Economic Stats Analyzed

The lindens add money to the economy as the population grows. Ergo, the same amount of "money per person" is floating around the world. Now, depending on various factors, folks may or may not have the same amount of money in their accounts... the median account balance on Philip's spreadsheets seems to imply that, in any case.

But, other factors (IGE hoarding money, land price speculation) may drive the perceived "value" of the linden dollar up or down.

LF

http://sl.sdfjkl.org/userdata/birthdate.spy

Really? That's funny, seems to be still about 60-90 people a day joining SL... same as it has been since the CNN story.

LF

not to argue Surina...but maybe LL needs to repost that thread on how the economical model is presently.

We are given the statistics...but without a definitave on the pool aspect it would continue to lead to disputes Ie dissagreements like ours at the moment.

Remember my data is based soely on tangible information I currently can refer to and combined with my personal observation. Dont get me wrong I could be totaly off base with my numbers and assumptions. However, I am tenious enough to stand by it till proven incorrect.

Shadow

Me too, we're simply drawing different conclusions...

I can't show you a specific quote, but I'm sure that I recall Philip addressing this question at one of the Town Halls 3 months ago or so. If you really want confirmation, perhaps the transcripts of all of these Town Halls are still available here in the forums and you might try to dig it up. I believe it might have been the Town Hall where they announced the increase in the dwell pool.

If I recall correctly, it was in response to a question about money and L$ valuations and Philip stated that the LL is trying to grow the total L$ in circulation at a rate proportional to the growth of subscribers.

And if my memory does, indeed, serve me well and this is correct, then I'd say we don't have much to worry about in terms of inflation or deflation.

- Ace

Yeah, I remember Philip saying that as well. Simply translated means each new user is given L$ and no L$ are magically created from thin air. Hence the money pit pays for everything....

But surely we must be creating more things and things of far greater value nowadays.
A year ago people were still struggling to get a grip on the scripting language!

I'm still struggling to get a grip, and on the scripting language..

Well... it sounds like we heard the same thing, but made vastly different interpretations of what was being communicated.

I just did a forums search titles with keywords town/hall/transcript, hoping to find the reference. Unfortunately, there's nothing there older than the 10/1/04 Town Hall, so I can't pull up the specific quote.

But I will try to explain why I think your interpretation of what was said is incorrect. I am not trying to be argumentative, but rather because its an important distinction if we're to understand what all these silly numbers really mean.

If I am to understand you correctly, you're of the opinion that there is a finite number of L$ in circulation, and that the only new L$ created are the new user starting L$.

For this to be true, the money going out would have to exactly equal the money coming in. Going out, we have uploads (textures, sounds, animations), listing fees, group creation fees, land sales denominated in L$, and the rare fool who decides to pay their land tier with the L$2,000/US$1.00 exchange that the Lindens offer. Coming in, we have stipends, and dwell. I may be missing something here, but its irrelevant to the discussion.

If it were that the outgo is exactly equal to the income, even if we were to assume that every new account is a premium account with L$1000 given to them, the increase in the money supply of L$107M on the 10/6 spreadsheet, to the L$124.5M of the 11/4 spreadsheet would indicate that SL increased its subscriber base by over 17,000 residents in the month.

While LL doesn't release subscriber numbers, I think we can be sure that it wasn't that many new people in SL (although I'm sure LL would be quite happy if that were the case).

So the bottom line is that LL is increasing the money supply above and beyond the starting L$ they give new residents. Its coming in the form of dwell and stipend that exceed the number of L$ going out from all other sources.

But don't start to panic and sell your L$ because you're thinking that they will suffer from the effects of inflation. So long as there is enough content, services, and land, that people want to spend their L$ on, and this growth is managed wisely, then all will be well.

Inflation happens when there is too much money chasing too few goods and services. Increasing the money supply TOO fast can cause this, but increasing the money supply in and of itself will not.

- Ace

One last note...

If, on the other hand, my interpretation of what Philip said is correct, then these numbers seem to bare that out.

My understanding is that the Linden plan is to grow the money supply at a rate that is equal to the growth rate of the subscriber base. Since the money supply grew by about 16% during this one-month period, this would mean that the subscriber base grew by approximately the same 16% during the same period.

This sounds pretty reasonable to me.

- Ace

Well, they could buy money off of GOM / IGE to support stipends. At least in the case where money sinks aren't generating enough income to match the stipends.

The new user detector thingie shows 60 - 90 new users a day which equates to 1800 - 2700 a month.. not enough to account for the apparent increase in the money in circulation. However, it just occured to me that there is also the reward scheme whereby LL pays existing users for recruting new ones... these can be up to L$2000 per new user and I'd guess it's "magic money" just like the new users starting balance...

But of course the best way to prove any theory is by cross refference to known facts and as such we have the median account balance... L$1000 was it? If the money pool was truely being added to at a silly rate then the median balance would be way higher than the new account starting point..

Here are links to transcripts of Philip's two recent Town Halls -

October 27

October 28

Prokofy,

Just a minor clarification -- the U.S. dollar is not backed by gold or anything else, it is "Fiat Money" (See http://en.wikipedia.org/wiki/United_States_dollar#Fiat_standard), money with no intrinsic value or backing. In other words, the U.S. dollar (and most countries' currencies these days) have value only because we all agree that they have value. The Linden is very similar in this respect.

Haney that wasn't fair, you could have solved the discussion... Is the economy a closed loop or are L$ magiced from thin air as required?