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CAThastrophy and NW
castertroyt79
Member Posts: 58
I can never seem to resist the urge to debate and discuss economics for RL event or for a game. There are varying opinions on how recent event has affect NW’s economy, and I’m going to start by stating my stance:
The recent event, after dev’s action will have no long term impact on the economy.
I’ll try to illustrate some theories first, and then relate these theories on how it affects the game’s economy.
When we look at an economy, we need to look at the impact of any event on both the Short-run and Long-run of the economy. In layman’s term, that’s the short and long term effect.
Economic theory states that the value of a currency fluctuates base on the amount of currency that is circulating in the system. In a world where there are only x amount of money, a loaf of bread is priced at $1, and the supply of the bread is also constant. As long as the population growth remains constant with the growth of money and bread production, the bread will still cost $1 to buy.
Now, suddenly, the amount of money in this system doubles, so everyone now have twice the amount of money, then the cost of the bread will increase twofold to $2. Following me so far?
Now lets say in this same world, the amount of money doubles, but it is not equally distributed. In fact, only 1 person (Mr. A) gets all these extra money. What happen then? Just because he is capable to do so, he is going to bid up the price of all the breads.
In the short run, some of the population will suffer because they can’t afford to buy bread…and the bread producer will increase the production of bread. After any tick of time, the distribution of wealth changes…now Mr. A has less wealth, and the bakers will have more wealth. They in turn will have a higher purchasing power, and will drive up the price of other items, which in turn leads to a price increase in those items…and so on.
Given sufficient time, in the long run, this initial influx of money received by Mr. A would had been distributed to all the population in our fictional world…and the price of everything is doubled…but their real purchasing power remains the same as before the influx of the money.
This mirrors what we are seeing in NW. The exploiters are Mr. A. With their new found purchasing power, they will drive up the price of items and Zen…but given enough time, this influx of wealth would had been distributed to other players…Mr. A buying shards or tier2 dungeon drops from the farmers, the farmers in return spending these AD on other things…so in the long run, nothing changes…though in the short run, non-exploiters will feel the pain.
Now lets look at a couple of what if:
a) The exploiters are continually generating money out of thin air
In this case, yes, the economy will be ruined by them because they have infinite resources. No matter how much the price of item inflates, they can just keep “printing” money, causing uncontrolled hyperinflation, increasing market uncertainty, people stop trading in market, and if possible, a new market with an alternate currency develops (post WW2 German used cigarettes as currency due to hyperinflation)
b) Exploiters control the market with their huge capital
The capital needs to be significantly large enough to affect the aggregated capital of the other players. So they’ve managed to jack the price of an item to 100x the initial price. If no one can afford that, then they can’t profit from it…all it does again, is to force the players to obtain the item through other means. If no other means exist, player leaves, game over.
Dev had pretty much (I hope) stopped a) from happening…so no worries about that. Not all the exploiters are caught…but we don’t really know how many more is out there, and how much AD they had “printed”…either way, their amount of AD is now finite. Question remains if their capital is large enough to control the market. Personally, I don’t think so. Given the number of players who are able to generate AD every day, even not at the cap value, time will diminish the advantage that these escaped exploiters have. Their wealth will have to be distributed to the rest of the players as time goes by. We will very likely see short term inflation in the value of Zen, and certain end game items….but as supply catches up, we should see it stabilize. I can’t say how long, as I don’t have the numbers.
As for the dev, they are playing the role of a central bank (CB)…to maintain the inflation/deflation at a steady level, and prevent any spikes from happening. That’s pretty much what CB does because spikes create uncertainty, which can have a cascading effect on the economy causing it to spiral out of control.
The recent event, after dev’s action will have no long term impact on the economy.
I’ll try to illustrate some theories first, and then relate these theories on how it affects the game’s economy.
When we look at an economy, we need to look at the impact of any event on both the Short-run and Long-run of the economy. In layman’s term, that’s the short and long term effect.
Economic theory states that the value of a currency fluctuates base on the amount of currency that is circulating in the system. In a world where there are only x amount of money, a loaf of bread is priced at $1, and the supply of the bread is also constant. As long as the population growth remains constant with the growth of money and bread production, the bread will still cost $1 to buy.
Now, suddenly, the amount of money in this system doubles, so everyone now have twice the amount of money, then the cost of the bread will increase twofold to $2. Following me so far?
Now lets say in this same world, the amount of money doubles, but it is not equally distributed. In fact, only 1 person (Mr. A) gets all these extra money. What happen then? Just because he is capable to do so, he is going to bid up the price of all the breads.
In the short run, some of the population will suffer because they can’t afford to buy bread…and the bread producer will increase the production of bread. After any tick of time, the distribution of wealth changes…now Mr. A has less wealth, and the bakers will have more wealth. They in turn will have a higher purchasing power, and will drive up the price of other items, which in turn leads to a price increase in those items…and so on.
Given sufficient time, in the long run, this initial influx of money received by Mr. A would had been distributed to all the population in our fictional world…and the price of everything is doubled…but their real purchasing power remains the same as before the influx of the money.
This mirrors what we are seeing in NW. The exploiters are Mr. A. With their new found purchasing power, they will drive up the price of items and Zen…but given enough time, this influx of wealth would had been distributed to other players…Mr. A buying shards or tier2 dungeon drops from the farmers, the farmers in return spending these AD on other things…so in the long run, nothing changes…though in the short run, non-exploiters will feel the pain.
Now lets look at a couple of what if:
a) The exploiters are continually generating money out of thin air
In this case, yes, the economy will be ruined by them because they have infinite resources. No matter how much the price of item inflates, they can just keep “printing” money, causing uncontrolled hyperinflation, increasing market uncertainty, people stop trading in market, and if possible, a new market with an alternate currency develops (post WW2 German used cigarettes as currency due to hyperinflation)
b) Exploiters control the market with their huge capital
The capital needs to be significantly large enough to affect the aggregated capital of the other players. So they’ve managed to jack the price of an item to 100x the initial price. If no one can afford that, then they can’t profit from it…all it does again, is to force the players to obtain the item through other means. If no other means exist, player leaves, game over.
Dev had pretty much (I hope) stopped a) from happening…so no worries about that. Not all the exploiters are caught…but we don’t really know how many more is out there, and how much AD they had “printed”…either way, their amount of AD is now finite. Question remains if their capital is large enough to control the market. Personally, I don’t think so. Given the number of players who are able to generate AD every day, even not at the cap value, time will diminish the advantage that these escaped exploiters have. Their wealth will have to be distributed to the rest of the players as time goes by. We will very likely see short term inflation in the value of Zen, and certain end game items….but as supply catches up, we should see it stabilize. I can’t say how long, as I don’t have the numbers.
As for the dev, they are playing the role of a central bank (CB)…to maintain the inflation/deflation at a steady level, and prevent any spikes from happening. That’s pretty much what CB does because spikes create uncertainty, which can have a cascading effect on the economy causing it to spiral out of control.
Post edited by castertroyt79 on
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And Thank You Neverwinter Team for making light of an issue that we the players made for ourselves. Instead of just reporting a flaw that was found, it was used and abused in a silly attempt to get a leg up over other players. I am now on my 3rd week of play and 14th Level as a GWF(To high for the little time I have put in IMO). I am as high a level as some of the most loved Heroes of the Realm(Bruenor and Wolfgar), I have 1,200 AD, and plenty of game to play for weeks or months till I have finished the Beta content. You have a pretty good game developing here. Thank You
I'm talking about the gear flooding that pushed the prices down, so people started bartering with more reasonable amounts instead of expecting millions. You can buy a Tier 1 set for a very reasonable price, right now.
- Titania Silverblade, the Iron Rose of Myth Drannor (Lvl 60 GWF, Destroyer)
- Gwyneth, the Cowardly Cat Burglar Drowling (Lvl 60 TR, Saboteur)
- Lady Rowanne Firehair, Heartwarder of Sune (Lvl 33 DC)
- Satella, Sensate (LvL 44 CW, Renegade, Non-Active)
Check Steppenkat's Foundry Quest Reviews!
Athens. They have cats like other places have rats. Very odd relationship with animals in that part of the world
Anyway you're wrong and you oversimplify tons of things. You also vaguely understand the process of spreading wealth to the real economy and confuse purchase power with net wealth (first depends on work, second on the money you have).
Regards,
Kalantris
The economy still isn't great...
So, if you are willing to wait several years, of course it will balance out. But, given the present state of things, I doubt most of us will be playing NW several years from now.
Pretty much this. Many players won't care if in the long term things will recover if it makes life bad enough in the short term.
They will just move elsewhere......
1. duping items
2. new 1 hit kill bug with GF(other then the set one)
3. unlimited stamina
(i am listing these to make an argument, i would advice nobody to ever look into these and to just enjoy the game in a "solo-player" fashion until most of these get fixed)
As a consequence of the poor handling of the developers (no wipe and a shutdown for a week ore so to look at the game as a whole and fix it, personaly i wouldent mind if they took it offline for a week in return for some major bug fixes/balance issues but thats just me...) i think a lot of people who would opt not to exploit otherwise, wil this time around do use them, since they see how it is being handled, like a snowball effect. A lot of people are upset and as a result of this have turned there stance on exploits.
Obviuesly i do not know the full extend of the rollback and exploiter hunting the developers have done, but without communication and data towards the community nobody doe's, so exponential doom scenerio's are getting hyped.
I do believe things wil even out over time, but i am a solo player, so the economy doesnt mather to me, and for a lot of other people this also count's. I do feel for the people who purchased a founders pack do. I feel all they got was a respec token and a mount, since u could lvl to 60 in 1 hour, there 5 days headstart is worth nothing. And because of the recent event's even the AD bonus seems redicule...
(admin please remove things u do not apreciate, i am well aware of the forums rules but i posted them to make an argument, if u do not agree, i fully agree with ure stance to remove them
I'm trying to make a rational discussion here...so if you know something that I don't, I would appreciate for you to share it to rebut my theory. What you are saying here is that you know more than I do, but you refuse to tell me...doesn't add much value to the discussion.
Simplification in this case is a necessity. I'm not going to spend days researching all the factors and drafting a 20 page journal for a video game forum post.
Work generates money, which in turn is a measure of your wealth. Money can also be converted to other less liquid assets...which is also part of your wealth. Purchasing power is simply the relative net wealth of a person against others. I fail to see how that will invalidate what I've said.
Without the data, we won't know how long it will take...but I doubt it will take years. Given the data, I think very few gamers possess the necessary skills to compute that.
Games will have exploit...some have more, some have less. I'm not assuming the exploiters will stop...I'm simply examining one particular case. I believe there are still exploits in the game...and if left unchecked, will have a drastic effect on the economy.
By your chain of argument, are all MMO is doomed since exploiters are always trying to find ways to exploit the game?
I believe since you did not explain how they work itheryel then it should be ok. But I am sure if not they will redact what needs to be.
It is my opinion that the economy will return somewhere near normal but make take some time and I understand it may be more time then some players are willing to wait for.
And i was stating those things because i felt the op was being to one sided on his statements to be considered of value, obviuesly if exploits have stopped things wil even out, but people are actively looking for them in this early stage, and some people are joining them because of the way things are handled (development side, in a emotional rage i supose?)
Dont get me wrong i have great hopes for this game and i fully understand the op position on this mather, and obviuesly it holds truth, but other factors like duration of the gameplay etc need also to be taken into consideration etc and it isent as simple as the OP presented it(obviuesly, i think the op is fully aware of this, and it is very hard to go into detail on this on a forum)
Overal OP u make a point, but u left certain factors out. but on any post like this, i just want to bump it for awarenes both for the developers sake(might they ever pounder there weary eyes over this) and the community's sake.
Sorry for my tone, friend. I have nothing against you, I was just pissed off, as the **** forum deleted my entire post because of some character I used in my post. Anyway, on topic. Yes, you need simplification to describe certain mechanisms, but you compare it to a significantly simplified RL situation... in effect you simplify it twice.
Here we go, nice and short.
1. Doubling money in a economic system doesn't make everyone twice as rich because of capital cummulation. In effect it makes few people richer while generating poverty all across the board (because everybody looses a certain ammount of their money due to inflation).
Also increasing the total ammount of money in a modern economic system doesn't have to cause inflation. Take a look at Operation Twist (FED), LTRO (ECB), 270BLN GBP QE (BOE). Only the third one caused some inflation (2.8% march, 2.4% april, estimated ~3% in the summer). The previous two heaven't and they increased the ammount of currency in circulation by a freaking lot (LTRO alone was ~3bln EUR).
2. Bread you used for comparison is wrong. It could work for rare or complex items like gold, silver, microchips or graphen. Most items will just generate more supply to meet the demand instead of increasing their price. There's a matter of regulations and the production cycle (if you need 3 days to build a machine the price would spike in the first 72 hours and then start dropping), but that's irrelevant. There's also a certain sum of items held by people who think they're too cheap to sell and their supply will meet the demand to some point.
3. Purchasing power is generated by work not wealth in the long run. The significance of this fact in NwN is hard to over exaggerate, because the maximum income per capita is capped (24.000AD/day), which means it's impossible to increase the purchasing power of a single player in the long run.
As for central banks there are two types of central banks. One type is banks like ECB. Their mandate is to "maintain price stability over the medium term", which essentially means, as mr Draghi likes to say it, "keeping inflation close to or under 2%". There's also a second type of central banks that treat inflation as secondary data and are more focused on the interest rates (repo rates, main int rate, overnight rates etc.).
Best regards,
Kalantris
I'm not taking sides or commenting if the dev made the right move, I'm also not commenting if the game will die or continue...I'm merely stating the effect of what had happen, what had the dev done, and how would the economy look like. I am only examining the impact of Cathastrophy on the economy taking account into the steps that dev had taken.
Things is never as simple as presented here, but so far I haven't seen any effective argument against what I've said. You are talking on a wider context, in which case, I agree with your opinion....but that's out of the scope of my discussion. Complex problems are often tackled by breaking them into smaller ones, solving them individually, and then putting it back together. We can try to discuss the complex problem on the state and future of the game here as many other discussion threads had shown...but we'll get no where and more often than not, the discussion gets derailed.
Ok, now we can talk...I'll address my counters against your point.
on 1). Poverty exist because things keeps getting more expansive and the poor can't afford them. It is caused by a disparity in income, and income growth. If the rich's has an income of 100,000/yr, growing at 20%/yr, and the poor has 10,000/yr growing at 10%/yr, then yes, we'll have poverty. In the game world, the general public's income is capped at 24k/day if you do not purchase any zen. A sudden injection of AD through the exploit temporarily increases their purchasing power. They can afford to bid up what they want to buy from the AH....which then we'll have a temporary price increase. If none of these AD gets sink out of the system, then the AD in the game world will increase permanently, and will be continually distributed and traded to all other players. Fortunately, NW has many way to sink these AD out...so I don't foresee the price increase to remain so for too long...unless the amount of AD the exploiters get is astronomical in comparison to the aggregated AD of the other players.
Central bank injecting money into the economy will cause inflation if everything else being constant, according to monetary theorist such as Milton Friedman. It is also known that it takes time for these effects to be felt...and even then, there are a lot more of other factors that can affect inflation. I haven't read those report, so I can't comment much on it...but I have no reason to doubt you.
2) the bread example is just to illustrate my point on the effect of money supply on price. In fact, any item can be used. In my example, due to the sudden increase in money for Mr. A, the demand for bread increases...in which the reaction of the baker is to increase their production. But then, the production factors are finite, and it takes time for the supply to catch up. Either way, it is through this channel that the money from Mr. A gets cycled into the community.
3) I cannot agree with you on this. By working you get money (or wealth, which ever term you prefers). If everyone gets the same amount of money and works for the same length of time, then everyone has the same wealth, hence they all have the same purchasing power. If I decide to work an extra hour than all others, then I'll have this extra hour of wealth, which allows me to buy more things, hence my purchasing power increases. In NW, we have a hard cap of 24k. If you're diligent enough, you'll earn 24k/day. For people like me, I earn less than 10k/day. Those who puts more time into the game obviously earns more AD than me, hence commands a higher purchasing power. Aside from the hard cap, another way to earn AD is by selling T2 gears, which again, depends on the time you put into the game.
On CB, yup...it depends on their mandate...but that's a little too far fetch for this discussion.
Please don't take this the wrong way, but it seems to me your economic knowledge is from websites, news and magazine ( I could be wrong), and I applaud that...not many people are interested in it. Any economy, even the NW's one is complex...and there are many factors affecting it. There are also a general set of theories that describes how an economy will react to a certain situation. Textbook will usually try to illustrate it through simple examples with unrealistic assumptions (but that doesn't invalidate the theory) just to make a certain theory easier to understand...which is what I'm trying to emulate here. If you have one nearby, I'm sure there's a chapter on the things we've been discussing here which might be able to clear up some of the doubts you have.
Keep it up...I love discussions like this. Keeps my mind fresh and enables me to apply what I've learned into something.
That is the real question. If, contrary to all of the reports, the exploits began last weekend ... and if the vast majority of the AD has been taken out of the economy, then the economy will correct itself rather quickly. If, however, the reports are true that the exploit was found in closed beta, that and some people people amassed billions of AD, it will be take much much longer.
I'm not defending the game or anything for that matter...merely doing an analysis on the economy...not the player's having uber item....just the economy.
Raging doesn't get your point across any faster.
Not really. If I had hundreds of millions of AD hoarded, and had already traded for thousands of dollars of Zen, why would I keep selling it for Zen right now? Some people will hold the hoarded AD for later, and others will sell it directly to the gold-selling companies for cash.
You're right...if that's the case, then the economy that we see from launch to BC could also not be an accurate reflection of the real economy.
That's what I would do...that's something that we'll probably never know.
This is sad. I understand having this stuff account bound to prevent sales etc but really? What is the rationale for giving me a Present for my patients that I cannot use? Seems like more of a taunt than a gift.
Correct. It may take months to determine the real effect on the economy.
There was not one ounce of raid in my post,..... grabeth thou reading specs
The irony of a common pest spray being called "raid" and it being your typo as well was not lost on me.
Anyways, while we can't doomsay, you don't HAVE to be optimistic either, and I find the defenses that you mention in your first post to be just as vapid as you claim. So I agree with you, the points made by those defending the game are not great.
I personally find that a lot of players here being American, have very..."opinionated" views on economics anyways.
I can't be that positive with the NWO economy; when any country prints obscene amounts of money, even when kept in people's mattresses and never "put into circulation", the trick is the consumer's idea of the worth of that money.
Money, when not backed by actual physical wealth (such as in NWO) is purely an idea backed by confidence. The worth of said currency drops based on "popular opinion" far more than by any other factor. Where the currency is backed up by actual physical wealth (such as the Swiss Franc), then the "popular opinion" doesn't matter as much. Now, as to what "public opinion" is in this case... that's really hard to gauge from a bunch of forum posters. We're a minority of those who played the game.
Now, the other thing working against "standard economic theorycrafting" is that there are money sinks - a large number of them - where AD are removed from the economy permanently via removing runes and enchants, buying store items, buying frill items, feat respecs, etc. which does not occur in the real world (unless you count the barter system and eat the goat/bread/what-have-you). The amount being drained is actually pretty high for the "haves", but pretty low for the frugal and have-nots.
Anyhow, I could go on theorycrafting about the factors in the economy which might result in inflation, depression, or outright economic collapse, but I'll just do a TLDR:
It's really impossible to judge how the economy in this game may or may not go, because even the "experts" don't predict properly most of the time.
What we really need is a system bases only on work. As example: Only a man, who employs many workers is rich. This system will be a catastrophe for all bank institutes. They will be obsolete. So they will try to stop it at all costs. As they did in the past in a small town in switzerland.
They even try now to bring the bitcoin system under their control.
A clear sign of panic, because they know, that this system bitcoin system is the only thing that remains stable in value after the soon coming worldwide crash, because it has a stable -- or slow rising number --- of coins that can be used as money.
Contrary to common believe, more printed money will not help against a collapse.