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Suetonius ofScythia	Posted - 2008.03.31 08:58:00 - [1] I was thinking about this the other day. The EVE economy is an open economy, you can earn as much as you want and theres no real limit due to supply of actual money. Will this not eventually lead to a basic economic crash in EVE due to inflation? There ARE money sinks in the game like NPC corps that sell things, but once you move into the higher thresholds, you deal almost exclusively with players. But with this unlimited supply of money, wont this eventually create problems with inflation?
Ortos Empire Mafia Crew Ltd New Eden Federation.	Posted - 2008.03.31 09:35:00 - [2] Edited by: Ortos on 31/03/2008 09:35:25 All trading in EVE happens pretty fast, the biggest money sink in EVE is the sales tax really. 1% might not sound like much but money moves pretty fast in EVE. Imagining 5% of the total amount of money in EVE is moved every day thats about 4,5 trillions. So only with 5% of the total amount of ISK 45 billions would be drained daily. Then you have war declarations draining quite a bit aswell. It all sums up. Oh, and those 1,2m for 5000 faction bullets, again. People shoot a lot ^^ Even that would sum up to quite a bit.
EBANK Ricdic	Posted - 2008.03.31 10:19:00 - [3] Well when I spend 5-9b on a CNR or Golem and then fall asleep on missions, that is a money sink. With the amount of AFK/Asleep ship losses I have incurred over the years I would like to think I have single handedly curbed inflation for all of Eve. http://www.eve-bank.net Please visit your user settings to re-enable images.[/url]
Ortos	Posted - 2008.03.31 10:22:00 - [4] Originally by: EBANK Ricdic Well when I spend 5-9b on a CNR or Golem and then fall asleep on missions, that is a money sink. With the amount of AFK/Asleep ship losses I have incurred over the years I would like to think I have single handedly curbed inflation for all of Eve. Not my fault.
Shakuul O RLY corp YTMND.	Posted - 2008.03.31 11:05:00 - [5] Originally by: EBANK Ricdic Well when I spend 5-9b on a CNR or Golem and then fall asleep on missions, that is a money sink. With the amount of AFK/Asleep ship losses I have incurred over the years I would like to think I have single handedly curbed inflation for all of Eve. You are actually causing inflation by doing this. When you buy the Golem or CNR plus fittings, your 5-9bil just transfers to the sellers, minus 1%, so very little isk is removed from the economy. On the other hand, you have just destroyed a very expensive good. More ISK chasing fewer goods = inflation. Of course in this case its 10bil so its negligible. Most of the things that make inflation bad in the real world don't apply in EVE, so don't see rising prices for certain items as necessarily a bad thing. Additionally, battleship costs have stayed fairly stable, or fallen a bit (probably because of constant improvements to mining), so inflation doesn't harm new players much.
Kazuo Ishiguro	Posted - 2008.03.31 11:23:00 - [6] However, he's encouraging demand for CNRs and other equipment from the LP store, which is a much larger ISK sink. On the other hand, if it was insured, this works against him... My research services Spreadsheets: Top speed calculation - Halo Implant stats
EBANK Ricdic	Posted - 2008.03.31 11:37:00 - [7] The things I do for the playerbase http://www.eve-bank.net Please visit your user settings to re-enable images.[/url]
Lord Fitz Antares Fleet Yards SMASH Alliance	Posted - 2008.03.31 16:43:00 - [8] One of the things slowing inflation is that as well as isk being produced material is being produced, so if 3 isk enters the economy and 1 bit of trit does, and the trit is worth 1 isk, then the price of trit may not rise as a result of that isk entering. Of course ship destruction removes that asset and through insurance adds isk, which increases inflation. People have pointed to T1 and T2 ships and said that their dropping / stable prices are signs that there is no inflation, of course that's only because there is a rising supply as well as rising isk and demand. If you look at rare items, (1 off ships, T2 BPOs) etc. There is very much very huge inflation in those items, because the amount of isk some people have free to spend on them (and the amount of people with that much isk) keeps increasing. Of course players going inactive with large wallets sinks isk, as does extra insurance that expires without being claimed, new clones, moon proves, starbase structures (reduced abit since you can now loot non-tower components), trade goods for POS fuel, skillbooks etc. All isk sinks. The LP store where you have to give over isk is also an isk sink, at least for non-ships and for the portion of the ships you don't get back from insurance. Also you find as you get more isk some of the larger toys actually require larger amounts of material, which pays for alot of other people to mine said material, spreading out the wealth a little. Selling minerals for example isn't an isk faucet, even though you get isk it came from a player. And you're increasing the supply of material reducing inflation. Bounties from rats are isk faucets, while drones loot isn't. (So the drone regions as a whole don't add to inflation, but actually help reduce it).
Kwint Sommer	Posted - 2008.03.31 17:06:00 - [9] There are some massive ISK sinks out there including high level ones, namely sales tax and POS's. 360M for the tower plus a couple hundred million more for structures adds up quick when you're loosing a dozen a day in a war. My big issue is with insurance, that singlehandedly removes material and adds ISK. It's doubly inflationary. Please visit your user settings to re-enable images. Purchasing and Shipping Moon Minerals
Brisco Smiley	Posted - 2008.03.31 17:51:00 - [10] Originally by: Lord Fitz If you look at rare items, (1 off ships, T2 BPOs) etc. There is very much very huge inflation in those items, because the amount of isk some people have free to spend on them (and the amount of people with that much isk) keeps increasing. I worry that there is a lot of idle isk in people's wallets. I see the ridiculous price spikes at patch times as signs of that. I think most prices hold fairly stable because of elastic supply and people stacking their chips. As long as idle wallets stay idle, they are a great effective sink. When they all suddenly dump massive amounts on new items, hang on to your hats. Huge demand shocks can leave lingering effects for months. Cheers, Brisco Smiley
Priest Amarr Imperial Academy	Posted - 2008.03.31 18:00:00 - [11] Edited by: Priest Amarr on 31/03/2008 18:02:23 Eve economy does not react every economical event same as planet earth. While isk in the circulation increases you will not see an immediate common goods price increases. The reason behind this is, as time passes more people are having more isk , but at the same time more people are gaining ability to produce common goods. If you want to spot inflation you should look at fixed or very limited supply items. Watch rare moon market, more people joining eve and people get richer but rare moon supply is fixed (at the moment). Watch high end BPO market. Even though profit you can make from them decreases because their number is fixed their price increases. You can search for other examples yourself. Now, what is bad for Eve's future is not price increases. If item prices and everybody's wealth increases at the same time you wouldn't notice a different besides we would keep adding zeros to our wallets and prices. The problem is as isk circulation raises , and common goods supply is almost infinite , everything becomes more affordable. This would kill variety in the future. Variety is needed, because where majority of players reach a point they all can afford the same things and they all have skill to use it Eve Universe becomes flat. That day is not tomorrow and this is more than an economical issue. As far as market concerned , you will not see a market crash in foreseeable term but trading and production will become less and less profitable. There is a good chance, there will be changes in the future and those changes will create new high profit opportunities. I am sure this will be debated even more in the future. May Blessings Be With You Priest Amarr
Ghreymar LaNayeur Pariah Corp	Posted - 2008.03.31 19:06:00 - [12] Edited by: Ghreymar LaNayeur on 31/03/2008 19:06:53 <sigh> its so nice to see how people in this subforum understand economics. I've had huge arguments in GD with people who just don't understand that there WONT be inflation simply because the supply of goods is growing at such a faster pace than the supply of ISK. If someone can sell a hulk character with 5 million skillpoints for 2 billion isk (i trained mine up with 3 30 day GTCs, a pretty good ROI...), that just goes to show how much a single hulk can produce. The amount of isk added to the system by insurance, mission rewards, and bounty payouts won't overcome this so long as more players keep joining and skilling up miners. The only market people ever seem to have a problem with is trit, which i see as more of a logistical problem than anything else. Moving all that trit around is a huge pain. Imagine what would happen if they halved the m3 of trit? edit: just to clarify inflation rate = rate of growth of money supply - rate of growth of output. So long as the output growth is greater than the money supply growth, we will have DEflation rather than INflation
Shadarle LI0NS Industries	Posted - 2008.03.31 19:40:00 - [13] Originally by: Ghreymar LaNayeur Edited by: Ghreymar LaNayeur on 31/03/2008 19:06:53 <sigh> its so nice to see how people in this subforum understand economics. I've had huge arguments in GD with people who just don't understand that there WONT be inflation simply because the supply of goods is growing at such a faster pace than the supply of ISK. If someone can sell a hulk character with 5 million skillpoints for 2 billion isk (i trained mine up with 3 30 day GTCs, a pretty good ROI...), that just goes to show how much a single hulk can produce. The amount of isk added to the system by insurance, mission rewards, and bounty payouts won't overcome this so long as more players keep joining and skilling up miners. The only market people ever seem to have a problem with is trit, which i see as more of a logistical problem than anything else. Moving all that trit around is a huge pain. Imagine what would happen if they halved the m3 of trit? edit: just to clarify inflation rate = rate of growth of money supply - rate of growth of output. So long as the output growth is greater than the money supply growth, we will have DEflation rather than INflation Unfortunately I think the valves are open wider than the drains currently. The LP store could help this dramatically if more items were added which required high ISK amounts, or if insurance was tweaked a bit (no payout if you are hit by Concord!). Even if the economy as a whole is experiencing deflation, the rich are experiencing inflation. There is more and more money in the hands of the rich and they have less and less to spend it on. Sure, there are still plenty of ways to invest money, but eventually there may not be. Most people currently think T2 BPO's are the last investment in EVE, that's why they are selling for such absurd prices, people are panicked that they won't be able to invest their money into anything if they don't get a T2 BPO now. In reality there are plenty of ways to invest still, but they are indeed slowly drying up. This is a real problem.
Myrdyr	Posted - 2008.03.31 20:05:00 - [14] The ultimate isk sink is subscription attrition. Please post constructively. ~Saint
wamingo	Posted - 2008.03.31 20:43:00 - [15] Originally by: Myrdyr The ultimate isk sink is subscription attrition. Yes, we need more pirates, gankers and griefers so to increase the subscription cancellation rate or the sinks just won't keep up! I kid. Here's an interesting question though I think: What affect will Ambulation have on the eve economy? I predict the daytrader proffession becoming more popular, probably resulting in smaller margins yet again. -- I won't not promise to avoid refraining from harming you! .... What?
Myrdyr	Posted - 2008.03.31 20:52:00 - [16] Well, it's that or unleashing the banhammer a bit more. Please post constructively. ~Saint
Shadarle LI0NS Industries	Posted - 2008.03.31 21:08:00 - [17] Originally by: wamingo Originally by: Myrdyr The ultimate isk sink is subscription attrition. Yes, we need more pirates, gankers and griefers so to increase the subscription cancellation rate or the sinks just won't keep up! I kid. Here's an interesting question though I think: What affect will Ambulation have on the eve economy? I predict the daytrader proffession becoming more popular, probably resulting in smaller margins yet again. As long as ambulation has lots of ISK sinks it will be great.
Petyr Baelich	Posted - 2008.03.31 21:44:00 - [18] Originally by: wamingo I predict the daytrader proffession becoming more popular, probably resulting in smaller margins yet again. Yes, but volume will increase as well, probably to a greater extent than margins will decrease. Also, more daytraders means proportionally more bad traders than good. :) Please visit your user settings to re-enable images.
jedi2005 NED-Clan Insurgency	Posted - 2008.04.03 10:23:00 - [19] Wouldnt the selling of gtc's be the single greatest (indirect) money sink. Its money moved from peeps, with brains and isk, the ones who earned the 300m+ that they need to buy a gtc, to the lazy/inexperienced peeps, who dont have the time to find ways to "make" 300m+ and thus instead buy it with (rl) money. And the latter ones offcourse are more likely to loose all that "bought" isk so much the quicker then the former ones. (I.e. f.e. through buying expensive ships/mods for pvp when they dont have any pvp experience in any ship, and loosing it the next day.)
wamingo Imperial Shipment	Posted - 2008.04.03 11:15:00 - [20] Originally by: Petyr Baelich Originally by: wamingo I predict the daytrader proffession becoming more popular, probably resulting in smaller margins yet again. Yes, but volume will increase as well, probably to a greater extent than margins will decrease. Also, more daytraders means proportionally more bad traders than good. :) Ambulation will result in the biggest decline in volume of any patch so far. Consumption will fall if people no longer go outside. -- I won't not promise to avoid refraining from harming you! .... What?
Ferrosa GREY COUNCIL Hydra Alliance	Posted - 2008.04.03 11:16:00 - [21] Imagine how much fuel all the POSs in EVE use every day... That's quite an ISK sink. Imagine how many ships/modules/implants get destroyed every day... That's quite an ISK sink. Imagine all the sales taxes on everything (including contracts) every day... LP store = big ISK sink etc...
Chomin H'ak The Trivenerate	Posted - 2008.04.03 15:46:00 - [22] Originally by: Brisco Smiley Originally by: Lord Fitz If you look at rare items, (1 off ships, T2 BPOs) etc. There is very much very huge inflation in those items, because the amount of isk some people have free to spend on them (and the amount of people with that much isk) keeps increasing. I worry that there is a lot of idle isk in people's wallets. I see the ridiculous price spikes at patch times as signs of that. I think most prices hold fairly stable because of elastic supply and people stacking their chips. As long as idle wallets stay idle, they are a great effective sink. When they all suddenly dump massive amounts on new items, hang on to your hats. Huge demand shocks can leave lingering effects for months. Cheers, Brisco Smiley QFT Additionally, I would suggest the extreme nature of market PvP also helps reign in inflation. Though not as much as the rest of these speculations. However, I would also perceive that it is a combination of these things that keeps the market somewhat stable.
Sgt Job Free Enterprise Association	Posted - 2008.04.03 17:59:00 - [23] Edited by: Sgt Job on 03/04/2008 17:59:03 Why not hit two flies one one go? Increase markettaxes and fees but release a few advanced skills to reduce them to current levels. That would take care of the inflation (given that it needs to be taken care of) while it also would give some love for the dedicated trader, one of Eve's least skill-intensive occupations.
Kwint Sommer	Posted - 2008.04.03 18:09:00 - [24] Originally by: Sgt Job Edited by: Sgt Job on 03/04/2008 17:59:03 Why not hit two flies one one go? Increase markettaxes and fees but release a few advanced skills to reduce them to current levels. That would take care of the inflation (given that it needs to be taken care of) while it also would give some love for the dedicated trader, one of Eve's least skill-intensive occupations. No, just no. That doesn't give traders "love," it gives them a pointless grind. It would make them waste of a bunch of time and SP and once all is said and done they'd be exactly where they are now. Anyone who's being seriously hit by market taxes now would just train the skills so their wouldn't be an appreciable impact on inflation. All it would do is introduce yet another essentially pointless skill to grind through. It would be almost as stupid as learning skills, which, by the way, certain devs have admitted was a mistake and one they don't intend to repeat. The only good thing it would do is create a small barrier to casual traders entering the market but that's not worth making traders waste a bunch of SP. Please visit your user settings to re-enable images. Purchasing and Shipping Moon Minerals
Shadarle LI0NS Industries	Posted - 2008.04.03 18:35:00 - [25] Originally by: Kwint Sommer Originally by: Sgt Job Edited by: Sgt Job on 03/04/2008 17:59:03 Why not hit two flies one one go? Increase markettaxes and fees but release a few advanced skills to reduce them to current levels. That would take care of the inflation (given that it needs to be taken care of) while it also would give some love for the dedicated trader, one of Eve's least skill-intensive occupations. No, just no. That doesn't give traders "love," it gives them a pointless grind. It would make them waste of a bunch of time and SP and once all is said and done they'd be exactly where they are now. Anyone who's being seriously hit by market taxes now would just train the skills so their wouldn't be an appreciable impact on inflation. All it would do is introduce yet another essentially pointless skill to grind through. It would be almost as stupid as learning skills, which, by the way, certain devs have admitted was a mistake and one they don't intend to repeat. The only good thing it would do is create a small barrier to casual traders entering the market but that's not worth making traders waste a bunch of SP. I have been advocating doubling all taxes/fees and then adding advanced skills to bring them all to existing levels if maxed out. I'd really love to see 10+ new trade skills added, some of which would allow us to do things we can do now without skills. This would make trading more of a profession for people to specialize in. This would indeed be quite a bit of love for traders as those with the skills would have a larger advantage over those without them. By knocking a few amateurs out of the field it opens it up more for the serious traders. Just as you cannot manufacture very well without being skilled up and if you want to manufacture the high end stuff (t2) you need even more skills. It seems to me if you want to compete trade wise you should have to skill up as well. There are a massive amount of skills to compete in regular PvP, why not in market PvP as well? The side benefit is that it will increase the money drain by a fairly large percentage (since even traders might not train the advanced skills to 5, at least not right away). What this also does is hurt people with tons of alts and it helps people who are able to keep their number of orders down. Thus it goes hand in hand with increasing the order modification timer to 10-15 minutes. If people want to start using 2-3 orders instead of 1 they will run out faster and have to use alts, which means they will have to skill those alts... adds more thought into how you trade, that's a good thing.
Ordon Gundar Science and Trade Institute	Posted - 2008.04.07 15:13:00 - [26] CCP need to introduce parts fatigue. This way, everyones ships would have parts that degenerate over time, therefore introducing a basic "cost" element to every activity. At the moment, apart from doing missions, new players can sit and mine all day without cost, making the oversupply of base minerals worse. We need parts fatigue to increase the flow of money, which would scale with the value of the part, and would also introduce more industry players to increase the demand on raw material ore.
Brisco Smiley Peppermint Bay Trading Company	Posted - 2008.04.07 15:44:00 - [27] I find that missiles become fatigued rather quickly. I also fatigued a transport in low-sec last week. Does that count?
Moran Trayga	Posted - 2008.04.07 17:20:00 - [28] Inflation in EVE is so misunderstood. Inflation occurs for three main reasons: Demand-pull - when the demand increases, and therefore prices increase. Cost-push - where costs rise and so prices go up to reflect the extra costs. Built-in - wage bargaining causing wages to increase as an expectation of prices going up, which in itself causes prices to rise. A never ending spiral. A simple increase in supply does not cause inflation, if anything it will cause deflation. Originally by: EBANK Ricdic Well when I spend 5-9b on a CNR or Golem and then fall asleep on missions, that is a money sink. With the amount of AFK/Asleep ship losses I have incurred over the years I would like to think I have single handedly curbed inflation for all of Eve. Losing ships in missions does not create inflation nor deflation, it merely keeps demand at the current level. If anything if the amount of ships being lost to missions significantly rose we would experience demand-pull inflation. - MORAN TRAYGA -
Aslord Aslord Corp	Posted - 2008.04.08 23:51:00 - [29] i dont understand much about econ, but i see price dropping thinks its call deflation.
Trebor Locke Round Table Enterprises	Posted - 2008.04.09 01:45:00 - [30] Originally by: Moran Trayga Inflation occurs for three main reasons: Demand-pull - when the demand increases, and therefore prices increase. Cost-push - where costs rise and so prices go up to reflect the extra costs. Built-in - wage bargaining causing wages to increase as an expectation of prices going up, which in itself causes prices to rise. A never ending spiral. These have an effect on inflation but, is not the major reason for it in both the real world or in EVE. The Quantity Theory of Money flows quite prevailent in this game. There is simply more money in circulation in EVE than there was in the past. Short term price gains and decreases mean nothing towards overall inflation. The fact of the matter is that there is more money in EVE than there ever has been and more faucits than sinks for the ISK flow of the game. It is because of this reason that we experience inflation. Prices going up and down individually have nothing to do with inflation and are natural in a a society which uses Market Economics as its principal. Lets top this off with the fact that a huge war is coming to an end. In a game where bassically everything is part of the arms market, wars can cause prices to rise and drop as they are started and stopped. So the recently high prices were caused by REAL INFLATION and by the Great War of EVE. Now that the great war is gone, don't expect prices to go up much anymore. Also note that prices are still higher than they were 1 year ago for everything in the game. The latter being the result of real inflation caused by an flow of excess isk into the game from mission runners, new players being made, and rat farmers not putting anything into the sinks. All is normal! Nothing to see here folks :) -------------- Round Table Enterprises Your friendly economic management and trade orginization.

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