Value of Linden Dropping like a bomb?

Time to raise your prices, folks. Stuff in SL is far too cheap. People need to understand that they're not supposed to live off of stipend and that the stuff they buy costs real people real hours of work.

I would prefer that Linden Dollars become mostly worthless myself. Then hopefully we would lose most of the Land Barons, and clubs devoted to generating dwell.

Who uses L$ anyway

I'm tellin ya, lets switch to Euro's.

Because the price is normalizing. It's just going back to what it was before.

*peers over at the gom time will tell

Uhh, why is it that thereians haven't been making items before? aren't they just like any othe SL resident?

Yikes...the L$ is falling precipitously. Ouch. Damn. Bang. Zoom.

How low can ya go?

consolidation always seems to have a negative affect on stock prices. is that also the case in currency markets? like what happened when the lira or other currencies consolidated like that?

L$ do not accumulate. i think they have stated this many times. the supply is maintained by LL through small fees and auctions. when land prices drop, there should be more L$ land auctions to compensate and the reverse should be true.

SL needs new markets! like i said before, your homework is to go recruit a friend today! or two!

I’m not sure how much the Lindens really care about the R$ price of $L. I believe they could have an influence on the exchange rate by removing $L from the economy with a savings bond program and the development of a savings and loan system with a variable prime interest rate. Other commodities beside land would be nice. Rating bonus system could be tailored weekly to influence $L paid and received for rates. Linden Govt. Lotto may be used to add and remove monies from the economy as well. All of this could be done without taxes.

werd.

Inflation is by definition an increase in the monetary supply. If the increase in L$ is proportional to the increase in players things should be stable. The stipend and bonuses each week are an increase in the supply of L$ there inflationary.

If land sold at auction by LL in L$ is a decrease in the L$ supply then it follows that land sold at auction for US$ is an increase--can't have it only one way. It should be noted that it is in LL financial interest to sell land in US$.

That's not entirely correct from an economic point of view.

Inflation also occurs when there is a decrease of goods and services that your money can buy.

Look at what happened with the runup in land prices when there was a shortage of land available, and you'll see that concept in action.

- Ace

I was sitting at a Town Hall hosted by Philip Linden circa June/July of this year, and he was bragging about the fact that $L1000 was steadily worth about $US4.20-4.40.

This was before the L$ ran up due to both the land shortage and IGE's indiscriminate buying.

I'm of the opinion that the Lindens care quite a bit about the vaule of the L$, and are making concious decisions about how many come into existence (weekly allowances and dwell payments) and how many go out (uploads, listing fees, land purchases denominated in L$, etc.).

- Ace

What does LL say the value of the L$ is?

1) A US$6.00 per month membership produces L$2000 per month plus a 512 sqm land fee allotment which is worth between US$5 and US$1.52. Taking the land fee value at US$2: L$2000 / US$(6-2) = 500 L$/US$. But one can argue that LL provides additional services for the US$6 per month this further devaluing the L$ in this instance.

2) From https://secondlife.com/account/account-landcredit.php
L$10,000 / US$5 = 2000 L$/US$. This figure is the most telling because it is this figure at which LL will accept L$ for in place of US$. In RL such a scheme as this is used by Berkshire Hathaway to maintain the trading difference between their "A" and "B" shares.

So, if the issuer of the currency will only accept it at 2000 L$/US$ that effectively pegs the true value in the same manner of a RL government pegging a currency to some weight of gold.

Thus the GOM prices are substantially inflated.

Well, unless the Lindens have made some un-announced changes to the L$ economic model, there should be no artificial inflationary pressure other than that which we ourselves generate.

The L$ model, as explained in a few posts (probably now deleted) over a year ago stated that there is a FIXED pot of L$ from which all payments by the Lindens,in or out, were made. The only time this supply is increasd is when a new user joins.

Drains on the pot are things like stipends and bonuses. Land auctions, file uploads, 'find' listings and others all add to the pot. But mainly it's all the same money being passed from hand to hand and back again.

The only way that some people are able to get 'rich' is at the expense of others. With a basic stipend of L$500 per week it's interesting that the median account balance is stated as only about 1000 - 1500. That can only mean that the 'poor' are giving their stipends to the 'rich' each week...

Then again, if only 15% of users are land owners, and we assume that another 15% pay the monthly fee for a premium account WITHOUT owning land, that still leaves 70% of the user base only getting the basic L$50 weekly stipend... assuming they bother to log in.. That sort of stipend payout is easily sustainable from the known sources of drain from the system..

The L$ for Land arrangement was started BEFORE GOM came into existance and the L$10,000 = 5 USD was a random rate created so the system would work. I don't know how much thought was put into deciding this rate, there was certainly no public debate about it beforehand, it just appeared.

The rate on GOM is the rate decided by the users. You, me, everyone else that trades on GOM. It is the value that WE put on the L$. You think it's to high? place orders that are lower... if enough people agree with you the price will fall..

The true value of ANYTHING is only what other people are prepaired to pay for it... and currently the L$ is around $4.30 (split buy/sell price) per L$1000.

hehe...

I added a "Get your Free Money" type of post to the SL forums a while back.

You're right... The value of a premium account exceeds the US$ you can get, just by flipping.

- Ace

IGE Update

IGE, obviously seeing that people really want to sell in bulk, fast, are now buying again in large numbers - but at just 40$US per 10,000L$ - how generous.

PFFFFFFFFFFFFFFFFFFFFFFFFFT

wee haw... arbitrage is a good thing

- Ace