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Bloggers #25, EVE Economics

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Forum B	Posted - 2006.08.25 09:41:00 - [241] Originally by: Depko Edited by: Depko on 25/08/2006 09:23:17 I agree, that the EVE economy is complicated and isn't 100% predictable and i can't be 100% sure what will happen after some changes in the economy. But i can say, that with significant rising GDP and constant ammount of Money, there is very high probability of price lowering, called deflation. The inflation showed in blog was about 5%-10% if i correctly remember. I agree, there is no needed to significantly lower it. But lowering it to 1-5% wouldn't cripple the economics in EVE either. But the inflation in some specific goods, i may call it price fluctuation, is very high. This doesn't help anyone, except these producers of the tech II items. I think the appropriate action would be rising of the supply of highly inflated items e.g. HACs. -- To express this in game developer language: The people want more TechII intems (e.g HACs) after some time and not lower ISK income. This would not crash the economy in any way. The oposite is true, it would most probably lower the overal inflation by a very small portion. First of all i'd like to point out that with a single precise and LIMITED basket inflaction was pointed out to be 5-10%. In reality it is (probably) already between 1-5% and not much more. Second tech 2 is not inflated. It is overpriced. Inflation hit the market as a whole. (don't need to explain further we both made some good posts and explained it pretty well). Still don't forget that ccp want tech 2 to be elite (therefore luxury good) so the solution could not be simply "raise the number of bpo" because: 1) this will not solve the problem, it will just postpone it 2) this will not keep tech 2 as elite items So the real solution is not to add bpos. Real solution is making the suplly line of tech 2 shiftable. I mean that it simply "could" increase at the expenses of great efforts and some money. A good idea to obtain that was a rare: drop of tech 2 bpcs by agents for 40k LP (Or perhaps 300-500k RP?). Rare because remember we want to keep it elite. Another one could be a rare drop of bpc as overseer's loot in some difficult complexes. Reverse engineering would not keep it elite though.
Depko	Posted - 2006.08.25 09:42:00 - [242] Originally by: dirty mick Edited by: dirty mick on 24/08/2006 23:07:52 Originally by: Depko You are still continuing to think about, how to take more money from the players. What about rising the supply on market ? How about agents giving HACs for e.g. 40.000 LP ? What about dropping more expensive items in loot, making miners and producers more effctive ? How about putting more laboratories, factories to the empire or allowing to build more POSes there ? i think all approchaes instinctively search restrictive actions to lower inflation. why not rise the quantity of the wanted goods instead of lowering the ammount of money used for demand ? restrictions are never very popular, this game literaly lives from it's popularity. in real world, it's hard to leave the country because you don't like the monetary policy. in internet games it's much easier once again. there is an artifical price increase in tech II due to limited supply. we all agree with that. but that does not solve money supply inflation. invention and reverse engineering will resolve the tech II hac problem. according to the game's insurance payouts, hacks are only worth around 30 mil! as i have posted above, the overal inflation 5-10% is pretty acceptable by macroeconomic standard. it's normal value for e.g. OECD countries. But lowering it to 1-5% wouldn't be a bad thing either. more tech II would lower the overall inflation too, but not much. more tech I items being produced (as mentioned by me, with more laboratories, factories, produucing characters, more loot and other things) would lower the iflation even more. But there is the risk of deflation, as mentioned by "Forum B". Usually, the deflation is a bad thing, and it usually happens during GDP lowering, that means Recession. Deflation could hurt the economy, e.g people would wait some time to get chepaer items and will not purchase. people being not purchasing items, producers lower the production and lower prices even more. even lower prices could discourage producers and miners even more. with producers and miners gaining less money, the demand will be lowered even more and the mission runners will get less money for looted staff. with less money they may stop to loot eventually. with less produced and looted items we get recession, GDP is going down, economy goes down, owerall wealth is declining.
Depko	Posted - 2006.08.25 10:02:00 - [243] Originally by: Forum B [ First of all i'd like to point out that with a single precise and LIMITED basket inflaction was pointed out to be 5-10%. In reality it is (probably) already between 1-5% and not much more. Second tech 2 is not inflated. It is overpriced. Inflation hit the market as a whole. (don't need to explain further we both made some good posts and explained it pretty well). Still don't forget that ccp want tech 2 to be elite (therefore luxury good) so the solution could not be simply "raise the number of bpo" because: 1) this will not solve the problem, it will just postpone it 2) this will not keep tech 2 as elite items So the real solution is not to add bpos. Real solution is making the suplly line of tech 2 shiftable. I mean that it simply "could" increase at the expenses of great efforts and some money. A good idea to obtain that was a rare: drop of tech 2 bpcs by agents for 40k LP (Or perhaps 300-500k RP?). Rare because remember we want to keep it elite. Another one could be a rare drop of bpc as overseer's loot in some difficult complexes. Reverse engineering would not keep it elite though. sorry, i had to check the blog once again to be able argue about details showed there. there are 2 HAC graphs. Fist showes the number of people being able to fly a HAC with time. second showes the price of a HAC depending on the people able to fly it. Combing both graphs we get a price of HAC related to the time when it was bought. jan 2005 - 2.000 people - median price 60 mil ISK jan 2006 - 14.000 people - median price 150 mil ISK this one item has a strong rise in price. but it makes a small portion of the overal GDP and therefore it's impact on overal inflation is negligible. The yearly inflation in HACs (vagabond) is 150% ! If the overall inflation would be like this, we would get hyperinflation. HAC BPCs are allready dropped on some complexes i think. but number of complexes is constant. and spawns are also constant. they are actually being farmed. I think making BPOs dependent on the ammount of player would lower prices too. E.g. 10.000 players fly a HAC, then totally 100 BPOs will be released in the game. 20.000 HAC flyers -> additional 100 BPOs. Giving the HAC BPCs or complete HAC from agents would do the same thing, but distribute the wealth more evenly. The agents allready give players Interceptors, Assault frigates and Faction ships. I don't know why they don't give tech II with this situation. These will probably be handled by the introduction of salvaging. I can't predict how much, as i don't know all details (e.g. how expensive will be to produce a HAC BPC, how many players will do it). I think the introduction of Command Ships lowered the demand for HACs a bit allready.
Sable Schroedinger Gallente Jericho Fraction The Star Fraction	Posted - 2006.08.25 10:11:00 - [244] Basically because I believe the problem to be an excess in the supply of money, not the supply of goods. This may not quite be the case in a few markets, but I believe it to be true for the economy as a whole. -------------------------------------------- Nothing is as cruel as the righteousness of innocents
Depko	Posted - 2006.08.25 10:30:00 - [245] Originally by: Sable Schroedinger Basically because I believe the problem to be an excess in the supply of money, not the supply of goods. This may not quite be the case in a few markets, but I believe it to be true for the economy as a whole. Inflation is determined by both, ammount of money and ammount of goods. You can't handle inflation without calculating with both, ammount of money and ammount of goods in economy. At least in free market economy, and we have a free market in eve.
Sable Schroedinger Gallente Jericho Fraction The Star Fraction	Posted - 2006.08.25 10:56:00 - [246] your free market economy model is (imo) being broken by a too free production of money. If someone wants to buy a ship (lets say a HAC) they can go ratting and "print" the money for the ship, not exchange goods and services interacting in the market. -------------------------------------------- Nothing is as cruel as the righteousness of innocents
Depko	Posted - 2006.08.25 11:37:00 - [247] Originally by: Sable Schroedinger your free market economy model is (imo) being broken by a too free production of money. If someone wants to buy a ship (lets say a HAC) they can go ratting and "print" the money for the ship, not exchange goods and services interacting in the market. I don't know what you exacly mean by a "free market". for me all markets with prices determined by supply and demand are free markets. A communist country with 100% administratively choosen price, where prices doesn't reflect demand and supply, isn't a free market for me. A banana republic with 10.000% inflation and printing money every day is still a free market for me. free market may still have an inflation and printed money without introducing corresponding goods into economy. Let's say, the governement pays you money for fighting rats and pays you with printed, inflated, money. that doesn't interfere with free market and free prices. prices go up, they are inflated. if there wouldn't be money printing, not covered by goods and services, by real world economies, then there would be no inflation. but we have an inflation in almost all countries in the world, even the World Bank reccomneds to have a smal inflation. Therefore i don't understand your statement "your free market economy model is (imo) being broken by a too free production of money".
Depko	Posted - 2006.08.25 11:40:00 - [248] this model works even for countries with inflated printed money. it was created for this purpose, some nobel prize laureates are involved in it. i don't understand why do you argue with Wikipedia information. This is being teached at the beginning of studium in economy schools and some economy courses all over the world (except communist countries).
Miss Overlord	Posted - 2006.08.25 11:45:00 - [249] the big question is for the woodbe wealth acculmulators in the game - are u after ISK wealth or asset acquisition (which is prone to being revalued by patches and other changes within the game via the devs) - this flows onto ISK flows anyway and kali will affect this even more
Depko	Posted - 2006.08.25 12:07:00 - [250] Originally by: Miss Overlord the big question is for the woodbe wealth acculmulators in the game - are u after ISK wealth or asset acquisition (which is prone to being revalued by patches and other changes within the game via the devs) - this flows onto ISK flows anyway and kali will affect this even more I don't understand what you mean. can you explain ? I thought we are talking about inflation.

Depko	Posted - 2006.08.25 12:16:00 - [251] Originally by: Miss Overlord the big question is for the woodbe wealth acculmulators in the game - are u after ISK wealth or asset acquisition (which is prone to being revalued by patches and other changes within the game via the devs) - this flows onto ISK flows anyway and kali will affect this even more ah i think i understand you now. all goods on the market can have fluctuations, even the money can change the value. if you ask if it's better to by 10 Battleships for 100M a piece or to have 1 bln. ISK, then i don't know. ships are being nerfed, items change the price, ISK looses the value with time. most safe would be a combination of different mineral by my opinion. but even they may lower the price because of possible higher mining output in some future game change. if you seek safety, then diversification is the answer. buy different things, invest something in different ships, different item, different minerals and keep some ISK. you will surely not make a big profit with this, but you will surely not loose a lot of its value either.
BaldMan	Posted - 2006.08.25 13:36:00 - [252] Edited by: BaldMan on 25/08/2006 13:37:28 Who am I? I sell T2 mods and ships on a large scale in EVE. IÆve been doing it for the last six months and what im saying derives from experience in navigating EVE markets and my knowledge of economics I learned in the school and on my own. My weekly turnover is about 12 billion isk from which I make about 9 billion profit. I sell 60 T2 items but 90% of the profit derives from 5 of them. Im posting this as an alt because I do not want negative attention brought to me from outside of my corp / alliance. In the beginning i'd like to clarify one thing. T1 items are normal goods and T2 items are luxury goods. The inflation ideas derive solely from the ever increasing demand for T2 goods and their limited supply. The demand increases steadily as we were able to observe from the graph of the Vagabond prices compared to the number of Heavy assault ships skillbooks bought through time. Fact is that every day more people are able to use an increasing number of T2 modules. The demand increases on a daily basis but supply does not. I dare to say that supply is slowly decreasing overall because some BPO owners quit playing EVE, some dont produce anymore because they donÆt see the point of hoarding another 1000 billions isk etc. The price of the particular item went up from 50 milion in the beginning to well over 200 million today as shown on the graph. That shows us the item is an excellent piece of equipement and people will want to pay whatever the price for it so sellers are increasing the price and will continue to do so until they will not be able to sell at the set price. Simple laws of economics. Supply and demand. The price of very few T2 items like: HAC, AF, Cap recharger II and only a select few others have increased massively over a period the last year. These items however represent a very small portion of overall EVE economy. IÆd like to see price indexes of, say top 500 items by total isk transaction in the last year. Assign them ponders and then we can calculate the total inflation we have. It is true that some prices have increased but it is my opinion that rougly the same amount have decreased. For example: Arbalest Siege missile launcher cost 45 million isk at itÆs peak. Today I cannot get more that 6 million for it. ThatÆs 750% difference in the prices of today and the peak price. Someone said there are 8 of each HAC BPOs in game. ThatÆs 64 HAC BPOÆs potentially in production. The entire EVE can produce rougly 64 HACs a day. In september 2004 that meant that the whole isk turnover at the average price of 50 million isk was 3.2 billion isk. Today when HACs average 200 million per unit thatÆs a bit under 13 billion isk. 13 billion isk is a drop in the ocean in the entire EVE economy. For example: 13 billion isk of Zydrine is sold in Jita alone on a daily basis. Whoever wants to build his / her inflation argument on a price of HAC, AF and Cap recharger II together stands on a very thin argument. Maybe add the Hulk to equasion but itÆs still not even 1% of the business that happens on a daily basis. Lately I have noticed a steep increase of the Cruise missile launcher II prices. They went up from 6-7 million a piece in june to 10-11 million a piece today. It is my opinion that because of some producers being on vacation the supply diminished and the demand had not diminished as much and the price went up exacly as the law of supply and demand tells us it will.
BaldMan	Posted - 2006.08.25 13:39:00 - [253] Also let us not forget that a lot of people have a LOT of stuff laying in hangars doing nothing. Everyone has more than one ship and everyone who can afford has multiple fitted ships around where they live. These assets gained by wether mining, mission runing or any other isk faucet in game are doing nothing. They have no influence on the EVE economy because they are not in the process of buying / selling / appropriating new goods. Agent runners have tons of loot in their hangars. That loot is an isk faucet but as long it is laying in hangar it does not influence the economy. When the price of minerals rises ( inflation ) the agent runner will melt his loot and put the minerals on the market thus creating pressure on the supply side and eventually the price curve will start going down again. ( deflation ) Same goes for the bounty isk gained by doing missions. ItÆs either sitting in the wallet looking shiny with a number and 9 zeros behind it ;) or is used to buy more goods, be it T1 or T2. That isk, when used to buy stuff creates pressure on the demand side pushing prices up. The good thing of the T1 market is that is extremely competitive and the price of one particular item cannot rise above other because the production is higly mobile. T1 market of today has a multitude of sellers and a multitude of buyers. The T1 market is more than capable of balancing itself and is very close to a perfect competition whereas T2 market has a few sellers and a lot of customers. Some sellers have forged a cartel ( Cap recharger II ) to keep their prices up. Some just cannot keep up with the demand so they try to keep up by increasing their prices. Majority of T2 producers however have to compete with everyone else just like on the T1 market because the supply of the items they sell exceeds demand and forces them into lowering the price leading into price wars from which the consumers benefit most. In EVE devs have a strong tool of monetary policy in their hands. They can increase isk sinks overnight and drain massive amounts of isk from the economy. For example: 5% transaction tax instead of 1%. They can also increase isk faucets overnight by increasing bounties. Interesting thing here is that draining isk would have a much faster effect than adding it. Because everyone would have to pay immediately for the higher tax but the higher bounties would reflect in more isk available to buy a set amounts of goods over a period of at least a week and would increase even more by players migrating to a now more lucrative way of making isk. Current rise in tritanium price rise could be described as a hype of hoarding minerals to have big stockpiles when Tier 3 Battleships BPOs ( another big isk sink ) hit the market. I can understand that some people have specialised in flying HACs and wont take any other ship above it. It looks to them that the whole EVE market has inflated by 400% since september 2004. The fact is it has not. The richest individuals in EVE derive their welth from redistribution. They trade with the isk already in game. If someone sells a Cerberus for 250 million isk to a 3rd person this transaction if made through market was actually an isk sink because the taxes amounted to 5 million isk. With the small amount of data available to me I can conclude that EVE has an inflation rate no bigger that the average of a good economy. An EU-25 economy for example. The gasoline prices are up by 30-50% but the inflation rate in the EU-25 is not 40%. ItÆs more like 3-4% per year. The EVE economy is moving much much faster that the EU-25Æs economy does. Personally I can turn around my isk once every 2 weeks if I feel like it. That would be 26 turnarounds of my capital per year. RL economies donÆt move that fast. Compared to a RL economy EVE has a very very small inflation rate.
BaldMan	Posted - 2006.08.25 13:39:00 - [254] To be able to observe inflation of prices we need to divide the two groups of products sold on markets today. Those two groups are: T2 mods and ships and the other group includes everything else sold on markets. The price of T2 goods is driven by the demand. The more the demand the higher the price because the supply is stricly limited by the small number of BPOs in circulation. Some T2 goods have reached their maximum production and are now increasing price while most of the T2 BPOs still have plenty reserve. Namely almost all ammo BPOs, Command ships, Logistics ships, almost if not all ECM mods to name only a few. Their prices are laughable compared to the HAC prices. I am sure that in time when people will train up the skills to fly Command ships their price will rise above the HAC price which will lower to some degree. The only plausible explanation for such low prices of Command ships is the fact that very few people compared to HACs are able to fly them and ever fewer are able to fly them effectively. The high prices of some T2 items have nothing to do with inflation. ItÆs a temporary rise of price due to extreme demand and has very few to do with too much or too little isk being in game. Actually. When a Cerberus is sold for 250 million isk only about 17 million from that whole price has been added to the overall isk amount in EVE. Actually not even 17 million because POS is an isk sink and it decreases the amount of isk in eve. ( You need a POS to mine for moon minerals needed to build a Cerberus ) When that Cerberus blows up another few millions is added to the overall EVE isk. Not nearly as much as when you blow up a Battleship. To build a Battleship you need very few isk sinks. It would be safe to say that to build a Battleship it takes out 0 isk out of total EVE isk. The big isk faucets are mining and running missions followed by insurance payouts. The biggest isk sinks are BPOs; especially capital ships (if I remember correctly the titan BPO cost roughly 64 billion isk. Yes thatÆs 64.000.000.000 isk ),transaction tax, POS towers and equipment, POS fuels and Outposts to name the biggest. The Prices of minerals in my opinion are the actual builders or destroyers of inflation. Everything T1 can be built from the minerals everyone can mine. It is true that most of the highend ore is claimed by various alliances. Nobody is preventing a sole player to join one of them and mine his ass off by cutting Prime Arkonor in the farthest reaches of 0.0 space. If the price of minerals ( especially lowends ) is low this hurts most the newest members of our community. Since all they can do effectively is setup a MO and hoard isk for skillbooks and bigger/ better ships. Saying that inflation hurts the newb players is ridiculus because they stand a chance to benefit the most when the price of tritanium, pyerite and mexallon soares. Some time later the prices of Battleships and cruisers increase but in the meantime the newbs have a chance to profit from the different price of the minerals used to build that ship they want to buy and the ( now higher ) price they sold their minerals at. The Battleship that will be produced with the minerals the player in question just sold will have a pricetag reflecting the higher mineral price. Even today I still can see Raven battleships at 92 million isk per unit on market while the price of tritanium has increased by 50% in the last month. From 1.5 isk to 2.2 per unit. A long time ago when lvl 4 missions were introduced Ravens were sold @ 120 million isk a picece. People complained but the supply could not reach the demand ( remember the HAC prices ) and the prices rose. Again, the laws of supply and demand. Quite a factor of inflation in my opinion are the prices of named items. Better than T1 but worse than T2. Prices of most of these items has lowered since the introduction of T2. Another argument that opposes the (hyper)inflation theory.
dirty mick Nubs.	Posted - 2006.08.25 14:38:00 - [255] you will also find that gdp closely approximates population growth + productivity growth
Imhotep Khem Vortex.	Posted - 2006.08.25 16:40:00 - [256] Inflation is not about the price of goods, its about the value of isk. People are talking about inflation as if its the equivalent of overpricing. If HAC prices are up due to inflation, then the HAC producers are not making more profit. So saying HAC prices are inflated does not mean what some people seem to think. Anyway, I don't see why inflation matters in Eve since there is only a single currency, isk!? ____ "If your not dyin' your not tryin'." "Are you prepared to go all the way, Alexi?" DuGalle
Brian Detaah Destructive Influence	Posted - 2006.08.25 16:52:00 - [257] Edited by: Brian Detaah on 25/08/2006 16:55:28 When people say inflation is not about the price of goods but the value of money, they are just confused. The value of money* is what you can buy for it. So price and the value of money is, in fact, the same thing. Now inflation is a GENERAL rise in the level of prices the lowering the value of money in that X amount money will aquire less goods. These prices may rise without any foreign market. So there can be inflation in a closed economy. Two thing people need to understand: 1) IT DOES NOT FOLLOW THAT A INCREASE IN MONEYSUPPLY WILL HAVE TO MEAN A RISE IN PRICES (read my earlier post) 2) INFLATION IS A RISE IN THE GENERAL PRICE LEVEL THUS LOWERING THE PURCHASING POWER OF MONEY, NOT THE RISE IN THE PRICE OF A FEW SELECT GOODS. and the quantative theory of money is utter bunk and have been for 70 years btw. * now the debate on the nature of money is interesting and more complex. I here exclude the liqudity preference which is very very important, also in eve. If its of any interest i can explain how, but someone has made part of this point earlier. ------------------------------------------------ `When I use a word,' Humpty Dumpty said in rather a scornful tone, `it means just what I choose it to mean -- neither more nor less.' `The question is,' said Alice, `whether you can make words mean so many different things.' `The question is,' said Humpty Dumpty, `which is to be master - - that's all.'
Imhotep Khem Vortex.	Posted - 2006.08.25 17:06:00 - [258] Edited by: Imhotep Khem on 25/08/2006 17:07:05 OK, I don't know WTH im trying to say here If the value of isk changes, then doesen't my isk-earned change? So while I am paying more isk for products I have more isk and so my buying power has not changed? Which is what really matters right? How does inflation affect buying power? ____ "If your not dyin' your not tryin'." "Are you prepared to go all the way, Alexi?" DuGalle
Depko	Posted - 2006.08.25 17:49:00 - [259] Originally by: BaldMan Actually. When a Cerberus is sold for 250 million isk only about 17 million from that whole price has been added to the overall isk amount in EVE. Actually not even 17 million because POS is an isk sink and it decreases the amount of isk in eve. ( You need a POS to mine for moon minerals needed to build a Cerberus ) When that Cerberus blows up another few millions is added to the overall EVE isk. Not nearly as much as when you blow up a Battleship. To build a Battleship you need very few isk sinks. It would be safe to say that to build a Battleship it takes out 0 isk out of total EVE isk. The big isk faucets are mining and running missions followed by insurance payouts. The biggest isk sinks are BPOs; especially capital ships (if I remember correctly the titan BPO cost roughly 64 billion isk. Yes that’s 64.000.000.000 isk ),transaction tax, POS towers and equipment, POS fuels and Outposts to name the biggest. The Prices of minerals in my opinion are the actual builders or destroyers of inflation. Everything T1 can be built from the minerals everyone can mine. It is true that most of the highend ore is claimed by various alliances. Please read posts of Depko or Forum B before talking about inflation. It may show you what are you talking about. 1.) HACs production or any other production of goods doesn't generate any inflation. In contrary, it lowers inflation 2.) mining minerals doesn't generate any inflation. In contrary, it lowers inflation 3.) selling HACs for ANY proce to players doesn't generate ANY inflation, money is only TRANSFERRED not CREATED 4.) running a POS doesn't generate any deflation, you don't pay any ISK to npc entities I have stated this about 10x in this forum, but these posts with false statements continue. CREATING ANY ITEMS OR MINERALS LOWERS OVERAL INFLATION PUTTING NEW ISK INTO GAME GENERATES INFLATION TRANSFERRING MONEY FROM ONE PLAYER TO ANOTHER DOESN'T CREATE INFLATION
Red Ochre	Posted - 2006.08.25 17:52:00 - [260] very good read, had economics from way back, drove me batty in school, never thought i would be using it in a game to actually make isk (like a comperable real life job) the isk faucets can be shutoff very easily. the amount of isk in eve is in reality infinite because of the possibility of a new player joining, this too can be fixed rather easily. crude banks can be created to help deal with isk payouts from insurance or concorde induced bounties. limits would need to be set on say isk performance for the last 3 years and months in change. the bad thing about making a mmo to close to real economics is it becomes like real life, rich get richer and the poor stay poor, or stuck in the doldrum suburbs, and nobody likes this. how to make the economic profile for this game fun and keep it balanced? the only answer is dev fiddling. the developer MUST monitor eves isk total in the market, and poke and adjust slightly those things which might unbalance the market and take the isk total too far one way or the other. eve cannot be simply left alone and have the players alone influence the market, this would ruin the game for all but an elite few. the developers have to be active to keep the checks and balances, with that being said................ when are the natural disasters going to start occuring?

Depko	Posted - 2006.08.25 17:57:00 - [261] Originally by: Imhotep Khem Edited by: Imhotep Khem on 25/08/2006 16:57:21 Inflation is not about the price of goods, its about the value of isk. People are talking about inflation as if its the equivalent of overpricing. If HAC prices are up due to inflation, then the HAC producers are not making more profit. So saying HAC prices are inflated does not mean what some people seem to think. Anyway, I don't see why inflation matters in Eve since there is only a single currency, isk!? As such, how can there ever be inflation? P.S. NPC both sell (isk sink) and buy (isk faucet) goods. But this only works when the NPC are trading products outside of local market prices. When NPC buy overpriced its an isk faucet. When NPC sell underpriced its an isk sink. But NPC can not sell overpriced and NPC can not buy underpriced. Or when NPC is only trader of product. Still I don't see why it matters? 1.) you are apparently confusing appreciation/depreciation of a currency with inflation. please read some of my copy/paste from Wikipedia in my posts before this. 2.) In short: Inflation is a lowering of the currency value. If you have 10%inflation, you can buy now 10% less items for the same ammount of money. money has a lower real value than before. 3.) Inflation is bad, because if the inflation is in high numbers the economy slowly stops to functioning. inflation is de facto a hidden tax (in real world), but don't want from me to write another 1 page why do i think so. In Yugoslavia, during the hyperinflation, reported inflation was so high, that if you sold 4 TV receivers in the morning, the money was worth only 3 TV receivers in the evening of the same day This is really destroying the economy, it makes not a lot of sense to trade anything with such curcumstances.
Depko	Posted - 2006.08.25 17:59:00 - [262] Originally by: dirty mick you will also find that gdp closely approximates population growth + productivity growth Yes. we may discuss, if you mean the whole population, or the productive population ... but i believe it's approximately right.
Depko	Posted - 2006.08.25 18:03:00 - [263] Originally by: Brian Detaah Edited by: Brian Detaah on 25/08/2006 16:55:28 When people say inflation is not about the price of goods but the value of money, they are just confused. The value of money* is what you can buy for it. So price and the value of money is, in fact, the same thing. Now inflation is a GENERAL rise in the level of prices the lowering the value of money in that X amount money will aquire less goods. These prices may rise without any foreign market. So there can be inflation in a closed economy. Two thing people need to understand: 1) IT DOES NOT FOLLOW THAT A INCREASE IN MONEYSUPPLY WILL HAVE TO MEAN A RISE IN PRICES (read my earlier post) 2) INFLATION IS A RISE IN THE GENERAL PRICE LEVEL THUS LOWERING THE PURCHASING POWER OF MONEY, NOT THE RISE IN THE PRICE OF A FEW SELECT GOODS. and the quantative theory of money is utter bunk and have been for 70 years btw. * now the debate on the nature of money is interesting and more complex. I here exclude the liqudity preference which is very very important, also in eve. If its of any interest i can explain how, but someone has made part of this point earlier. Yes, I agree with all what you said. 1.) rise of the ammount of money will very likely create inflation. but it may not, as you posted. in most cases it does. 2.) CPI from the blog, based on 5 special things from thousands of the is not representative, i agree.
Imhotep Khem Vortex.	Posted - 2006.08.25 18:57:00 - [264] Originally by: Depko 2.) In short: Inflation is a lowering of the currency value. If you have 10%inflation, you can buy now 10% less items for the same ammount of money. money has a lower real value than before. Yes, this is the best way to put it I think. Leave price out of it. Since were talking about value of isk we can think of a measure of value/isk. With this in mind, its not all about isk faucets and sinks. Equally as important are value faucets and sinks. If NPC sells a Tempest for 105M isk, then this is an isk sink, but a value faucet which should have no net effect on inflation right?? A 'net' faucet would be for NPC to sell a Tempest for 50M which sinks isk but fauceting an even greater value. Or for NPC buy Tempest @200M which faucets great isk for little sink in value. Either of these 2 things should tip the isk/value scale. But simple NPC selling products at market value should not affect anyones buying power. This is correct? ____ "If your not dyin' your not tryin'." "Are you prepared to go all the way, Alexi?" DuGalle
Depko	Posted - 2006.08.25 19:34:00 - [265] Originally by: Imhotep Khem Edited by: Imhotep Khem on 25/08/2006 17:07:05 OK, I don't know WTH im trying to say here If the value of isk changes, then doesen't my isk-earned change? So while I am paying more isk for products I have more isk and so my buying power has not changed? Which is what really matters right? How does inflation affect buying power? Inflation lower purchasing power of your accumulated ISK in wallet. E.g.: You have 100 mil. ISK and you can buy a Megathron for it now. With 10% inflation, you need 110 mil. ISK to buy the Megathron. Your savings, your cash, lost 10% of it's value. In reality, the inflation isn't calculated only from one single item, but it's calculated as an weighted average of the price changes in consuumer price index. This index holds representative sample of the traded items. the weight of each item represents the ammount of that single item in the sold items.
Depko	Posted - 2006.08.25 19:49:00 - [266] I would rather to talk about Inflatory Impulses and Deflatory Impulses, or let's call it "things stimulating inflation" and "things stimulations deflation", or "aspects rising inflation" and "aspects lowering inflation", or something similar. ISK faucets and ISK sinks sounds for me confusing. As FORUM B showed, direct and indirect sinks and faucets have the opposite affects on iflation. Talking about Inflatory Actions and Anti-Inflatory Actions, or how to call it, would be less confusing and more self-explaining for me.
Depko	Posted - 2006.08.25 19:57:00 - [267] Originally by: Imhotep Khem Originally by: Depko 2.) In short: Inflation is a lowering of the currency value. If you have 10%inflation, you can buy now 10% less items for the same ammount of money. money has a lower real value than before. Yes, this is the best way to put it I think. Leave price out of it. Since were talking about value of isk we can think of a measure of value/isk. With this in mind, its not all about isk faucets and sinks. Equally as important are value faucets and sinks. If NPC sells a Tempest for 105M isk, then this is an isk sink, but a value faucet which should have no net effect on inflation right?? A 'net' faucet would be for NPC to sell a Tempest for 50M which sinks isk but fauceting an even greater value. Or for NPC buy Tempest @200M which faucets great isk for little sink in value. Either of these 2 things should tip the isk/value scale. But simple NPC selling products at market value should not affect anyones buying power. This is correct? I think (don't think i am allways right, but i try to be right very often), that a Player buying a Tempest from NPC is lowering inflation. Because there is ISK putted out of economy. That ISK can't be used on purchasing other player created items and is consequently lowering the demand for other goods. Further, if the player resells hes ship to others, he is rising the supply and consequently lowering the prices. rising average prices => inflation. But i would simply say: If the player bought the Tempest under the average price, he is lowering inflation. If the player pays above average price for Tempest, he is rising the inflation.
Forum B	Posted - 2006.08.25 20:51:00 - [268] Edited by: Forum B on 25/08/2006 20:55:32 Originally by: Imhotep Khem Originally by: Depko 2.) In short: Inflation is a lowering of the currency value. If you have 10%inflation, you can buy now 10% less items for the same ammount of money. money has a lower real value than before. Yes, this is the best way to put it I think. Leave price out of it. Since were talking about value of isk we can think of a measure of value/isk. With this in mind, its not all about isk faucets and sinks. Equally as important are value faucets and sinks. If NPC sells a Tempest for 105M isk, then this is an isk sink, but a value faucet which should have no net effect on inflation right?? A 'net' faucet would be for NPC to sell a Tempest for 50M which sinks isk but fauceting an even greater value. Or for NPC buy Tempest @200M which faucets great isk for little sink in value. Either of these 2 things should tip the isk/value scale. But simple NPC selling products at market value should not affect anyones buying power. This is correct? If an NPC sells a tempest to players this is both an isk sink, as it drains out isks from market, and an asset faucet. Being inflation and deflation generated by variations of the equilibrium between all the isks in eve and all the assets in eve (i put the formula in one of the last pages with a bit of explanation), precisely ISK direct faucet + Asset destruction/sinks = Asset generation/faucet + ISKS sinks the selling of a tempest by npcs has a double effect on the second side, effectively leading to deflation. If you still have some doubts on inflation both me and depko made some good posts in the previous pages. If you have some doubts on which are the sinks and the faucets i made a pretty good post at page 7. Hope to helped you understanding how does it work. Originally by: Depko I think (don't think i am allways right, but i try to be right very often), that a Player buying a Tempest from NPC is lowering inflation. Because there is ISK putted out of economy. That ISK can't be used on purchasing other player created items and is consequently lowering the demand for other goods. Further, if the player resells hes ship to others, he is rising the supply and consequently lowering the prices. rising average prices => inflation. But i would simply say: If the player bought the Tempest under the average price, he is lowering inflation. If the player pays above average price for Tempest, he is rising the inflation. Doesn't matter if he sells it or not. Simply you increased assets in eve and decreased isk -> as defined a couple of pages before this should be (in theory) a deflationary case. Ps:sry to post with alt but i'm not subbed atm.
Brian Detaah Destructive Influence	Posted - 2006.08.25 21:55:00 - [269] Originally by: Depko CREATING ANY ITEMS OR MINERALS LOWERS OVERAL INFLATION PUTTING NEW ISK INTO GAME GENERATES INFLATION TRANSFERRING MONEY FROM ONE PLAYER TO ANOTHER DOESN'T CREATE INFLATION Well, i know this will just add confusion to most readers, and its some great posts you have made but this is not totally right. If the transfering of money from player A to player B means that rather than save it Player B respends it V might rise causing a inflationary pressure (money supply circulates faster). So transfering money fast can cause inflation, but this is mostly academic in this context i think. ------------------------------------------------ `When I use a word,' Humpty Dumpty said in rather a scornful tone, `it means just what I choose it to mean -- neither more nor less.' `The question is,' said Alice, `whether you can make words mean so many different things.' `The question is,' said Humpty Dumpty, `which is to be master - - that's all.'
Sadist SWIFTS Against ALL Authorities	Posted - 2006.08.26 04:45:00 - [270] Quote: * Player A has 100 million ISK, Player B has a "Generic Battleship". Total ISK: 100 million * Player A buys the "Generic Battleship" from Player B for 70 million. Total ISK: Still 100 million. * Player A insures the ship for 30 million ISK, ISK dissapears into the void. Total ISK: Now only 70 million! * Player A loses the ship within the insurance period, gets a payout of 100 million. Player A has 100 million, Player B has 70 million, Total ISK: 170 million! Ok, I know you said you have no econ. training, but surely the first statement implies that the battleship has no value? Then the 2nd statement contradicts that, by naming the price of the generic battleship - 70 mil. Hence the 1st statement is incorrect, since the total isk there would be 170 mil, same as it is at the end. No inflation is happening here, sorry. òòòòòòòòòòòò VIP member of the [23] Quote: - Numbers alone do not win a battle - No, but I bet they help.

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