A new mysterious way to fight inflation

Since LL put a big hand in our pockets to fight inflation lowering supply (a way that is absolutely unstable, because has a side effect called recession that normally nulls it's effects, in fact right now a block of 1000L$ has descended again under the "wall" of 4 dollars, opening the road to further descent), maybe it's better that for the future they think of an alternative way in case inflation pushes it's ugly head in trough the window again.
What is the alternative to cut supply?
Simple, to raise demand.
What is the simplest way to raise demand?
Again simple, to increase the population.
And again what is the way to increase the population without implementing pregnancy in game?
To make SL a better product, thus attracting more customers.
This will increase the population, thus increasing the demand both for currency and products, killing inflation and fueling the economy at the same time.
There are many things that LL could do to increase the appetibility of SL to the general public.
-Reprogram the light sources engine so that people with above average computers can use local lighting without having their video card explode, it's a WHOLE world of difference and makes the landscape and buildings extremely nicer to the eye, helping them blend more into the environment. I have an almost top class computer and can't run SL with it turned -on, this is really unacceptable
The graphical potential is there (try for once to experiment turning all display settings to max, you will see a WHOLE new SL, if your comp doesnt explode).
-Work on the stability of the servers so that they don't crash or lag horribly when more than 40 people are there.
-Make inter-sim communication easier, opening roads to a more intensive use of veichle s(car racing, dogfights, tours and the like), adding a whole new level of content and of things to do to residents, finally letting veichles be what they should be: an alternative to teleport and a way of having fun. Yesterday i had LOTS of fun racing with my celica on the roads of the new sims on the north east part of the world (wonderful with their soft curves and nice landscapes, it seemed to b e back to the wonderful times of gran turismo), until the asphalt begun to disappear under my tires and the lag killed any chance of keeping the car on the road.

These are only a few example of what could be done to make SL better and attract new customers, since the mmorpg scene is FULL of people completely SICK of hacking and slashing at mindless monsters and would gladly dive on SL if only it was up to par with mmorpg's in stability and graphics.
more population = more customers = more demand for products AND currency = no inflation/no recession

Simple

Shiryu, your analysis would be right if the influx of money into the economy was fixed as the population grows. But each new resident also brings with them a stipend + bonus so the amount of money in the system grows at the same rate as the population increases. This means "more new players" won't fix the problem, unless each player brings less money into the system than they are now. That's pretty much exactly what the Lindens are trying to do with their fix.

Aimee has a great point. Over a long enough time frame, each additional player actually contributes to the inflationary nature of SL. Thats because each new player (premium or not) brings with him/her a weekly stipend that (probably) will never be reduced. Therefore, the more people in SL, the more the [quasi-permanent] stipends pump L$ into the economy.

Now if each new user spends more per week than their stipend, we have economic growth...

True Aimee, but not completely. A constant afflux of new people drives the economy in more than one way: If it's true that they bring into the equation their stipends too, but more people not able to produce (at least at the beginning) increase the demand for content in a way that is more esponential than incremental, if the demand for content increases increases the demand for currency to acquire it as well. It's not really easy to explain it, but it's like when you move your shop to a more populated area, you take benefit from it in more than one way: you get more sales because of the higher population, but even because the increase of number of people that see your products and cause an increase of the number of people that hear about your products from them, or see them around the world, making the increase in sales esponential. I don't know if this explained it in a decently easy way to understand, but this is roughly how it works.
In addition to this, the more the content increases in quality, the more people are persuaded to buy (currency as well as goods) because they have trust in the future of the game and want to enjoy it fully. This is a further boost to the value of L$ and to th whole economy.
Obviously it's even more complex, and there are more variables, but an increase of population would be much more beneficial than a cut in currrecncy supply that does come with a recession (may not happen to all merchants, because the ones that have a big name suffer less from recession than the ones that have still to make a name for themselves, or maybe my products are just crappy, but i had a decrease in sales of roughly a 60-80% in the last 3 days), and recession in the long term causes inflation again (in fact right now the L$ has gone again below the "morale" wall of 4 dollars / 1000 L$ and when you go beyond such a wall it opens the door to a further descent). I wouldnt be surprised (not sure, but it wouldnt surprise me) if the value of the L$ will decreases to pre-reform levels, or maybe even less, because depression brings to times of lack of trust in the future of the economy and people don't buy currency.
I may be wrong, and im more then willing to discuss about it, but thinking that cutting the supply will SAFELY increase demand, without including the variable of depression into the equation seems really simplicistic and quite short sighted to me. This time has happened and unfortunately the Lindens didnt (on purpose, i'm afraid) leave us any time to discuss it and to propose more viable alternatives, but i am trying to start a discussion here and now for the future, to help provide the lindens with better solutions so that all this doesnt happen again.

The exchange rate going back down doesn't really suprise me. The boost was caused by currency speculators trying to buy at the best rate to sell later on, or if they all tried to sell right away then they made and popped their own short lived bubble. It will likely take a while before the exchange goes up as a result of the economic changes.

Other ways to manage the economy insted of taking from the poor is to have a central banking system. This would allow the issue of bonds and savings accounts that could be used to remove or add monies to circulation. A sales tax could also serve the same purpose. I would like to see an system of enforcable business contracts. Right now every deal is pretty much "handshake" with no enforcement of default loans. A properity lean system or wage garnishment would allow safe loaning of monies to develop new business. I dont know how loans would affect the price of lindies but I really dont understand the whats the big deal of the price of $L vs RL $. How is this a stake for Linden Lab? Is it to keep the SL shakers and movers happy?

It's a stake because basic accounts don't make LL any money. They're a loss leader. There has to be an incentive for them to convert to monthly accounts while still allowing them a fun basic SL experience if they don't. I suspect this has as much to do with trying to up account conversion rates as it does with trying to hedge inflation.

If you are not able to take part to a discussion, why don't you go trolling somewhere else?

Anyway Chip, yes, i agree that the effects of the changes have to be judged on the long run and not immediately, but still i think that there are ways to fight inflation without risking to cause a depression. The ones i listed could be a solution or maybe not, if you have different ones please express yourself.

Originally Posted by Shadow Weaver



You are correct. The Savings created alone would be staggering and surely would help fund Events, but also giving a gradual bonus to players for longevity taking into consideration also of taking out Basic Accounts and make Premium Accounts manditory after a one month Free Trial then both would begin. This would also provide incentive to retain accounts and account holders to refer new account holders to the game rather than stifling Social Events as Social Events promote enjoyment at least to alot of new account holders rather than herding them through a work line to start, and once settled in; they will learn the basics of creation because they will have probably met a Partner and want to build a house and then even a business with their Partner, also making bonuses based on Class Certificates of Education and learning the Tools in Secondlife. This way everyone wins, the Lindens win because they give incentive for learning and giving back to the Community and Economy, the Community Wins by retaining account holders with Social Activities.

Originally Posted by Shadow Weaver



You are correct. The Savings created alone would be staggering and surely would help fund Events, but also giving a gradual bonus to players for longevity taking into consideration also of taking out Basic Accounts and make Premium Accounts manditory after a one month Free Trial then both would begin. This would also provide incentive to retain accounts and account holders to refer new account holders to the game rather than stifling Social Events as Social Events promote enjoyment at least to alot of new account holders rather than herding them through a work line to start and once settled in, they will learn the basics of creation because they will have probably met a Partner and want to build a house and then even a business with their Partner. This way everyone wins.

Thank you Chip. I was thinking a gentle nudge for the basics to upgrade had somthing to do with it. This makes more sense. I would like Linden to come right out and say it, if this is the case. The inflation excuse only invites everybody to pipe in on how they would save the economy. (Just Like I did) Maybe he said it and i didnt catch it. I dont really want to read the speech again. Anyway thanks again.

I also think Chip is spot on. I have several RL friends that never bothered to upgrade, since they could get all they wanted from rating bonuses. Now they have to reconsider if they want to maintain their SL lifestyle.

Lowering the money supply does not create recessions. The money supply is not being lowered. That is all I have to say.

Lol interesting opoint of view nicholas, expecially without any kind of explanation... care to elaborate?

About your proposal Blake, its interesting, but anyway there are not many basic members that don-t pass to premium after a while, most of them just don-t play a lot, while the other after a bit of time are lured by the land temptation and change to premium. The basic account is the perfect lure "Hey, come and pay 10 dollars for a lifetime!" and then most of the ones that do decide they would love to build and switch to premium.
i think that actually eliminating basic would have a negative effect on the influx of newcomers...

I absolutely agree. They're vital... but my guess is that LL hoped if they stayed basic they wouldn't be shy about buying currency on GOM or IGE. It's the ability to earn USD that will drive higher level content development, and in turn attract new people. If the money they're spending for goods is all coming straight from ratings bonuses and Linden funded contests it doesn't do anything to aid that goal. I'm speculating of course. I'm not an economist and I'm not privy to any inside information.

For the love of all thats readable, how about an <enter> now and again to break up those billboard blocks of text. Gah.

And I couldn't be happier about the changes, even if it means less L$ for me.

The money supply is NOT being lowered by reducing bonuses? Uhm, damn, I cant even think of an insult appropriate enough for such a stupid remark.