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Inflation

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Claire Voyant
#61 - 2013-09-05 23:24:07 UTC
Diska Eamod wrote:
One can not pay market fees with Trit, therefore Trit is not money. With 12 trillion Trit and 0 isk, you will lose sovereignty.

You cannot pay your subscription with trit or isk so neither one is money.
Adunh Slavy
#62 - 2013-09-06 02:04:21 UTC
Claire Voyant wrote:
Diska Eamod wrote:
One can not pay market fees with Trit, therefore Trit is not money. With 12 trillion Trit and 0 isk, you will lose sovereignty.

You cannot pay your subscription with trit or isk so neither one is money.



You can't pay the market fees with dollars or euros, so they must not be money.

Oh wait, we're talking about the Eve Economy, not the real world.

Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.  - William Pitt
Vaerah Vahrokha
Vahrokh Consulting
#63 - 2013-09-06 02:07:24 UTC  |  Edited by: Vaerah Vahrokha
Claire Voyant wrote:
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.


Markets with a tranquil and ranging trend are markets that are steady and whose demand vs supply is holding well.

As PLEX price rising is usually taken as example of inflation, this shows quite the opposite of the "inflation is running rampant" than some keep repeating here and on GD.

EvE Online portal | EvE markets tutorials
Vaerah Vahrokha
Vahrokh Consulting
#64 - 2013-09-06 02:15:41 UTC  |  Edited by: Vaerah Vahrokha
Rthor wrote:

Isk fails as a store of value not because I claim that it will go down in value. Value of isk can even go up from patch to patch. It fails as a store of value because it's value is not stable. From patch to patch its value jumps either up or down. It is like having dollars in real life and one month you can buy a car for 20 grand then next month for same car for 10 grand and then next month for 40 grand and then again for 10 grand. Would you call dollar money if that was happening in real world? Heck maybe you would but a lot of people would then try to dump such a currency and go with something else. This is my argument here that isk is not acting like money.


You are bringing in a borderline case with dollar. It's so steady to make your sentences true but this only because dollars are a "refuge, reference" currency.
If you lived in other countries you'd have experienced what means having 20% a year depreciation, having prices doubling overnight across a wide range of goods because of "central boureau induced" choices and so on.

EvE Online portal | EvE markets tutorials
Claire Voyant
#65 - 2013-09-06 03:23:35 UTC  |  Edited by: Claire Voyant
Adunh Slavy wrote:
Claire Voyant wrote:
Diska Eamod wrote:
One can not pay market fees with Trit, therefore Trit is not money. With 12 trillion Trit and 0 isk, you will lose sovereignty.

You cannot pay your subscription with trit or isk so neither one is money.



You can't pay the market fees with dollars or euros, so they must not be money.

Oh wait, we're talking about the Eve Economy, not the real world.

I haven't paid market fees in years, but for the sake of argument suppose I mine veld, refine it into trit, convert the trit to isk, and then convert the isk to PLEX to extend my subscription paying various taxes and fees in the process,. Why should I care about the relative value of isk?

Edit: As I recall the market fees are a percentage of the trade value so it shouldn't matter to me if I pay half a billion or a billion for my PLEX if it requires the same amount of mining to procure it.
Claire Voyant
#66 - 2013-09-06 03:50:28 UTC
Vaerah Vahrokha wrote:
Claire Voyant wrote:
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.


Markets with a tranquil and ranging trend are markets that are steady and whose demand vs supply is holding well.

As PLEX price rising is usually taken as example of inflation, this shows quite the opposite of the "inflation is running rampant" than some keep repeating here and on GD.

I'm surprised to hear you talking about supply and demand, but since you mentioned it PLEX demand is relatively inelastic while supply would most likely be very elastic. An increase in PLEX price would be expected to bring new supplies of PLEX on the market as isk buyers take advantage of the improved exchange rate. A "tranquil" market price could still mean large swings in volume because PLEX is so price sensitive.

The basic problem with the whole inflation/deflation discussion in Eve is that no one can agree on what the terms mean in the context of the Eve economy. Personally I consider rising PLEX prices as a sign of deflation since it means the value of stuff in eve (both goods and isk) is declining in real value. Since he only thing in Eve that has been experiencing a long-term increase in price is PLEX it seems silly to call that inflation since by definition it means a general increase in prices over time and is not meant to apply to a single commodity.
Vaerah Vahrokha
Vahrokh Consulting
#67 - 2013-09-06 07:07:19 UTC
Claire Voyant wrote:

I'm surprised to hear you talking about supply and demand


Why?

Depending on each market, D&S play a bigger or smaller role at forming price.

I don't strictly need to know the D&S ratios or roles for each market nor the volumes, but they are factors. Factors useful to learn why a market is structured in a certain way or another.

EvE Online portal | EvE markets tutorials
Rthor
Smugglers Inc.
#68 - 2013-09-07 01:24:38 UTC
Vaerah Vahrokha wrote:
Rthor wrote:

Isk fails as a store of value not because I claim that it will go down in value. Value of isk can even go up from patch to patch. It fails as a store of value because it's value is not stable. From patch to patch its value jumps either up or down. It is like having dollars in real life and one month you can buy a car for 20 grand then next month for same car for 10 grand and then next month for 40 grand and then again for 10 grand. Would you call dollar money if that was happening in real world? Heck maybe you would but a lot of people would then try to dump such a currency and go with something else. This is my argument here that isk is not acting like money.


You are bringing in a borderline case with dollar. It's so steady to make your sentences true but this only because dollars are a "refuge, reference" currency.
If you lived in other countries you'd have experienced what means having 20% a year depreciation, having prices doubling overnight across a wide range of goods because of "central boureau induced" choices and so on.


Actually I did live in such a country. But that is besides the point.

The problem with deflation is that it creates a bias against investment or industrial activity decisions. Why would you do the work if once the work is done prices will be lower than you expected wiping out your expected profit. You would be better off holding on to isk and doing nothing.

I think that possibly CCP is intentionally causing deflation thinking that inflation is bad, while only run-away inflation is bad.

Price stability with no deflation and no inflation would be fine.
Adunh Slavy
#69 - 2013-09-07 22:13:45 UTC  |  Edited by: Adunh Slavy
Rthor wrote:

The problem with deflation is that it creates a bias against investment or industrial activity decisions. Why would you do the work if once the work is done prices will be lower than you expected wiping out your expected profit. You would be better off holding on to isk and doing nothing.

I think that possibly CCP is intentionally causing deflation thinking that inflation is bad, while only run-away inflation is bad.

Price stability with no deflation and no inflation would be fine.


It's esoteric post time.

Economies with commodity money are almost always deflationary; the rate of deflation is generally rather slow. This is something most of us alive today are not used to seeing. We are used to an environment of inflation in our day to day real lives due to fiat currency and the general behavior and belief of Keynesian economists, bankers and politicians that like to give away "free stuff" for votes and start wars. Politics aside, we think inflation is the norm when it is not the case at all, deflation is the norm.

The reason Keynesians, like Ben Bernake and Paul Krugman fear deflation is, they are considering a very rapid event due to the aimless meanderings of central banks and governments in a fiat system with fractional reserve banking. Natural deflation is a process that occurs slowly, so slowly that capital investment is worth while, to address the deflation effect cited in the quote.

Anyway ...

Why is this the case? In a commodity money environment, that is not overly constrained by a government, people choose to do the labor/activities available to them. This usually leads to a pretty good distribution of labor. Some of that labor goes to the production of the monetary commodity. If we examine the regression of value (aka sticky prices), when too much money is in the system, the commodity money labor is not as attractive, so it attracts less labor ... good old supply and demand.

Monetary commodities, those that have stood the test of time across cultures and ages are silver and gold. As time passes, these commodities become more rare in relation to population and productivity. This is not the case with ISK in Eve. An examination of this aspect is not useful for us, so that's all I will say about that, simply realize they are labor intensive and require increasing amounts of labor (in the past) to produce.

Now in the case of Eve, ISK is a commodity money from a functional perspective, its production requires labor in the past. However, ISK does not become more rare with time, it does not require more labor to produce over time (increasingly rare) as do things like silver and gold. Though, the population growth, distribution of labor, increasingly efficient production, and the regression aspect are the same as a real world economy with a commodity money.

People, in Eve, are relatively free to choose whatever they wish, and can switch professions rather easily. If we examine the value of ISK versus something else, and something else is more worth while compared to what it was yesterday, then it will tend to attract labor where as ISK production will not: regression of value, aka sticky prices. Labor can shift relatively easily in Eve when players try to maximize the value of their labor, and they do so according to what they remember prices were in the past. Regression of value and Distribution of Labor.

Another aspect to keep in mind is that, over time economies tend to become more efficient. People learn how to do their jobs better gaining experience, new technologies, research and development increase productivity. In Eve we get these due to a few things, BPO research, Skill Points and better levels - players become more efficient and their productivity of ISK and stuff increases over time.

So, the primary drivers for steady and sometimes deflationary behavior in some markets in Eve are, Distribution of labor, Regression of value and productivity increases. There is also the aspect of the broken window not being entirely fallacious in Eve, but that's another subject for another thread someday in the future, and has been done in the past.

Keeping those things in mind, examine the Eve market, find out which things fail in one or more of these general rules and profit. Enjoy.

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.
#70 - 2013-09-08 21:55:23 UTC
I suspect that deflation is caused by eve devs because they are scared of run-away inflation. I think that inflation that is kept under control, like maybe a few percent per year is a superior alternative to deflation.

Also I suppose that miners and PLEX are deflationary. Basically people just mine for PLEX and dump minerals at any price.

If this is so then there is no floor on mineral prices. Yes you may see mineral prices jump (they were artificially held at 1 isk for trit, hence their jump, etc) or rebound as a result of game-play changes. However, this is where understanding the difference between something being deflationary and deflation comes into play.

Isk generation is inflationary as you say. But even with it being inflationary you may still have deflation if other deflationary forces dominate. A deflationary force could be people growing their isk wallet for insurance purposes (as I do) or quitting Eve with billions of isk in wallet.

This is a big issue because, as I said deflation creates a bias against industrial activity. If you are better off doing nothing than investing then nothing will get done unless some people like to do things at a loss like mining my own minerals is free. Now consider that some people may be running level 4 missions only to cover their industrial activity losses without realizing it.

I think that the whole idea of devs being opposed to passive income stream is what is causing deflation. Basically if you had a bank where you could hold your isk, that was safe, then people could take breaks from the game without having to do a lot of work on their comeback to try to get back to where they were. In a sense holding isk provides passive income because of deflation at a risk of getting wiped out by a patch, which is not really good design.

But having said this, we are talking about a game that is 10 years old. Just because economics is out of whack is not the end of the world. I bet that physics is not exactly correct either although I would not know a thing about it.
Tau Cabalander
Retirement Retreat
Working Stiffs
#71 - 2013-09-09 22:59:03 UTC
People really should read Dr. E's past reports, and watch past presentations, like the fanfest one:

http://www.youtube.com/watch?v=Ie9V2P5El0E
Tina Tyrion Lanister
Royal Amarr Institute
Amarr Empire
#72 - 2013-09-12 10:28:54 UTC
The traditional concept of inflation is that the currency itself loses value. Not that the "demand" is any less per se.

I get the impression that isk enters the game economy faster than it leaves the economy thus the slow creep towards inflation (not deflation). What takes isk out of the economy? Taxes? Compared to the massive isk influx due to missions/ratting i'm guessing the net result is more isk incoming rather than outgoing. (although I have no data to back this up)

Almost every commodity i look at tends to be worth less in terms of its "isk value" (with many exceptions, but that seems to be the general trend)
Kaivar Lancer
Doomheim
#73 - 2013-09-12 16:30:07 UTC
I liek money.
Rthor
Smugglers Inc.
#74 - 2013-09-14 00:39:18 UTC
Tina Tyrion Lanister wrote:
The traditional concept of inflation is that the currency itself loses value. Not that the "demand" is any less per se.

I get the impression that isk enters the game economy faster than it leaves the economy thus the slow creep towards inflation (not deflation). What takes isk out of the economy? Taxes? Compared to the massive isk influx due to missions/ratting i'm guessing the net result is more isk incoming rather than outgoing. (although I have no data to back this up)

Almost every commodity i look at tends to be worth less in terms of its "isk value" (with many exceptions, but that seems to be the general trend)


I see the same thing. Despite the obvious idea that more and more isk is generated as time goes by stuff gets worth less and less. So perhaps, oh wow, other stuff is being generated faster than isk... But the celebrities of this forum are cement hard headed to realize this.

I have this joke. A friend of mine once told me after months of arguing that he has to admit that I was right about something. I told him that he is brilliant because it only took him 6 months to agree with me. Normally it takes people longer.

So ta ta. I do not care what you think, however, do come back to this thread in 6 months if you remember to check prices. I have stuff to rule in the meantime. On second thought no hints.
arabella blood
Keyboard Jihad
#75 - 2013-09-14 06:39:40 UTC
Rthor wrote:
Tina Tyrion Lanister wrote:
The traditional concept of inflation is that the currency itself loses value. Not that the "demand" is any less per se.

I get the impression that isk enters the game economy faster than it leaves the economy thus the slow creep towards inflation (not deflation). What takes isk out of the economy? Taxes? Compared to the massive isk influx due to missions/ratting i'm guessing the net result is more isk incoming rather than outgoing. (although I have no data to back this up)

Almost every commodity i look at tends to be worth less in terms of its "isk value" (with many exceptions, but that seems to be the general trend)


I see the same thing. Despite the obvious idea that more and more isk is generated as time goes by stuff gets worth less and less. So perhaps, oh wow, other stuff is being generated faster than isk... But the celebrities of this forum are cement hard headed to realize this.

I have this joke. A friend of mine once told me after months of arguing that he has to admit that I was right about something. I told him that he is brilliant because it only took him 6 months to agree with me. Normally it takes people longer.

So ta ta. I do not care what you think, however, do come back to this thread in 6 months if you remember to check prices. I have stuff to rule in the meantime. On second thought no hints.


See, there is a reason why NONE is willing to agree with you - its because you are wrong :)

And claiming "Didn't need your agreement anyway" is:
1. Delicious tears of a guy with no fiends.
2. childish.
3. pathetic.

And screaming "you all will see i was right at the end" is even more pathetic.

Grow a brain.

Troll for hire. Cheap prices.

Snagletooth Johnson
Center for Advanced Studies
Gallente Federation
#76 - 2013-09-14 17:45:27 UTC
Inflation and deflation is in relation to the circulation of the physical dollar in relation to demand. High demand for cash without enough cash to go around creates inflation. When demand drops and dollars flood back home, you get deflation of the dollar. The pice of goods is can rise and fall even with a stable dollar just becuse of direct cost ( afew more employees, a bad crop, ect.).

We have no real, hard cash in Eve. In Eve, ISk doesn't really exist, it's just a term for cashless credits..ISK is infinite. In the real world, the dollar is hard currency in curculation, it is finite. In Eve, the "value" of infinite ISK is tied to infinite resources (yes, even plex is infinite). In the real world, product value is tied to finite resurces in realtion to finite currency value available.

The reason there is and always be run-away inflation in Eve, is becuase it doesnt matter. need more isk? run a another mission, grab another ore load, buy a nother plex and sell it. Need more dollar in the real world, well, you have to wait for the government to make it.
arabella blood
Keyboard Jihad
#77 - 2013-09-14 18:34:33 UTC
Snagletooth Johnson wrote:
Inflation and deflation is in relation to the circulation of the physical dollar in relation to demand. High demand for cash without enough cash to go around creates inflation. When demand drops and dollars flood back home, you get deflation of the dollar. The pice of goods is can rise and fall even with a stable dollar just becuse of direct cost ( afew more employees, a bad crop, ect.).

We have no real, hard cash in Eve. In Eve, ISk doesn't really exist, it's just a term for cashless credits..ISK is infinite. In the real world, the dollar is hard currency in curculation, it is finite. In Eve, the "value" of infinite ISK is tied to infinite resources (yes, even plex is infinite). In the real world, product value is tied to finite resurces in realtion to finite currency value available.

The reason there is and always be run-away inflation in Eve, is becuase it doesnt matter. need more isk? run a another mission, grab another ore load, buy a nother plex and sell it. Need more dollar in the real world, well, you have to wait for the government to make it.


Are you reffering to "amount of isk inflation", or "prices inflation" ??

Troll for hire. Cheap prices.

Rthor
Smugglers Inc.
#78 - 2013-09-15 02:42:44 UTC
arabella blood wrote:
Rthor wrote:
Tina Tyrion Lanister wrote:
The traditional concept of inflation is that the currency itself loses value. Not that the "demand" is any less per se.

I get the impression that isk enters the game economy faster than it leaves the economy thus the slow creep towards inflation (not deflation). What takes isk out of the economy? Taxes? Compared to the massive isk influx due to missions/ratting i'm guessing the net result is more isk incoming rather than outgoing. (although I have no data to back this up)

Almost every commodity i look at tends to be worth less in terms of its "isk value" (with many exceptions, but that seems to be the general trend)


I see the same thing. Despite the obvious idea that more and more isk is generated as time goes by stuff gets worth less and less. So perhaps, oh wow, other stuff is being generated faster than isk... But the celebrities of this forum are cement hard headed to realize this.

I have this joke. A friend of mine once told me after months of arguing that he has to admit that I was right about something. I told him that he is brilliant because it only took him 6 months to agree with me. Normally it takes people longer.

So ta ta. I do not care what you think, however, do come back to this thread in 6 months if you remember to check prices. I have stuff to rule in the meantime. On second thought no hints.


See, there is a reason why NONE is willing to agree with you - its because you are wrong :)

And claiming "Didn't need your agreement anyway" is:
1. Delicious tears of a guy with no fiends.
2. childish.
3. pathetic.

And screaming "you all will see i was right at the end" is even more pathetic.

Grow a brain.


You keep popping up here but you have no ideas whatsoever. Just another random vacuous forum celebrity. When was the last time you had an original thought that you shared with us? There was none. All you do is attack. Even if you have no point.

I could say that and end on this. However, almost nobody has an original thought, and frankly I did not produce one here. I am just rehashing economic knowledge that people who are quite smart produced. However, it seems that on forums there is always this group of vultures who contribute absolutely nothing to the discussion and all they do is attack attack attack even if they are completely clueless. I just wanted to point it out that this is you.
arabella blood
Keyboard Jihad
#79 - 2013-09-15 03:41:38 UTC
Rthor wrote:
arabella blood wrote:
Rthor wrote:
Tina Tyrion Lanister wrote:
The traditional concept of inflation is that the currency itself loses value. Not that the "demand" is any less per se.

I get the impression that isk enters the game economy faster than it leaves the economy thus the slow creep towards inflation (not deflation). What takes isk out of the economy? Taxes? Compared to the massive isk influx due to missions/ratting i'm guessing the net result is more isk incoming rather than outgoing. (although I have no data to back this up)

Almost every commodity i look at tends to be worth less in terms of its "isk value" (with many exceptions, but that seems to be the general trend)


I see the same thing. Despite the obvious idea that more and more isk is generated as time goes by stuff gets worth less and less. So perhaps, oh wow, other stuff is being generated faster than isk... But the celebrities of this forum are cement hard headed to realize this.

I have this joke. A friend of mine once told me after months of arguing that he has to admit that I was right about something. I told him that he is brilliant because it only took him 6 months to agree with me. Normally it takes people longer.

So ta ta. I do not care what you think, however, do come back to this thread in 6 months if you remember to check prices. I have stuff to rule in the meantime. On second thought no hints.


See, there is a reason why NONE is willing to agree with you - its because you are wrong :)

And claiming "Didn't need your agreement anyway" is:
1. Delicious tears of a guy with no fiends.
2. childish.
3. pathetic.

And screaming "you all will see i was right at the end" is even more pathetic.

Grow a brain.


You keep popping up here but you have no ideas whatsoever. Just another random vacuous forum celebrity. When was the last time you had an original thought that you shared with us? There was none. All you do is attack. Even if you have no point.

I could say that and end on this. However, almost nobody has an original thought, and frankly I did not produce one here. I am just rehashing economic knowledge that people who are quite smart produced. However, it seems that on forums there is always this group of vultures who contribute absolutely nothing to the discussion and all they do is attack attack attack even if they are completely clueless. I just wanted to point it out that this is you.


My porpuse is in my sig. Twisted

I am a celebrity now? Bear

Troll for hire. Cheap prices.

Rthor
Smugglers Inc.
#80 - 2013-09-15 03:46:29 UTC
arabella blood wrote:
Rthor wrote:
arabella blood wrote:
Rthor wrote:
Tina Tyrion Lanister wrote:
The traditional concept of inflation is that the currency itself loses value. Not that the "demand" is any less per se.

I get the impression that isk enters the game economy faster than it leaves the economy thus the slow creep towards inflation (not deflation). What takes isk out of the economy? Taxes? Compared to the massive isk influx due to missions/ratting i'm guessing the net result is more isk incoming rather than outgoing. (although I have no data to back this up)

Almost every commodity i look at tends to be worth less in terms of its "isk value" (with many exceptions, but that seems to be the general trend)


I see the same thing. Despite the obvious idea that more and more isk is generated as time goes by stuff gets worth less and less. So perhaps, oh wow, other stuff is being generated faster than isk... But the celebrities of this forum are cement hard headed to realize this.

I have this joke. A friend of mine once told me after months of arguing that he has to admit that I was right about something. I told him that he is brilliant because it only took him 6 months to agree with me. Normally it takes people longer.

So ta ta. I do not care what you think, however, do come back to this thread in 6 months if you remember to check prices. I have stuff to rule in the meantime. On second thought no hints.


See, there is a reason why NONE is willing to agree with you - its because you are wrong :)

And claiming "Didn't need your agreement anyway" is:
1. Delicious tears of a guy with no fiends.
2. childish.
3. pathetic.

And screaming "you all will see i was right at the end" is even more pathetic.

Grow a brain.


You keep popping up here but you have no ideas whatsoever. Just another random vacuous forum celebrity. When was the last time you had an original thought that you shared with us? There was none. All you do is attack. Even if you have no point.

I could say that and end on this. However, almost nobody has an original thought, and frankly I did not produce one here. I am just rehashing economic knowledge that people who are quite smart produced. However, it seems that on forums there is always this group of vultures who contribute absolutely nothing to the discussion and all they do is attack attack attack even if they are completely clueless. I just wanted to point it out that this is you.


My porpuse is in my sig. Twisted

I am a celebrity now? Bear



Yeah you are Kim Kardashian of market discussion in Eve forums. Grats. Fantastic accomplishment.