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Daeva Vios
New Eden Credit Bureau
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Posted - 2008.03.16 20:53:00 -
[31]
Edited by: Daeva Vios on 16/03/2008 20:54:16
 Originally by: Sphynx Stormlord
Quote:
HOWEVER it does provide the ABSOLUTE ASSURANCE that your funds would be returned to you
Ironically, this is only true because people believe it; as currency is only as good as those who believe in it. If people should stop valuing currency, then it becomes useless.
I think you're looking for the Philosophy forum.
As far as I know, this isn't it. 
You could say that time only impacts us so powerfully because we choose to live our lives according to a schedule. You could say that the science of physics is only important to us because we choose to explore the boundaries of what we know and understand.
You're still navel-gazing.
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Selene D'Celeste
The D'Celeste Trading Company
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Posted - 2008.03.16 21:08:00 -
[32]
Originally by: Hexxx
Something is worth only as much as what someone pays for it, not what someone believes it's value to be. Similiar idea. 
I love market systems <3
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Priest Amarr
Imperial Academy
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Posted - 2008.03.16 22:01:00 -
[33]
Edited by: Priest Amarr on 16/03/2008 22:05:14
Originally by: Daeva Vios
Edited by: Daeva Vios on 16/03/2008 20:54:16
Originally by: Sphynx Stormlord
Quote:
HOWEVER it does provide the ABSOLUTE ASSURANCE that your funds would be returned to you
Ironically, this is only true because people believe it; as currency is only as good as those who believe in it. If people should stop valuing currency, then it becomes useless.
I think you're looking for the Philosophy forum.
As far as I know, this isn't it.
You could say that time only impacts us so powerfully because we choose to live our lives according to a schedule. You could say that the science of physics is only important to us because we choose to explore the boundaries of what we know and understand.
You're still navel-gazing.
Actually this concept has a very solid place in economy , and it's far away from being a pure philosophy. Until 1971 a system called the Gold Standard was used to measure countries' power of printing money. Basically every bill in circulation was backed by gold in reserve banks. That system had its advantages and disadvantages but it's not the topic. After its collapse countries started to use an internal debt method. It simply means if United States (for example) wants the Federal Bank to print 10 billion dollars , the government gives the Federal Bank a note in the same amount stating these bills are backed by the government. Of course since bills are not covered by something solid like gold anymore, their value started to depend on people's trust in governments. This is why today you are witnessing a major decline in the dollar , investors don't trust the United States' power of repaying its debt anymore, therefore in the free market they value dollar less than before.
Of course this concept is irrelevant when it comes to isk. In the universe of Eve, isk is the only currency created by the only regulative body (CCP) of the universe. Although when it comes to secondary markets (bond exchange, stock exchange) we can see its affects. As an example, let's assume you deposit 5 billion isk into X Bank and receive a 5 billion isk note/bond from them. We can look at it as a alternative currency now. While the average return on bonds is 5%, if X Bank's bond pays out 15% and if X Bank has a very strong reputation , your 5 billion isk bond might worth even more than 5 billion in secondary markets. If nobody trusts X Bank you might end up getting 500 million isk for your 5 billion bond when you need to exchange it before its maturity. If X Banks bond was a currency you could simply view this ratio as currency exchange rates.
As Eve economy develops further you will see these concepts becoming important.
May Blessings Be With You
Priest Amarr
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Daeva Vios
New Eden Credit Bureau
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Posted - 2008.03.16 22:52:00 -
[34]
Quote:
If X Banks bond was a currency you could simply view this ratio as currency exchange rates.
But X Bank's bond is not a currency, and is not traded as such. When X Bank's bond is exchanged, isk is the medium of exchange used. Perhaps this is done in very rare and private circumstances. I know that GoonSwarm at one point had their own internal currency and in that case, the value of that currency was only as strong as trust in the value of that currency. I'm not certain if this is the case any longer. In any event, in this case, Isk is the standard currency and any statement to the contrary is as interesting and ultimately pointless as alternate universe theory. Sure it looks great on paper and it might even make sense, but how is it relevant?
If there comes a time when X Bank's bond notes are used as the primary medium of exchange and the value of the Isk can be tied to the value of X Bank's bond directly, then you can talk about Isk's value being based solely on perception. Until then, it is a matter of philosophy.
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Hexxx
Sebiestor tribe
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Posted - 2008.03.16 22:57:00 -
[35]
Originally by: Daeva Vios
Quote:
If X Banks bond was a currency you could simply view this ratio as currency exchange rates.
But X Bank's bond is not a currency, and is not traded as such. When X Bank's bond is exchanged, isk is the medium of exchange used. Perhaps this is done in very rare and private circumstances. I know that GoonSwarm at one point had their own internal currency and in that case, the value of that currency was only as strong as trust in the value of that currency. I'm not certain if this is the case any longer. In any event, in this case, Isk is the standard currency and any statement to the contrary is as interesting and ultimately pointless as alternate universe theory. Sure it looks great on paper and it might even make sense, but how is it relevant?
If there comes a time when X Bank's bond notes are used as the primary medium of exchange and the value of the Isk can be tied to the value of X Bank's bond directly, then you can talk about Isk's value being based solely on perception. Until then, it is a matter of philosophy.
Hrmmm....that just gave me a really interesting idea...
Director | www.eve-bank.net
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Daeva Vios
New Eden Credit Bureau
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Posted - 2008.03.16 23:21:00 -
[36]
Ugh, don't do that Hexxx.
Sent a shiver of terror down my spine
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Brun Thorvald
Red.
Red Republic
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Posted - 2008.03.17 05:12:00 -
[37]
If Hexx issued T-notes, saying 'Ebank guarantees the holder 1 million units of Tritanium on demand at Jita 4-4' then I think people would use em.
But yeah, bank runs are a problem when you dont have a working Central bank - see the Rich Man's Panic of 1907 and the role of JP Morgan in fixing it.
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Tasko Pal
Heron Corporation
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Posted - 2008.03.17 06:21:00 -
[38]
Originally by: Jamie Freely
I would love to say I'm wrong, but I don't see how you can have insured deposits with player run banks.
Within the frame of this game and within the time that people will put into a system I don't think its possible. Please show me where I'm wrong.
You just need an insurer with some credibility. For example, if I say I'll back all deposits at a bank with the uh, considerable resources at my disposal, everyone would consider it a joke. It certainly would be a strong indication that the bank was a bad investment. But if I had say a trillion isk and a good reputation at hand, and I say that I back all deposits at a bank with my reputation, then that will have some weight to it and would be a credible example of bank insurance.
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Shadarle
LI0NS Industries
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Posted - 2008.03.17 07:12:00 -
[39]
Originally by: Tasko Pal
Originally by: Jamie Freely
I would love to say I'm wrong, but I don't see how you can have insured deposits with player run banks.
Within the frame of this game and within the time that people will put into a system I don't think its possible. Please show me where I'm wrong.
You just need an insurer with some credibility. For example, if I say I'll back all deposits at a bank with the uh, considerable resources at my disposal, everyone would consider it a joke. It certainly would be a strong indication that the bank was a bad investment. But if I had say a trillion isk and a good reputation at hand, and I say that I back all deposits at a bank with my reputation, then that will have some weight to it and would be a credible example of bank insurance.
Thanks for the reputation 101 lecture... but someone saying they back deposits and having 100% insured deposits is a very different thing.
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Brisco Smiley
Peppermint Bay Trading Company
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Posted - 2008.03.17 14:37:00 -
[40]
Originally by: Kazuo Ishiguro
Well, in principle, banks could agree to co-operate and be bound by certain conditions.
I think some people may have missed this, so I included it here again for their convenience.
Cheers,
Brisco Smiley
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Tasko Pal
Heron Corporation
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Posted - 2008.03.17 18:54:00 -
[41]
Originally by: Shadarle
Thanks for the reputation 101 lecture... but someone saying they back deposits and having 100% insured deposits is a very different thing.
Some people seemed to need that lecture. And I find the quibble between "backing bank deposits" (which would naturally include a variety of insurance schemes) and "100% insured" bank deposits (one fairly specific insurance scheme) to be far less important than whether the insurer pays out the promised amount in the event of a bank default.
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Jamie Freely
Aliastra
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Posted - 2008.03.17 19:02:00 -
[42]
Originally by: Tasko Pal
Some people seemed to need that lecture. And I find the quibble between "backing bank deposits" (which would naturally include a variety of insurance schemes) and "100% insured" bank deposits (one fairly specific insurance scheme) to be far less important than whether the insurer pays out the promised amount in the event of a bank default.
We need to remember that nothing is guaranteed in life, and we can't trust anyone with too much as we are just opening ourselves to massive problems.
The only reason I got into this thread was because there was this idea that deposits can be 100% safe, when that just isn't possible.
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Daeva Vios
New Eden Credit Bureau
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Posted - 2008.03.17 19:37:00 -
[43]
Relying on one individual or organization to cover a run on the banks is too risky, and I am assuming that the banks already have measures in place with several outside groups to cover any runs they might encounter. This should be a last resort, however, to prevent any loss of confidence.
The banks setting up a loan network with pre-determined terms for use in the event of a bank run would serve to maintain confidence and its mere existence would serve to prevent the event that it's intended to protect against.
It's not 100% secure because nothing is 100% secure. Arguing over that point gets tiring because everyone is aware of it and if they're not they're ignoring the obvious.
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