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Mad inflation

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Tyberius Franklin
Federal Navy Academy
Gallente Federation
#541 - 2012-03-16 22:25:01 UTC
Darth Gustav wrote:
Liang Nuren wrote:
Skex Relbore wrote:

You graphs are still not showing monetary inflation. Monetary inflation due to an over abundance of ISK would result in a relatively steady increase in prices overtime. What the graph shows is market volatility as a result of many different factors not price inflation due to an increase in the money supply

The data just doesn't support your position. the initial bump on the graph coincides with the introduction of PI not incursions. Which makes perfect sense, CCP replaced a heavily regulated market that had a fixed price/costs and an unlimited supply with a completely new player controlled mechanic.

The data just isn't consistent with monetary inflation. once again if we were looking at monetary inflation we'd see a steady increase in prices over time as the general supply of isk increased relative to production. This is not what has happened.

Now you probably won't see a return to pre-PI prices because those inputs are limited by supply rather than simply being a factor of demand (NPC supplied items have an effective unlimited supply and their price is fixed which puts an artificial constraint on the market). Whether prices return to the Dec levels is going to depend on how the Russian war resolves itself and whether CCP removes drone goo as a major sources of minerals.

The EVE economy is a fairly complex beast but monetary inflation isn't. Monetary inflation is a oversupply of currency relative to the overall economy and would manifest in a steady increase in prices over time.

Now I'm not saying that there isn't any monetary inflation, there probably is. in fact a certain amount of inflation is generally healthy for an economy as it provides an disincentive to hoard currency.

You would expect a general increase the supply of currency as the player base matures and becomes more efficient at harvesting isk, you'll also see a change in spending habits overtime as this happens. which is why I don't consider the 5% increase in money supply relative to population that CCP's economist reported to be indicative of a problem

The point is the level of monetary inflation that has manifested in EVE has not caused the market failures associated with hyper-inflation. In fact all indicators are to the opposite. The EVE economy is humming along quite nicely. The bears are farming their isk the PVPers are blowing up their ships and everyone is having a good ole time. Which in the end is the whole point of the economy in the game.


Heh, go read the latest dev blog. ;-)

-Liang


What I read indicates that a tiny amount of players are injecting almost 25% of the ISK into the economy.

Do you suspect that 25% of Eve's population run incursions? If not, then it's broken.

Because I can pretty much guarantee you that more than 75% of the population contribute to bounties.

They only stated the values associated with 2 isk faucets and didn't give a total amount provided by faucets. The only thing that could be derived from those numbers is that incursions introduce about 25% of the isk that bounties do.
Patri Andari
Thukker Tribe Antiquities Importer
#542 - 2012-03-16 23:37:59 UTC
MacLuven wrote:
Incursions? The cause of this thing this weekend?

Not so sure about that.

Money supply is not a sufficient cause of inflation, a necessary cause but not sufficient.

There's a great historical example of an economy that experienced a high population growth, economic growth, productivity growth, and growth in the money supply, but experienced deflation. Eve, 2006-2007.

A growth in money supply isn't a problem so long as the economy can continue to grow fast enough to match the demand generated by the new supply of money. Theoretically.

Money supply is needed to fuel economic growth. Inflation occurs when inefficiencies develop in the economic structure and supply cannot match demand leading to price increases. If money supply increases and it is matched by economic growth, it is not necessarily inflationary. Practically it is inflationary because economies lag a bit in adjusting to its growth.


I'd be more easily convinced that there was a connection between the Incursion flood gates opening and the blow up this weekend if there hadn't been 13.5 months between when Incursions started and now.

And I don't see why how it could have caused the mineral markets to go so crazy.

If the flood of money creating a new super rich class, why are the ultra luxury goods, like faction battleships and tech 2 stuff not going up in price with trend?

The tech 1 battleships are all on a steep climb, but Rattlesnakes, Nightmares, and Vindicators are all trending down in price. Bhaalgorn's are looking stable. Machariels are the only ones going up.

That suggests to me that the run-away prices are a tech 1 phenomenon which means driven by the mineral market. That sounds like a supply shortfall and not a demand spike.

Checking on the tech 1 battleship volume numbers, they look pretty steady over time. So, it's not a spike in demand.

This looks like a mineral supply issue to me.


CCP hire this man. I do not know if he is right, but hot damn!

Among all this bitter nit picking with little factual support, he actually made a analysis based on facts and supported it with reasoning.

If he is right, and I am warming to the opinion, might not recent events that have caused many miners to stop mining be the blame? Ice interdiction coupled with the seemingly general rise in exhumer ganks. Add to that the recent bot purge and that could cause what we are seeing here. Not to mention speculation and mineral manipulation.

Good job sir.





Be careful what you think, for your thoughts become your words. Be careful what you say, for your words become your actions. Be careful what you do, for your actions become your character. And character is everything. - author unknown
Patri Andari
Thukker Tribe Antiquities Importer
#543 - 2012-03-17 00:08:46 UTC
@ CCP Soundwave

A while ago you guys introduced internal figures showing where the minerals in Eve were coming from. It broke down the contribution from mining, drone poo and other reprocessing from loot and such. ( I think carrier spawns were not included iirc)

I know you are a busy man, but I would love to see how those figures have changed to date and hear your views on how much mineral supply may or may not be influencing the current trend in price changes upward.


Thanks.

Be careful what you think, for your thoughts become your words. Be careful what you say, for your words become your actions. Be careful what you do, for your actions become your character. And character is everything. - author unknown
Ann Can
Doomheim
#544 - 2012-03-17 00:31:41 UTC
Patri Andari wrote:

CCP hire this man. I do not know if he is right, but hot damn!



Others have been saying as much for months. This guy is late to the party.
DarthNefarius
Minmatar Heavy Industries
#545 - 2012-03-17 07:21:59 UTC
Have to re-iterate: THE MINERAL SITUATION IS MUCH,MUCH MORE WORRYING THEN INCURSIONS,level 4-5 bounties, bott bans & tech moon faucets BY A LONG SHOT replace drones pooping alloys with bounties IN 1 SWITFT BLOW(PATCH?) AND YOU'LL SEE HYPER INFLATION WHICH WILL make your HEADS SPIN IMHO
An' then Chicken@little.com, he come scramblin outta the    Terminal room screaming "The system's crashing! The system's    crashing!" -Uncle RAMus, 'Tales for Cyberpsychotic Children'
DarthNefarius
Minmatar Heavy Industries
#546 - 2012-03-17 07:35:26 UTC  |  Edited by: DarthNefarius
Mara Rinn wrote:
You are talking through your bum I didn't see a relaxation in PLEX prices until afterwards on my graphs which indicates another factor was at play... the 'interdiction' was so short lived you could not say PLEX's prices went up or down either way without horrible p values statistically.


Your graphs are talking out their bum. I was following the PLEX prices due to being in the market. Interdiction started, prices went down. Interdiction ended, prices went back up. There's a little bathtub in the graph right about that time. Then there are the PLEX offers which despite their unattractiveness compared to GTC from resellers do have an impact on PLEX prices ingame.

There are downward fluctuations over the year that very closely correspond with PLEX offers, the interdiction, and school holidays. There are peaks which correlate with pre-expansion speculation and others which correlate with "OMG PLEX PRICES" posts by market manipulators.

Perhaps try running with shorter rolling durations, since a 7-day rolling average is going to show you nothing of value apart from week long trends. Try an 8 hour rolling average to spot trends shorter than a week.

As for your statistics, note that p-scores are used for determining the confidence that a particular result set fits your hypothesis. Statistics and probability are about analyzing sets of numbers in a static sample, not trends, and certainly have nothing to do with facts.


The interdiction you talk about has a low confidence level due to its haphazard time ( sample set was small ) I don't think a trend could be established and I question vehmetly your conclusions as being unfounded. FYI there was a earlier incursion interdiction by the way that was just as long ( there was also a very much shorter 'almost' interdiction of MOM sites which really makes the number of Incursion interdiction = 3) did you see the same PLEX price reduction then?
An' then Chicken@little.com, he come scramblin outta the    Terminal room screaming "The system's crashing! The system's    crashing!" -Uncle RAMus, 'Tales for Cyberpsychotic Children'
Adunh Slavy
#547 - 2012-03-17 08:47:19 UTC
DarthNefarius wrote:
Have to re-iterate: THE MINERAL SITUATION IS MUCH,MUCH MORE WORRYING THEN INCURSIONS,level 4-5 bounties, bott bans & tech moon faucets BY A LONG SHOT replace drones pooping alloys with bounties IN 1 SWITFT BLOW(PATCH?) AND YOU'LL SEE HYPER INFLATION WHICH WILL make your HEADS SPIN IMHO



No :) There can not be a hyper inflation in Eve in the same way that it can happen in the real world. Once mineral prices shoot up high enough, everyone and their Eve playing cat will be out mining. Expansion of money will slow down and a new equilibrium will be found. Despite everyone's big fear of "inflation" it might just be the best thing that could happen to Eve right now. I won't lie and pretend that the potential of a 1300% increase in prices isn't alarming, but we have to understand how we got here before we'll ever be able to figure out how to fix it.

There is only one thing players spend in Eve, that thing is time. Players are going to gravitate to the activities that generate the most wealth for that time. They are going to ISK faucets because there isn't an increase in prices that meets the money supply, so the money supply just keeps getting bigger and bigger and bigger.

The more CCP tries to keep inflation in check by tinkering with the ISK supply, the more distortion they cause in the economy. ISK is not the problem, it's all the artificial caps, over supply, lack of any consumables and poor divisions of labor that are the real issues in the economy. Lowering the monetary base doesn't fix any of these things, it just changes the magnitude of the behaviors and the frequency of inflationary manifestations.

We may see some shocking numbers ahead, and I am sure many people will scream and whine that Eve is dying, when in fact, it might just be the kick in the ass it needs to wake up.

Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.  - William Pitt
OfBalance
Caldari State
#548 - 2012-03-17 09:39:12 UTC
Invest in widgets, ride out the inflationary period.

You heard it here first!
Mr Kidd
Center for Advanced Studies
Gallente Federation
#549 - 2012-03-17 10:41:13 UTC  |  Edited by: Mr Kidd
Patri Andari wrote:
MacLuven wrote:
Incursions? The cause of this thing this weekend?

Not so sure about that.

Money supply is not a sufficient cause of inflation, a necessary cause but not sufficient.

There's a great historical example of an economy that experienced a high population growth, economic growth, productivity growth, and growth in the money supply, but experienced deflation. Eve, 2006-2007.

A growth in money supply isn't a problem so long as the economy can continue to grow fast enough to match the demand generated by the new supply of money. Theoretically.

Money supply is needed to fuel economic growth. Inflation occurs when inefficiencies develop in the economic structure and supply cannot match demand leading to price increases. If money supply increases and it is matched by economic growth, it is not necessarily inflationary. Practically it is inflationary because economies lag a bit in adjusting to its growth.


I'd be more easily convinced that there was a connection between the Incursion flood gates opening and the blow up this weekend if there hadn't been 13.5 months between when Incursions started and now.

And I don't see why how it could have caused the mineral markets to go so crazy.

If the flood of money creating a new super rich class, why are the ultra luxury goods, like faction battleships and tech 2 stuff not going up in price with trend?

The tech 1 battleships are all on a steep climb, but Rattlesnakes, Nightmares, and Vindicators are all trending down in price. Bhaalgorn's are looking stable. Machariels are the only ones going up.

That suggests to me that the run-away prices are a tech 1 phenomenon which means driven by the mineral market. That sounds like a supply shortfall and not a demand spike.

Checking on the tech 1 battleship volume numbers, they look pretty steady over time. So, it's not a spike in demand.

This looks like a mineral supply issue to me.


CCP hire this man. I do not know if he is right, but hot damn!

Among all this bitter nit picking with little factual support, he actually made a analysis based on facts and supported it with reasoning.

If he is right, and I am warming to the opinion, might not recent events that have caused many miners to stop mining be the blame? Ice interdiction coupled with the seemingly general rise in exhumer ganks. Add to that the recent bot purge and that could cause what we are seeing here. Not to mention speculation and mineral manipulation.

Good job sir.







IDK, he points to 3 faction BS's going down in price as a lack of demand for luxury goods. As for the rattlesnake and nightmare, can't say, but the Vindi received a buff with Galente rebalancing which actually inflated it's price by at least 200mil that I'm aware of, probably more because I quit looking after it crossed the 1bil mark. So current down trends are most likely due to demand being suppressed by it's recent price increase due to game mechanics, not increases/decreases in component price. While it is a supply and demand issue, as everything in very general terms can be attributed, the Vindi's price was directly influenced by game mechanic changes, not lower level price changes in components & resources.

He's making some assumptions, not necessarily tied directly to game mechanic changes which are the overall driving factors in price in game.

As for inefficiencies in the market, this is an area that I have a little bit of experience pertaining to T3 production. Last I looked, T3's and their subsystems, overall, were selling for less than market value of their build components. If we equate efficiency to competitiveness then it doesn't get more efficient than selling a product for less than it's component value. I suspect other product markets suffer from the same problem but, I cannot specifically verify this.

Which brings us to the mineral markets. Many people in Eve believe that resources they gather themselves are "free", i.e. they don't consider the resources' market value when pricing their end products. As such, I would expect that prices for end products are somewhat insulated from fluctuations in mineral price changes because of the "resources are free" mentalities in Eve. My guess would be that price changes are driven more by speculators who are looking for value. Generally, these folks are knowledgeable of changes in game mechanics and are keenly aware of those changes. They don't examine the market, so much to find opportunity, but, look at dev blogs, Sisi and DB dumps as indicators of future directions.

If this is more accurately how the Eve market works, and I'm not saying I'm correct, then there is a indirect, not a direct, correlation between mineral price and product price. Rather, there is a direct correlation between speculation & mineral price and speculation & product price.

While Macluven's assumptions, based on market trends and inflation, might be right on in the real world, he's not taking into account game mechanics which are telegraphed via dev blogs, Sisi and databases. Therefore, his conclusions about supply/demand, wealth and inflation are probably not accurate for Evedom.

Don't ban me, bro!
Mussaschi
No Wise Guy's
#550 - 2012-03-17 11:26:13 UTC
lol, 28 pages renting about inflation and the presumed reasons, and one nice dev blog, showing that most get it totally wrong ;)

For those whoo haven't read it already. New ISK sources and inflation are hardly coupled (if at all).

So a big thanks to all the "experts" in this threat handing out their own interpretation. Rereading all this suddenly almost becomes fun.
Doomhowler II Augustus
Incestuous Cult of Paranoid Swamp People
#551 - 2012-03-17 11:42:27 UTC
do you feel your reaction is different though, different from what you expected?
instead of feelings of victory, i am in fact kind of sad that so many people spew out false theory and others buy into it
Falkor1984
The Love Dragons
#552 - 2012-03-17 11:44:27 UTC  |  Edited by: Falkor1984
Zircon Dasher wrote:
Fun Facts:

In the month of Feb:


~8.6T ISK in Incursion Payouts

~4.8T in Mission Rewards + Mission Bonuses
~32T in NPC bounty


So of the combined Incursion/Missions/Ratting/etc ISK faucet

~81% comes from non-Incursion activity


EDIT: Beaten. Damn you Soundwave!


Kinda true, but keep in mind that a large part of those NPC bounties come from nullsec where there are isk sinks in the form of all kinds of costs like sov, stations, jumpbridges, stuff lost during transport etc. I cannot even begin to estimate how much that would be, but there are isk sinks in nullsec. Incursions do not have an appropiate isk sink apart from noobs losing ships, but since the number of guides on the web is in line with the current inflation, the number of losses will be small imho. So the net amount contributed to the isk stock in game is relatively high for incursions.
Doomhowler II Augustus
Incestuous Cult of Paranoid Swamp People
#553 - 2012-03-17 11:57:21 UTC  |  Edited by: Doomhowler II Augustus
Falkor1984 mate do not forget that there is pretty easy movement of isk and goods between empire and nullsec. could it be that with the right risk/reward ratio (buff-non-hisec!), the hisec bears will trade their isk for actual goods obtained from nullsec! it's like magic.

you should also think a bit more about what an isk sink is, because you make mistakes in your post:
* stuff lost during transport does not remove isk from the game, isk is a number in a wallet, it can't get blown up.
* 'noobs losing ships' does not remove isk from the system, it in fact adds some as an insurance payout.
* incursions also award lp. did i hear lp, like lp store? isn't that an isk sink heh! magic again.

also nerf hisec incursions lololol.
Falkor1984
The Love Dragons
#554 - 2012-03-17 11:58:39 UTC
Mussaschi wrote:
lol, 28 pages renting about inflation and the presumed reasons, and one nice dev blog, showing that most get it totally wrong ;)

For those whoo haven't read it already. New ISK sources and inflation are hardly coupled (if at all).

So a big thanks to all the "experts" in this threat handing out their own interpretation. Rereading all this suddenly almost becomes fun.


yeah......classic case of "lies, damn lies and statistics". Ofcourse there is no one source of inflation, but the total amount of isk flowing into the economy is way to high at the moment as compared to the amount flowing out. You can see that in that dev blog in most of the price indexes. The only one that is not increasing sharply is the one that has been bouncing around due to the change in PI mechanics.
Mind you that if a money flow in the economy is in balance, even a small increase in moneysupply (say 1-2%) can sent it into high inflation on a short notice. So the statement in that devblog that the Incursions rewards are not to blame is blatently wrong, since they contribute 25% of the money supply. It would be very interesting to see what the increase of the incursion bounties is. If they have increased by 10% lately (which is a grossunderstament I think), that already contributes 2,5% to the growth in money supply.
Doomhowler II Augustus
Incestuous Cult of Paranoid Swamp People
#555 - 2012-03-17 12:00:58 UTC
Falkor1984 wrote:
Mind you that if a money flow in the economy is in balance, even a small increase in moneysupply (say 1-2%) can sent it into high inflation on a short notice.

jesus christ o\ how do you even come up with this stuff
Falkor1984
The Love Dragons
#556 - 2012-03-17 12:01:58 UTC
Doomhowler II Augustus wrote:
Falkor1984 mate do not forget that there is pretty easy movement of isk and goods between empire and nullsec. could it be that with the right risk/reward ratio (buff-non-hisec!), the hisec bears will trade their isk for actual goods obtained from nullsec! it's like magic.

you should also think a bit more about what an isk sink is, because you make mistakes in your post:
* stuff lost during transport does not remove isk from the game, isk is a number in a wallet, it can't get blown up.
* 'noobs losing ships' does not remove isk from the system, it in fact adds some as an insurance payout.
* incursions also award lp. did i hear lp, like lp store? isn't that an isk sink heh! magic again.

also nerf hisec incursions lololol.


True mate, wasnt thinking straight on the ship losses indeed. And yes Hisec incursions should be nerfed anyway due to being game breaking, but thats just my opinion and a whole other discussion :)
Falkor1984
The Love Dragons
#557 - 2012-03-17 12:02:59 UTC
Doomhowler II Augustus wrote:
Falkor1984 wrote:
Mind you that if a money flow in the economy is in balance, even a small increase in moneysupply (say 1-2%) can sent it into high inflation on a short notice.

jesus christ o\ how do you even come up with this stuff


You might want to google moneysupply etc. Big smile Or ask Dr Enyo back to explain it to us.
Doomhowler II Augustus
Incestuous Cult of Paranoid Swamp People
#558 - 2012-03-17 12:10:56 UTC  |  Edited by: Doomhowler II Augustus
more money does not mean inflation per se.
there are two kinds of inflation:
* cost-push: happens due to a shortage of a critical resource. something is so desirable that it will be purchased pretty much no matter what, e.g technetium. if the resource is widely used in manufacturing chains (e.g tech) or for transport (e.g isotopes), it will in turn increase pretty much every price. now add speculators sitting on these resources to the mix.

* demand-pull: demand is larger than supply and people are willing to spend more to get what they want. this needs people really going out to spend more. imagine a guy A, he doesn't buy stuff at all. in january he has 1mil isk, in feb he has 1bil isk (he did some l4-s in his sentry domi) - is he contributing more to 'inflation' in february? after all he has 1000x the isk available to him, so he must be, right? nope. (also you could expect that if people are spending more on a good, more people will move towards producing it, countering the effect to some extent etc, but this is entering boring territory)
Falkor1984
The Love Dragons
#559 - 2012-03-17 12:16:56 UTC
Doomhowler II Augustus wrote:
more money does not mean inflation per se.
there are two kinds of inflation:
* cost-push: happens due to a shortage of a critical resource. something is so desirable that it will be purchased pretty much no matter what, e.g technetium. if the resource is widely used in manufacturing chains (e.g tech) or for transport (e.g isotopes), it will in turn increase pretty much every price. now add speculators sitting on these resources to the mix.

* demand-pull: demand is larger than supply and people are willing to spend more to get what they want. this needs people really going out to spend more. imagine a guy A, he doesn't buy stuff at all. in january he has 1mil isk, in feb he has 1bil isk (he did some l4-s in his sentry domi) - is he contributing more to 'inflation' in february? after all he has 1000x the isk available to him, so he must be, right? nope.


You are not looking at it from the monetary prospective, but from a goods perspective. The problem is that IF prices rise, people will start spending their money, because they fear it will be worthless tomorrow, which will drive up prices, which in turn will cause more money to be spent etc. Basically people will start hoarding goods instead of money. The "real economy" doesn't have anything to do with it.
Doomhowler II Augustus
Incestuous Cult of Paranoid Swamp People
#560 - 2012-03-17 12:23:43 UTC  |  Edited by: Doomhowler II Augustus
Cool, i'll sell some of my coercer-class destroyers for an inflated 100M/ea and buy more coercer bpos at.. wait, what?? that's right 7.7M/ea (because that's what they cost from an npc order: a sink, you know, the thing which gives isk value). After that I'll rent some factory slots for 333K/hour to expand my manufacturing operation. i think i'll do it in low-sec, because i'm not afraid of the risk - if I get podded, i can get like 200 new clones for the price of a single coercer.