are going up while other prices are going down. And this deflation is caused by extreme competition between some players ensuring that prices of mods and ships are very affordable, while at the same time the earning power of some other players goes up as a result of gameplay changes, like lvl 4s or incursions.

Think about it in this way, you have people who produce stuff without profit but with their time, and these activities are deflationary. These people probably do not think that there is inflation in the game.

On the other hand you also have the "rich" who can afford whatever they want and they compete among themselves for officer mods or some other rare stuff. They might think that in some areas of the economy there is rampant inflation. But they would probably say that a BS is "cheaper" to fly and risk than some time before, and you probably do not even need a BS to do that job.

Overall I think that an average player over time can afford more and more while grinding the same amount of time so I am leaning towards there being deflation in eve because there is inflation in earning power.
Vaerah Vahrokha
Vahrokh Consulting
#30 - 2013-09-04 01:49:02 UTC  |  Edited by: Vaerah Vahrokha
Adunh Slavy wrote:



No, that ISK, sans taxes and fees, goes from one player to another.

Example,

You run a mission and make 10 million ISK from doing so.
I buy a PLEX for $15 and then sell it on the market for 10 million ISK.
You buy that PLEX for 10 million ISK.
I now have that ISK minus a small percentage for taxes and fees, taxes and fees are the only sink.
You don't have 10 million ISK.

Now let's examine the other scenario, a destroyed PLEX ....

You run a mission and make 10 million ISK from doing so.
I buy a PLEX for $15 and sell it on the market.
You buy that PLEX for 10 million ISK.
I now have 10 million ISK and you have 1 PLEX
You undock from jita in an Ibis and someone blows you up and destroys the PLEX.
I still have your 10 million ISK you got from running missions.
You are out one ibis, a PLEX and kinda pissed off and likely will not undock in an ibis again with PLEX in the cargo, or perhaps never buy PLEX again, or any other number of scenarios.

When a PLEX is destroyed, what is destroyed is the PLEX and the subjective emotional impacts on the PLEX holder, and whatever ship they were stupid enough to be flying at the time.


The quite sensible taxes over every owner change are the ISK sink (Edit: exactly your "sans taxes and fees" which by your writing you discount, while to me it is the focus).
The PLEX gets destroyed even if it's just "used". It "creates" game time but the cumulative taxes paid by its whole supply chain represent a net ISK sink.

EvE Online portal | EvE markets tutorials
Adunh Slavy
#31 - 2013-09-04 02:24:50 UTC
Vaerah Vahrokha wrote:

The quite sensible taxes over every owner change are the ISK sink (Edit: exactly your "sans taxes and fees" which by your writing you discount, while to me it is the focus).
The PLEX gets destroyed even if it's just "used". It "creates" game time but the cumulative taxes paid by its whole supply chain represent a net ISK sink.


You had written, "As for the ISK sink, many PLEXes get bought with missioned / incursion ISK, that ISK was a faucet and a destroyed PLEX makes that ISK go out and thus acts as a sink."

I do not see taxes mentioned, I read it as you saying that the destruction of a PLEX is an ISK sink. I don't see any qualifiers with regars to taxes and fees. If it is an oversight or language issue, fair enough.

Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.  - William Pitt
Adunh Slavy
#32 - 2013-09-04 02:32:11 UTC
Rthor wrote:

Let's say I point my guns at a rat and get a bounty. Isk is created. This is supposedly inflationary.

Let's say I point my miner at a veldspar rock. Tritanium is created. This is supposedly not inflationary because it is not an "isk faucet." It is a trit faucet. Whatever is the difference.



The difference is, one is the most commonly used item for indirect trade, (aka money) and one is not money. The context here is economics, not English. Playing fast and loose with the definition and context of words is a linguistic argument, not an economic argument.

Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.  - William Pitt
Rthor
Smugglers Inc.
#33 - 2013-09-04 11:52:18 UTC
Adunh Slavy wrote:
Rthor wrote:

Let's say I point my guns at a rat and get a bounty. Isk is created. This is supposedly inflationary.

Let's say I point my miner at a veldspar rock. Tritanium is created. This is supposedly not inflationary because it is not an "isk faucet." It is a trit faucet. Whatever is the difference.



The difference is, one is the most commonly used item for indirect trade, (aka money) and one is not money. The context here is economics, not English. Playing fast and loose with the definition and context of words is a linguistic argument, not an economic argument.


Ah isk is money right. That must mean that I have no money. Isk is not money in eve.

You must be one of those forum mods, getting discussion on topic and such whatever floats your boat. Well I am making an economic point that wealth effect is present in this game. Look up wealth effect first. Then consider that the player base and or the market is divided into parts. You have those who see and are exposed to deflation, i.e. miners, producers because of all the competition between them. Then you have the second part of the market where lvl 4 mission/incursion runners, and advanced players, can buy everything that the first group produces for less and less effort relatively. Things are in fact getting cheaper for this second group, and even holding isk for them (as this is what this second group produces) makes sense in a deflationary world.

So maybe now you show me evidence of inflation. What went up? Luxury goods. What went down or is not going up? Everything else pretty much. After you are done proving some kind of inflation somewhere I will claim that wealth effect overcomes any inflation in eve and call this topic of inflation in eve moot.
Adunh Slavy
#34 - 2013-09-04 12:29:09 UTC
Rthor wrote:

So maybe now you show me evidence of inflation. What went up? Luxury goods. What went down or is not going up? Everything else pretty much. After you are done proving some kind of inflation somewhere I will claim that wealth effect overcomes any inflation in eve and call this topic of inflation in eve moot.



Why am I responsible for addressing your strawman?

Read through this thread, see if you can find refrences to monetary inflation and price inflation. Let us know when you know the difference.

Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.  - William Pitt
Rthor
Smugglers Inc.
#35 - 2013-09-04 12:46:54 UTC
Adunh Slavy wrote:
Rthor wrote:

So maybe now you show me evidence of inflation. What went up? Luxury goods. What went down or is not going up? Everything else pretty much. After you are done proving some kind of inflation somewhere I will claim that wealth effect overcomes any inflation in eve and call this topic of inflation in eve moot.



Why am I responsible for addressing your strawman?

Read through this thread, see if you can find refrences to monetary inflation and price inflation. Let us know when you know the difference.


Yes sir! First you accuse me of using English, while yourself speaking English, and now you accuse me of using a strawman while you have built your own strawman. Funny guy you. :-)
Adunh Slavy
#36 - 2013-09-04 13:09:04 UTC
Rthor wrote:

Yes sir! First you accuse me of using English, while yourself speaking English, and now you accuse me of using a strawman while you have built your own strawman. Funny guy you. :-)



Try making some sense

Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.  - William Pitt
Claire Voyant
#37 - 2013-09-05 02:13:28 UTC
Vaerah Vahrokha wrote:
Claire Voyant wrote:

No, the only thing standing between Eve and utter economic chaos is the stream of new players and players buying PLEX with RL money to support their habits. Dr. E's blather is all hand-having and mostly concerned about him keeping his job.

Also, PLEX in a cargohold destroyed in a gank is not an isk sink and nor is anything else destroyed in Eve.


ATM the PLEX market is quite tranquil, showing there is not a "stream of new players and players buying PLEX with RL money".

On the contrary, the tranquil PLEX market proves that there is a stream of people buying PLEX with RL money because we know a large number of players are consuming those PLEX every month to pay for their subscriptions.
Claire Voyant
#38 - 2013-09-05 02:32:14 UTC
Adunh Slavy wrote:
Rthor wrote:
Let's say I point my guns at a rat and get a bounty. Isk is created. This is supposedly inflationary.

Let's say I point my miner at a veldspar rock. Tritanium is created. This is supposedly not inflationary because it is not an "isk faucet." It is a trit faucet. Whatever is the difference.


The difference is, one is the most commonly used item for indirect trade, (aka money) and one is not money. The context here is economics, not English. Playing fast and loose with the definition and context of words is a linguistic argument, not an economic argument.

Rthor has a good point here that you are completely missing. In real life "goods" have a value that is created when real work is done to them. Things are dug up or harvested, refined, worked, and transported whereas modern money is created by fiat and has a value that is assigned to it. Goods and money are clearly to very different types of things, except in early society when iron pots or cattle were used as a medium of exchange.

In Eve, isk and goods are both items in a database created by certain player actions. Isk is more easily transported and exchanged, but there is no fundamental difference between them that would give isk a magical economic status different from tritanium.
Adunh Slavy
#39 - 2013-09-05 12:09:57 UTC  |  Edited by: Adunh Slavy
Claire Voyant wrote:
Rthor has a good point here that you are completely missing. In real life "goods" have a value that is created when real work is done to them. Things are dug up or harvested, refined, worked, and transported whereas modern money is created by fiat and has a value that is assigned to it. Goods and money are clearly to very different types of things, except in early society when iron pots or cattle were used as a medium of exchange.

In Eve, isk and goods are both items in a database created by certain player actions. Isk is more easily transported and exchanged, but there is no fundamental difference between them that would give isk a magical economic status different from tritanium.


More on the strawman bandwagon?

I don't disagree with that at all. ISK and trit and not different with regards to production, both require the application of labor in the past. This is a point I have made myself a number of times through the years. ISK however is what we regard as money in Eve.

ISK is money because it is the most commonly used item for indirect trade, aka medium of exchange. It did not gain this status due to evolution, but because CCP has imposed the rule on us via the market interface. It is this imposition that gives ISK its fiat attributes. However from a production point of view ISK is more like a commodity money as it requires labor performed in the past to produce, where as real world fiat paper requires labor in the future (debt) to produce. I have also made this point many times in the past.

The "magical" status ISK receives is the fact that it is the money in the Eve economy, regardless of how it became the money. ISK is money in Eve. Inflation is a term describing economic behavior from a monetary perspective.

When we speak of "inflation" in an economy, we are referring to monetary behaviors. We can't williy nilly go and change the definition of the word. The term "inflation" assumes a point of view. GDP in not measured in terms of potato production in Idaho simply because Idaho potato farmers want to talk about their potato crop.

So I will say it again as it relates to the question asked,

Rthor wrote:

Let's say I point my guns at a rat and get a bounty. Isk is created. This is supposedly inflationary.

Let's say I point my miner at a veldspar rock. Tritanium is created. This is supposedly not inflationary because it is not an "isk faucet." It is a trit faucet. Whatever is the difference.


The difference is, one is the most commonly used item for indirect trade, (aka money) and one is not money. The context here is economics, not English. Playing fast and loose with the definition and context of words is a linguistic argument, not an economic argument.

Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.  - William Pitt
Diska Eamod
Federal Navy Academy
Gallente Federation
#40 - 2013-09-05 16:20:32 UTC
Adunh Slavy wrote:
Claire Voyant wrote:
Rthor has a good point here that you are completely missing. In real life "goods" have a value that is created when real work is done to them. Things are dug up or harvested, refined, worked, and transported whereas modern money is created by fiat and has a value that is assigned to it. Goods and money are clearly to very different types of things, except in early society when iron pots or cattle were used as a medium of exchange.

In Eve, isk and goods are both items in a database created by certain player actions. Isk is more easily transported and exchanged, but there is no fundamental difference between them that would give isk a magical economic status different from tritanium.


More on the strawman bandwagon?

I don't disagree with that at all. ISK and trit and not different with regards to production, both require the application of labor in the past. This is a point I have made myself a number of times through the years. ISK however is what we regard as money in Eve.

ISK is money because it is the most commonly used item for indirect trade, aka medium of exchange. It did not gain this status due to evolution, but because CCP has imposed the rule on us via the market interface. It is this imposition that gives ISK its fiat attributes. However from a production point of view ISK is more like a commodity money as it requires labor performed in the past to produce, where as real world fiat paper requires labor in the future (debt) to produce. I have also made this point many times in the past.

The "magical" status ISK receives is the fact that it is the money in the Eve economy, regardless of how it became the money. ISK is money in Eve. Inflation is a term describing economic behavior from a monetary perspective.

When we speak of "inflation" in an economy, we are referring to monetary behaviors. We can't williy nilly go and change the definition of the word. The term "inflation" assumes a point of view. GDP in not measured in terms of potato production in Idaho simply because Idaho potato farmers want to talk about their potato crop.

So I will say it again as it relates to the question asked,

Rthor wrote:

Let's say I point my guns at a rat and get a bounty. Isk is created. This is supposedly inflationary.

Let's say I point my miner at a veldspar rock. Tritanium is created. This is supposedly not inflationary because it is not an "isk faucet." It is a trit faucet. Whatever is the difference.


The difference is, one is the most commonly used item for indirect trade, (aka money) and one is not money. The context here is economics, not English. Playing fast and loose with the definition and context of words is a linguistic argument, not an economic argument.


I think you need to simplify your explanation.

One can not pay market fees with Trit, therefore Trit is not money. With 12 trillion Trit and 0 isk, you will lose sovereignty.