Economics question

I doubt you selling at 100k will help. People will just buy it, and immediately sell it at a higher price. It'll eventually get back to the rates it was before the v77, assuming there isn't that much of "glitched" money left on the market after the emergency maintenance.

Shota - Heavens Tear wrote: »

Yay Economics.. my major! In the real world this would be an easier question because the money supply is relatively fixed. In PWI, new money constantly comes into the game as people buy more zen it instantly appears. Because of this, the value of money is not truly based on supply and demand and a finite resource.

The short answer is that unless you have a substantial enough amount of gold to price below the current market value so as to force others to necessarily lower theirs or be faced with not being able to sell, then you will have little chance of making a lasting change to the price.

In the real world the supply of money isn't fixed. First year courses in macro-economics - specifically Keynes Economics which the world had adopted in light of the recessionary problems - tell you money is nothing more than an elaborate convention of faith.

Even now the money supply is being altered as the Central banks of ALL G7 Nations including miscellaneous non G7 China, India, etc, are pumping currency into the system.

Money can be invented - its nothing more than a couple of numbers on a computer.

In fact, the second principle concept understood in economics is that you adjust the supply of money to keep currency moving. If 1 dollar spending doesn't equal 1 dollar income you must adjust the system artificially to shift the movement to a 1:1 ratio (what today's governments are doing)

Right now, its more like 1 dollar spending to 3 dollars income (just as an example) thus currency doesn't move, businesses dont make money, which in turn results in layoffs, etc (the simple circular model - which conveniently is forgotten by many graduate students, and surprises them when their thesis is rejected for abandoning the core of economics)


Money was designed to facilitate trade by making the illusion and appearance that it holds wealth.



The system has reached some sort of equilibrium. Selling for lower will not do much, and selling for higher doesn't do much either.

The principles of aggregate demand do not work in a game as the "perceived value" of the in-game currency is thought to be worthless outside a virtual world.

Michaeas - Sanctuary wrote: »

Wow, thanks for all the replies. I was hoping for some better news to help out with, but at least I know now what NOT to do to further hurt things. It looks like the player base will have to work to fix the economy on Sanctuary, (if it is salvageable) so if any of you economically savvy people have any ideas, please send them out.

Thanks.

Drive demand down.

Demand and prices are directly proportional to each other.

Lower demand with greater supply means that people carrying inventory will need to compete to sell their stuff. Competition amongst sellers drives prices down. Competition amongst buyers drives prices up. Equilibrium occurs when you have just enough supply to meet demand.

Shota - Heavens Tear wrote: »

Yay Economics.. my major! In the real world this would be an easier question because the money supply is relatively fixed. In PWI, new money constantly comes into the game as people buy more zen it instantly appears. Because of this, the value of money is not truly based on supply and demand and a finite resource.

The short answer is that unless you have a substantial enough amount of gold to price below the current market value so as to force others to necessarily lower theirs or be faced with not being able to sell, then you will have little chance of making a lasting change to the price.

Shota is right, the only way you could "Fix" the market is by flooding it with a never ending supply of cheap gold. You would nee to spend thousands of dollars to keep this up for a few weeks until prices balanced out.

3 words....
Economic Stimulus Package

angellicdeity wrote: »

In the real world the supply of money isn't fixed. First year courses in macro-economics - specifically Keynes Economics which the world had adopted in light of the recessionary problems - tell you money is nothing more than an elaborate convention of faith.

Even now the money supply is being altered as the Central banks of ALL G7 Nations including miscellaneous non G7 China, India, etc, are pumping currency into the system.

What Shota was getting at is that in this game, gold doesn't circulate like real money does. In the real world, every monetary transaction results in someone losing the money and someone gaining it for later use. But in the game gold is created when you buy it with $$$, and destroyed when you spend it in the cash shop. Maybe it's traded once or twice for coin in the auction house, but that's relatively minor compared to how much of it is spent on cash shop items.

The circulation of coin in the game is more like real money, but the circulation of gold isn't.

Michaeas - Sanctuary wrote: »

Wow, thanks for all the replies. I was hoping for some better news to help out with, but at least I know now what NOT to do to further hurt things. It looks like the player base will have to work to fix the economy on Sanctuary, (if it is salvageable) so if any of you economically savvy people have any ideas, please send them out.

Unfortunately it's going to be very difficult. Personally I think it's going to be impossible. The 100k trading price reflected a certain ratio of available gold (people willing to spend $$$) to available coin. The bug has caused the amount of available coin to spike tremendously, skewing that ratio, and causing the price of gold to climb.

The only way to fix it is to increase the supply of gold (everyone has to be willing to spend more $$$), or to decrease the supply of coins. Unfortunately the game has very few coin sinks (things that destroy coin and remove it from circulation). There's bidding for TW, and buying certain items and services from NPCs (teleporting, repairing, etc). The majority of coin in the game remains in circulation, traded between players in exchange for items.

That means the amount of coin in the game is ever increasing. Since the goods you can buy with gold have a fixed price, the value of gold remains relatively constant. Since the amount of coin is always increasing, it suffers from inflation and their value is always decreasing. So gold prices will slowly rise over time.

What the bug did was fast-forward Sanctuary's gold-to-coin ratio by several years, and unless they put in some significant coin sinks to remove the excess coin from circulation, I think you're stuck with the higher gold prices.

The only good news I can think of is that in a normal currency market, the spread between the buy and sell price for different currencies equals the transaction fee. Right now, the spread is several times larger than the transaction fee, indicating the gold exchange market is very unstable. Basically people are groping around placing random bids and offers, trying to figure out what the "right" value for gold is. So the prices you're seeing now may not reflect what the prices will be long-term. Give it some time to stabilize.

poorteg wrote: »

LOL how is it fair when there are people running around with 400-800 Million of golds because they bought gold and sold at 600k+ each during the bug?

Those people get to keep all of their money sound fair to those who didn't exploited the bugged huh?

I don't think it's fair. But for someone to have obtained 400-800 million coin from purchasing Zen and selling gold in the AH for 600k, they'd have to have spent $667-$1333 on their credit card that day. The "innocent" folks who obtained coin by selling gold probably didn't mass these huge fortunes.

In fact, I'd venture to guess that someone with that much coin is really a bug exploiter, who is now trying to deflect criticism by pretending he got the coin semi-legitimately by selling gold in the AH.

shota - Heavens Tear wrote: »

you Mean "socialism Spending Program"?

Qq.....qq.......qqq

STOP BUYING

After 1 day they will lower prices

Ethas - Heavens Tear wrote: »

Inflation grows while there is demand. If they don't have to whom to sell they will lower prices.

In this case overflowing the market with cheap gold dose not work. So the only way to manipulate the market is to stop any transactions.

Yes this is correct.

Faustinna - Heavens Tear wrote: »

Shota is right, the only way you could "Fix" the market is by flooding it with a never ending supply of cheap gold. You would nee to spend thousands of dollars to keep this up for a few weeks until prices balanced out.

No that is plain wrong. Excess gold just creates an inflationary gap.

Shota - Heavens Tear wrote: »

Thank you for teh economics lesson. If you had read my post I said "relatively" fixed. The point was that trillion of dollars don;t just magically appear overnight.

if you really want to sound intelligent, do so without misreading someone else's post and then teaching a lesson not needed.

It does, and thats what you apparently didn't understand when you posted what is quoted now.


The economy is not relatively fixed. If you believe that then, I dont know who's giving you your bachelors degree, but you would surely not make it past the first exam in my program.


Trillions of dollars do appear over night. Billions of dollars have been pumped into the the global economy in the past few months. Collectively, they add up to way more than a trillion dollars.

Where did they come from? Magic? Sort of, someone just changed a value that goes into circulation.


Money also dissappear's in the same fashion. Once the recession has subsided the central banks withdraw the money from the system as if it never even existed.


Quit trying to dismiss my arguments as if I havent read your text.

Shota - Heavens Tear wrote: »

The point was that trillion of dollars don;t just magically appear overnight.

That is a very clear and concise point, which I argued is wrong.

angellicdeity wrote: »

Yes this is correct.



No that is plain wrong. Excess gold just creates an inflationary gap.





It does, and thats what you apparently didn't understand when you posted what is quoted now.


The economy is not relatively fixed. If you believe that then, I dont know who's giving you your bachelors degree, but you would surely not make it past the first exam in my program.


Trillions of dollars do appear over night. Billions of dollars have been pumped into the the global economy in the past few months. Collectively, they add up to way more than a trillion dollars.

Where did they come from? Magic? Sort of, someone just changed a value that goes into circulation.


Money also dissappear's in the same fashion. Once the recession has subsided the central banks withdraw the money from the system as if it never even existed.


Quit trying to dismiss my arguments as if I havent read your text.



That is a very clear and concise point, which I argued is wrong.

Sorry, going to dismiss your argument again.

Trillions of dollars just don't appear overnight as a normal happening. You just saw the chance to take a simple statement and dazzle everyone with your expertise. I was keeping it simple because people didn't come here for an economics lesson and nothing I said is wrong.

Your answer are much more in depth and complete, but unrelated to the point at hand. You can question my bachelor's degree if you like, I find myself questioning where you learned your manners.

have a nice day :-)

angellicdeity wrote: »

That is a very clear and concise point, which I argued is wrong.

Argue all you want, it still doesn't happen magically. When it happens it is a planned event wher this was not. You know your economics, now maybe you can learn to make your points without telling other people they're wrong or their degrees are of questionable validity because you don;t have the intellectual ethics to make your points on their own merit.

angellicdeity wrote: »

Unfortunately, with that single statement, anyone who is competent in macro-economics can safely say you dont even study economics.


It's even littered all over the newspapers in regards to the concerned "inflation" with pumping extra currency into the system. You obviously dont understand the role of the central banks, nevermind how the system works.


So my friend, I need not say more, you are incompetent in the study of economics. You have also proven it for everyone to see.

All you have proven is that you don't know how to read for understanding. The money does not just appear out of thin air. When money is pumped into the system it is a planned event.

You just can't say your peace without being degrading, but nobody's buying it but you.

Apparently you need to go back to school and learn how money is pumped into the system... it's not by the Keebler Elves as you must think and it's not a surprise when it happens.

angellicdeity wrote: »

Of course, because half of the people posting here dont understand a thing about economics, with you too.


Of course when money is pumped its planned, but you still dont get the fact that it comes from NOWHERE, which you unintelligently argued against including the fact that it "just doesn't appear overnight" which it does.


The banks don't announce announce with bells and whistles that they're pumping billions into the system, which was created out of thin air. They just mumble a few words and let loose.


Unfortunately you keep wrongly insisting that you are right. Unfortunately for you my young student, you're the one who needs to reread some textbooks. Unlike you, I've graduated from my graduate studies.

I keep backspacing because my first instinct is to match your insults with my own. You have proven nothing excpet that you are a malcontent who can't speak his mind without berating others. Yup you got me figured out, I'm poorly educated and don't deserve to be heard in the same forum as you. It must be quite a burden being blessed with so much brains and so little ability to use them without being a jerk. have a nice day :-)

angellicdeity wrote: »

You haven't proven much except that you have a shaky base in your understanding of economics.

I wouldn't have needed to address you directly had you realized the fault in your economic analysis.

Defending it by saying I didn't read it thoroughly is what many students do.

Most of what you had stated in your original analysis was correct minus the statement about "relatively fixed supply of currency."

Have a nice day too.

I'll take my underestimated understanding of economics (by you), since I was not making an attempt to teach a class but provide a simple response to a simple question. over your more proven expertise (since you felt it necessary to impress everyone - in which you failed) coupled with your complete lack of manners and decency. But you like what you have better, so we both win :-)

farewell :-)