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Frezik
Celtic Anarchy
Anarchy Empire
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Posted - 2007.05.06 21:47:00 -
[1]
 Originally by: Nymos
oh right. first people whine about inflation when t2 prices were really insane and certain modules were plain overpriced (cov ops cloak, t2 guns, jenny spitfire's vagabonds etc). people came with the half assed explanation of supply and demand and elaborated pages over pages of worthless economics theory (no i'm not too dumb for it, i studied that).
Why was supply and demand an insufficient explanation for the behavior of the majority of the t2 market under the BPO lottery? Yes, you can point to specific examples (like cloaks) that were clearly cartel behavior (and therefore market failures), but that didn't apply to the majority of the market.
I expect a three page essay, due tuesday.
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Frezik
Celtic Anarchy
Anarchy Empire
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Posted - 2007.05.06 22:50:00 -
[2]
Originally by: Varia Net
In a real economy, there's something like a national treasury , bank
which uses interest rate to steer economy and market inflation/deflation.
All those things were a result of there being some problem with the economy and people looking for a way to fix it. Banks tended to fail, so in America, FDIC was created to insure that people would get at least some money back if a bank fails.
Governments tend to be very clumsy in managing an economy directly. The more successful government economic programs tend to gently guide behavior. Economy flys high, so increase interest rates to encourage saving. Economy sinks, so decrease interest rates to encourage spending.
The Tech 2 lottery was a large, clumsy attempt by the people who play the role of the Eve government (CCP) to control the economy. The pain of a market correction phase was inevitable when the lottery was no longer the primary means to get into the Tech 2 market, but it will move things to a far better position over time since the supply is no longer so inelastic.
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Frezik
Celtic Anarchy
Anarchy Empire
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Posted - 2007.05.06 22:57:00 -
[3]
Originally by: Nymos
what i meant was that people responded like zombies "supply/demand u noob". of course it is supply and demand, even if a commodity is monopolized, but what if supply was broken?
the problem with t2 was that unlike in the real world people couldn't just invest cash and start researching and producing themselves (now they can).
There are real-world examples where the supply can't get any bigger. Real Estate, for instance. As long as the population of people who want to own land grows, demand for land will always go up, while supply stays the same, excepting advancements in colonizing other worlds. That's what makes land such a great investment.
Quote:
there might emerge a problem with too much supply tho.
Market corrections are rarely instant and painless, of course (despite how the theory looks in economic textbooks--just look at the major housing market correction in the US right now), but an oversupply under the invention system will be counteracted by people getting out of the market when they can't make good margins.
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Frezik
Celtic Anarchy
Anarchy Empire
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Posted - 2007.05.07 00:00:00 -
[4]
Originally by: Hellman109
^^ The federal reserve isnt government.
Yep you heard right, the main controller of US finance is a privately owned operation.
The federal reserve was created by the government. While it might meet the political definition of "government", it qualifies as a government for economic purposes.
Different disciplines often have different definitions for things. It only matters that the definitions are useful and applied consistently within a discipline.
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Frezik
Celtic Anarchy
Anarchy Empire
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Posted - 2007.05.07 00:42:00 -
[5]
Originally by: R3dSh1ft
space is too crowded
Space is big
Space is dark
It's hard to find
A place to park
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Frezik
Celtic Anarchy
Anarchy Empire
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Posted - 2007.05.07 19:24:00 -
[6]
Originally by: Suada
Umm.. Deflation makes money more valuable because your money has more purchasing power. I've never heard anyone complain about deflation. Dropping prices is a good thing. You should complain when prices are steadily increasing (inflation), because your money is worth less. 
No, deflation is not always a good thing. Deflation is good if (like me) you have a lot of your wealth saved in liquid isk. It's bad if you have your wealth in durable goods (like ships).
The US dollar recently hit about $2/UK Pound. Is that good or bad? Well, it's good if you're in the UK and want to take a vacation in the US, since your money can go farther. It's bad if you're in the UK and have a lot of investments in American companies.
Same thing here--it all depends on what you're doing with your money.
In fact, inflation getting too low can be a bad sign in the real world. There's always a small unemployment rate from people being replaced by better technology (though this generally comes with more openings in higher-tech positions). A 2% unemployment rate is considered healthy, which does generate some inflation as a side effect.
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