Captain Dragotahl
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Posted - 2011.05.12 12:56:00 -
[1]
 Originally by: Tehg Rhind
However, doesn't the increase in the ISK price of Plex indicates that the supply of ISK is increasing at a faster rate than the supply of Plex. Plex is unique because it's the only item kn game that ties ISK to something outside of game, namely $s. Real world currency is unique because it has an effectively static true value compared to ISK.
This is why I thought of looking at Plex as an indication of monetary inflation, since it is static and not tied to asset generation. An asset driven index is problematic because asset generation rates seem closely tied to isk generation, which is why the ISK price of a Raven hasn't really changed even though it's value has (loosing an 80 mil hull isn't that big of a deal now compared to 4 years ago.)
on the other hand, is this just a currency exchange rate that I am masquerading as an inflation?
Like I said before though, economics is not my strong suit
Ok, heres what happened pimp. You started out really well, however, poorly worded, but that's ok most economists are much worse. PLEX IS unique in that it is the only item in game tied to an outside exchange. The idea that it is "static" in comparison is where you contradict your next sentence that you could tie "PLEX as an indication of monetary inflation", which you certainly can! REAL WORLD inflation. Rise in overall EVE market prices can NOT be reflected by PLEX prices. Long term supply side shifts can only occur by change in inflation in the outside world, and I hope some economist makes millions off that paper.
Demand side is where you feel like you have a better argument, but it's certainly much worse as there are WAY too many in game things that could change demand for PLEX, which ultimately is the entire reason isk/price will fluctuate. PLEX is truly a unique good in EVE, and should be treated as such.
What you seem to want is what economists call a CPI (consumer price index), which is a bundle of goods that give a general one term rate of inflation that represents general inflation in the market. They like to joke that by comparing the price of a whopper at Burger King in different countries you can get a feel for overall inflation where you are as its a good example of a collection of many different goods (i.e. meat, dairy, grain, vegetable, etc.)
In EVE, the long standing tradition was to refer to the price of ships for a CPI as they take the most direct route from a collection of goods (the 7 basic minerals), to the market with easily measured value added scales. Nowadays it gets more complicated with tech 2, POS fuels, and what have you, but that still doesn't mean that for those particular bundles of markets that ship prices (even tech 2) can't reflect a general inflation rate. What I can tell you is that with a higher inflation rate, people WILL buy more PLEX, but this is a LAGGING indicator. Which means that what inflation you are seeing in PLEX has ALREADY HAPPENED in the rest of the market. No future trends are being predicted. It's just sort of confirming what you should already know from feeling out the market "people have more money".
Any good statistician would tell you to make sure that you look at more than one market to get a "feel" for the true overall inflation. And economists and statisticians like to have butsex. There's even a cray sect of these guys call econometric statisticians...the guys who NEVER got laid in high school...lots of butsex
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