Value of Linden Dropping like a bomb?

Well, recently, around the time the server crashed about a few months ago, I noticed the price of the linden drop drastically on Gaming Open Market, after LL gave 1k to everyone on at that time. Well recently, now i've gone back to check on GOM again after a while, but can someone tell me why the linden is dropping even furhter? Now they've changed the blocks to 1000 lindens and their not worth anything as much as they used to be? Is there anything we can do about this problem or whatnot to help the exchange rate?

because it was artifically high before.

Economics are an extremely delicate business. Because the Linden Dollars (L$) aren't really being taken out of circulation (except by people who quit), it's a continuous race: as long as people come in faster than L$ pile up, the L$ will get 'more valuable'... but a slow-down in new customers, or an increase in the L$ given out, will cause the $L to get weaker... very loosely speaking.

Because L$ doesn't leave circulation, any time there's a break in popular growth, L$ value will PLUMMET, because the weekly income will make everyone 'richer'. Of course, that's bunk - everyone's the same wealth as before, just with more L$, meaning the L$ means less than it did. If there's a growth in growth, then all the oldbies DO get a little richer, in comparison to the newbies. A little bit. Not much. Growth has to be very high.

How to fix it? Give out fewer L$. Is this reasonable? No, not really. Alternate solution: take L$ out of circulation. How? I have no idea. Taxes used to do this, but not any more.

Final analysis: L$ is highly dependent on outside influence, and there will be fluctuations neither we nor LL can control. I doubt L$ will stabalize until massive changes have been made to the way they are introduced.

This is not a full essay, and conclusions reached are not guaranteed. Many factors have been left out of consideration.

-Ansi

Maybe everyone is learning to create their own stuff and doesn't need to buy anything.

Lindens could sell items of particular value and thus suck L$ out of the economy. But what we're seeing is pretty much going to continue unabated.

PC

Nah...

All that's happened is all those people who *were selling* to IGE at a higher price for their Linden's than they could get at GOM now have to sell their Linden's there.

So you're seeing a temporary flooding of the market until IGE will start repuchasing them again.

It's just basically a lowering of the price of what the Linden *would be* had IGE not been purchasing them at higher prices.

Figure a good 20K to 50K per day additional on GOM of Linden's for sale.

From the time we opened up until early-July, the exchange rate was relatively stable. It has since peaked and returned to it's previous level. This is probably related to the buy rates of the primary external market-maker. Although drawing any conclusion about causality is beyond the scope of this post.

The attached file shows the closing price levels for the past 150 days.

$L's can still leave though land auction, uploads (still taxin the creators, sighhhhh), advertising in the Finder, and i found out the hard way, you can somehow own more land than your group is supposed to own but there is major tax if you make this mistake.

Very coordinated, thanks. Very helpful.

I would have to know EXACTLY what's happening to the money before I would hazard a firm statement, but I would still heavily favor the 'unstable currency' tendency... unless the firms purchasing $L are colluding specifically to keep $L at a certain value.

-Ansi

I beleive you hit the nail on the head Ansi. IMO rate of growth is one of the biggest factors effecting the value of the $L. . I beleive we are seeing a combined effect from several factors.
1- Slow down in rate of growth. - Ansi already covered this.
2- Maturing of "baby boom" players - (S.A.,MSN,Therians) These players are learning to make $L on their own, instead of buying them with $USD.
3- Drop in land prices - Less $L leaving the system through auctions. Also, less $L needed to be purchased with $USD.
4- Attrition - Natural loss of players for various reasons. This factor was recently compounded by stability issues.
5- A major speculator of the $L seems to have changed their position. (IGE) They took a shot, and apparently they are now reversing that decision in an attempt to minimize their losses.

Thats my take on it.

dropped 2 cents in the last couple of hours.

sell sell sell

Cat

yeah! flood the market so the value drops even lower.

buy buy buy

Remeber, too, that with the new block sizes a 2-cent move in the price is kind of like the price moving by 1/2 cent with the old block sizes. I'm sure you were being facetious, but I think it's important to clarify that.

Dropped yet another penny. Stock markets are interesting to me so naturaly the GOM is.

Now we must ask ourselves why is the L$ dropping?

I think its safe to assume that the changes in the gom its self have a lot to do with it.

Cath

*edit for siggy

Had a lot to do with the sudden steady decline today.

Wow it always seems my threads are so popular. Also just a note to those worried about Linden Price; Donate to Atmos Kuroda to help the economy, I will guarantee that I will remove more lindens from the game .

Not really - it's been steadily dropping for the last week or so.. It wasn't that long ago it was around a buck a 250 block - then there was the huge spike when there was a land shortage and it went up to around 1.45... It seems to just be leveling out at a reasonable level once again.

For those who actually depend on the value of the Linden dollar (as opposed to folks like me - enthusiasts). One thing to consider... people will only buy money if there is something to spend it on. So without high land prices, that only leaves content.

If you want low land prices AND a high need for the L$ - ya best get cracking on making things people want/need.

Siggy.

The MegaTower rents are tied to the value of the L$ on GOM. Check out how we calculate our rents, and how we determine how we can pay back our land tier at...

/invalid_link.html

Wasn't the last 1.45 spike in July? I didn't notice it dropping so steady last week. Sorry I wasnt more specific.

Cat

Yeah around there, and held for a month or so, it's been floating its way down since then.. the recent GOM changeover probably shook things around while people come to grips with new calculations.. I expect if theres another influx of people looking for land, there will be another spike.

I think those prices of 1.45 are just as unreasonable as $10 per square meter of land... these things ebb and flow..

Either way, I have all the land I need, and I don't really use $L for anything.... so for me it's same old same old...

Still - if people want a stable linden dollar with value, they're going to have to start exploring other ways to make a buck other than land and dwell.

-- side note.. the majority seems to still be around 4.58 - with a few sales here and there at lower prices. I wouldn't judge the daily high and low as anything substantial, as I could post 1k at .01 US and claim the market crashed.


Siggy.

I agree with Lynn here. Question is when and for what rate IGE will buy again. I wish GOM could accept credit card, then IGE would have to lower their selling price. As of now, IGE sell L$ at above market value to people who don't have PayPal.

Of course low land price and Therians making their own items now also has big influence on the weak L$ value. IMHO it would be good idea for Linden Labs increase share of land sold at auction for L$ a little bit in order to balance things out.

I think the 1.45$ spike wasn't in July but much later in August or September. At the height of land boom L$ only was at 1.25$. Land market was already about to cool down when IGE started buying L$ like mad, which is what really lead to price spike.

The price at GOM had kind of stabalised until they changed the block size, and now it's going downward again quite quickly (it was round about $1.20 for 250 before and not it's around $1.10). Changing the block size has definitely had an impact, how long that lasts or whether it will find a new stable level because of the new block size is anybody's guess.

Its taken a nose dive today, did IGE unload?

nope, which means if they ever do, the L$ has much further to fall.

Tough times ahead

I'm of the opinion that the rise in the value of L$ was driven by IGE's indiscriminate buying, and the fall back down is driven mostly by the fact that IGE ain't buying right now. They're sitting on over L$11M, and are trying to sell those at a price that is significantly higher than what folks can get on GOM.

The only competitive advantage they have over GOM is the fact that they'll accept credit card payments for L$, while GOM does not.

IGE screwed up, trying to out-muscle the free market, and now they have to pay the piper, which means that if they have any sense, they won't be buying L$ at all for a long while.

- Ace

a reccesion!!! take your money and run for the hills!!!
hehe.
I have noticed the value of the L$ dropping for a long while. Back in september i could change 10k to a good 56 RL$. now i only get about 46 RL$ last time i checked.. although that was with the old system, perhaps the new system will eventually smooth out and the value of the Linden might stop falling?