L$ Falling Like a Cheap Ho After a Night Out!

The carnage continues!!! The L$ is down to $3.30 USD per $1,000.

IS THIS THE TIME TO GET OUT NOW?!?!?!?!?

Or are you a glutton for punishment?

My prediction --> L$ will fall below $3.00 USD per L$1,000 before the year is out.

So - purchase steadily and discretely until it turns up, meantime keep stuffing the L$ into Ginko!

How can you loose?
(answers in a new thread please...)

You can lose if the L$ doesn't turn up

Where does that money go that you place into ginko? It just not sit there and magicly make you money. That money is then spent. The last figure I hear was over 12ML$ held in Ginko. lets assume this is true. Also, lets go on the figure that Philip gave us, plus time of 360ML$ in the world.

12ML$ is about 3.33% of the total money supply in SL. Lets say that 2ML$ is held for cash on hand. That leaves about 10ML$ left for them to spend on whatever investments they invest in. This 10ML$ can't just sit in an account it must be put to work in order for them to pay this intrest rate. So how ever they invest it 10ML$ is now placed back into the economy. This means that the amount of L$ in the economy is 370ML$, with 10M being counted twice becasue of being in two places at once. That means there is an increase in the money supply. With demand falling, as I am sure most people can agree to, we have a system that has an increasing money supply and decreasing demand. It is going to be harder and harder for anyone to control the economy when you have banks in SL. I would wager, but I would not suggest it, that is all the banks in SL where to close, and all the money in these banks was given back to the people, you would see a sharp dip followed by a steady rise, and it would keep rising past the point we are now.

Gas prices go up, Linden dollar value falls.

=P

I'll wait until the Linden Dollar bottoms out then I will buy them all for cheap XD

I sure hope no one uses their SL profits to pay their gas bills

Meantime you can contribute to Ginko's falling interest rate...

this really sux

i member when you could sell 1K for like 5.00+

I really think there should be a cap at $3.00 usd should be set for the very minimum the L$ could be sold by anyone, GOM, IGE, Anshe, etc. This would leave room for it to rise, and return back to the low mark as it wishes, while still being able to turn a profit fairly easily.

Just my suggestion though,
- Sam

The amount of money being cashed out is surging due to all the charity collections. People are being so generous it is causing the whole market to shift its balance.

But you can help! To loosely paraphrase George Bush, it is your duty as an SL'er to get out there and keep shopping!

Hm, I think the original 'price of gas' comment referred to the recent raise in the price of petrol/gas in the US.

But yes, I've sold off L$s to pay for petrol/gas, as well as utility bills. I'm a sad, sad person...

Sam. Do you think if this would work it would not have been tried?

The market will find a way to bypass any controls or caps. Because people willnot/cannot wait obediently in long ever-growing queues if they wish to trade. This will happen when insufficient takers of the opposite sort appear at the artificial price. Any imbalance in supply and demand at that price will cause it to bypassed, and the exchange to be marginalised, and eliminated. People who cannot wait will set up trades elsewhere at a price which brings them someone they can trade with. Otherwise, with a steady imbalance, the queue of waiting unmatched trades keeps growing to totally unmanageable waiting times for one of the two sorts of trader.

If this explanation is too cryptic, try the long, step-by-step version.
/130/e6/61377/3.html#post641617

Well Sam, I can see where a $3 cap would be a huge help to you. But, who would subsidise that capping process? GOM, LL? And how would it stop me selling L$500k on Ebay at $2.50 if I really wanted to? LL doesn't control the real world you know...

What SL needs is a control on the money supply. The reason the L$ is fast approaching it's base value - $0 - i.e. 'Monopoly Money' is that LL is constantly 'printing' L$!

Do you SERIOUSLY believe they BUY all those L$ they hand out to their customers in various ways?

Of course not! LL want US$ in and give out nothing but worthless L$! They effectively 'print' L$ as required!

It's hardly surprising that the economy is now in free fall, something I predicted back in May and was poo-hooed for... ANY economy where the government prints money regardless of the state of the economy will exhibit the behaviour we are seeing.

And blaming it on people impatient to cash out (for whatever reason), as some do, is missing a much deeper issue. The money supply is in the hands of people who don't have the faintest idea what they are doing...

LL should in fact be BUYING their L$ for US$ on the open market like everyone else. If that happened the value of the L$ would soar.
Currently LL is effectively dumping huge sums of L$ on the market every week - it's no wonder the L$ is in free fall.

Cap the L$ and subsidise LL printing money? No WAY!

In fairness to Sam, he's not the only one that has voiced this concern (re: "Stabilzation of L$" further down in this forum,) and coming from another virtual world that DOES set a value on their currency, it is understandable to ask this rhetorical question. Why doesn't Linden Labs set a value of exchange?

I had a few long conversations with the then finance guy of this virutal world, and though a bright guy, he was a poor communicator of his ideas and being most people see these world's as "fake" it took a few reads to understand what he was doing with that world's economy. Eventually, he pointed out that the currency value was set and memberships were tied to that value, so only the currency released in world was accounted for by actual USD paid in. So Doc, I see what you are saying very clearly now.

I also see why Linden Labs abolished the land auctions for linden dollars and paying tier fees in linden dollars. Both were setting a value on the linden indirectly, but the USD it generated for many went between users, not back to the company. Effectively you were paying someone for supporting your bills to LL, but LL was not seeing a profit from it.

To get back to my rhetorical question, I very much want to see LL get involved here and promote their currency. Phillip argued with the other world's Finance guy in depth why they shouldn't, but I'm sorry Phillip, I think now you were wrong and he was right. Third parties did set up exchange sites that were competetive with the main company, but the overall value stayed about the same.

That said, as a short term measure wouldnt' it be prudent to control the amount of currency that could be exhanged at one time by a given user across all linked avatar accounts? This may slow up the "big cash outs" (looks at IGE for starts) and allow the sellar side of the list to gain a bit of ground. I honestly do not believe the problem is the average person trying to sell 10 or 20K of linden. But I do see huge chunks undercutting those smaller orders on both sides of the webpage.

Also for those that predict $3.00 USD by end of the year.. look closer at what is growing at the bottom of the list. 2481K blocks are up for "buy now" at 1 USD penny.

Still think there isn't manilpulation going on with an unregulated market?

My linden 2 cents,

- Taylor

I read a thread on the GOM forums about IGE liquidating its $L holdings due to LL's announcement to get in the business of selling $L. The market is apparently being flooded with millions of $L, hence the dropping value.

Sorry, not the case, look at IGE holdings on the leaderboard - not dropping significantly...

In addition there hasn't been the volume of sales on GOM that IGE dumping would cause. This is NOT a new thing, if you look at the graphs, download GOMs historical records you'll see that there has been a steady and continuious decline in the exchange rate since... umm, roughly the time when that 'upgrade' resulted in people being unable to log on for 3-4 days.

I believe there was something of a exodus around that time and various LL actions since have done little to restore confidence in SL's future.

Meantime LL has continued to flood an ailing economy with newly 'printed' L$. That's all. No one has been dumping on the marked - except LL!

4 weeks ago IGE had 40 million on the leader board...last week or so they were at 10 million....what do you consider sidnificant exactly?

Looks like $28million to me, and they had around $30 a week or two ago. (add #1 & #3 on the leaderboard).

ige stopped purchasing for a week or so, and purely sold currency, they had about 36 million between their account when they started and have dropped about 8 million of this to about 28, i noticed in a week anshe managed to gain about 3 million

Ok after reviewing what I said last night I do see the flaws in my master plan, but to defense of my theory, I will say this. As anyone with 3 brain cells can gather, the economy of needs a boost before we bottom out. My idea of capping GOM (using them as an example) at say $3.00 could temporally give us enough of a pause to possibly (note how I said possibly) to promote a raise in value. Now, this could also end in a big fire ball just making things worse lol.

Doc, I agree with what you're saying 100%, it happened in TSO, and it's happening again here. Back then (and still, as far as I know) EA would flood the market with billions of Simoleans weekly through various machines and bugs. This money would flood in the community like water into a bathtub. With very minimal low price ways to get it out, it would be like adding a pin hole to the bathtub to drain it. Thus more water (money) flowing in then out.

What you're saying is true here, it's the same effect, and we are headed in the same direction as the Simolean. Like Taylor and I have discussed before, getting rid of the L$ for land auctions was a major mistake. I often would sink some major L$ into land auctions. but not anymore. (I personally don’t believe in spending RLD on virtual anything beyond the basics. If I cant pay for it, or buy it using money earned from the program, I don’t spend USD on it. This applies for Tier and Land purchases in world also.) I believe many other players are this way also. Correct me if I'm wrong. Now the L$ for tier option ended not long after I joined, but I can imagine if something better was developed today, it would greatly increase the L$ being drawn out of world. An example may be using a linden set fixed rate (if you REALLY must, a floating rate) that would go toward your tier fee, membership, useful goodie features, or anything else that LL could issue. I don’t know how this would effect Linden Labs income (may be the reason they canned it in the first place) but I'm sure if it was looked into again, a way could be devised.

Now again, let me state these are just ideas, and ideas only. Feel free to correct me, improve, or disapprove. Really all I can say is, if this doesn't stabilize soon, we'll be seeing allot of players packing up and leaving, which no matter what, is "bad for business."

Have at it,
- Sam

Its hard to know the result, isn't it. Whether many will actually leave if the L$ heads on down ?

Personally, this serious instability tells me two things:
1. Don't own anything of significant value which is vulnerable to being devalued. eg Land, or money hoard. Get any money earned out promptly.
2. If selling things, build in automatic exchange rate correction to the vendors, so that the selling price is constant in US$ terms, or can easily be made so if you so wish.

And, of course, to scream, scream, scream to demand LL get the economy under control and stable at just SOME level.

And to read, to better understand the economics of what is happening.

But the L$ instability doesn't convince me I should actually leave.

No, not all players will leave because of the falling or bottoming out of the Linden Buck, (they are here for the community), but others will leave because of it. How many, we have no idea. But any leaving simply because of the falling L$, isn’t good.

Now to show how dumb I am, I just bought another 8k.sq.m land today, paid for it with L$ I had earned in game. I fully expect when I cant afford to pay my tier with L$ converted to USD, to be forced to release this land back to the lindens. I have always felt this way and I never expected to get a dime back on any land I have bought. (One reason I'm still on the mainland too.) I do have a fair amount of L$ in my inventory, which I see now is a big mistake. I'll continue to do the most likely dumb thing, hold onto it, (selling only what I need too.) and hope that someone inside this company has the smarts to get this economy back on track. (No other MMO-VR World company I know of has succeeded in this yet.)

- Sam

Do you think with the stipend cuts that more people will want to buy Lindens, and so the price will go back up? Maybe even over $4.00 per 1kL?

Welcome to the stabilization era, still l$ is way too overpriced considering it's values:

A account costs $5 to run for a month, the stipends profits 2500l$ a month...
Those of you who did what i planned to do: (per account values)
Selloff stipends each month, and create new accounts and credit cards with the turnover:
May Turnover = $5,25 (sold at avg rate of 4,1)
June Turnover = $5 (sold stipend at avg rate of 4,00)
July Turnover = $4,75 (sold stipend at avg rate of 3,90)
August Turnover = $4,25 (sold stipend at avg rate of 3,70)
September Turnover = $3,25 (sold stipend at avg rate of 3,30)

So far we see a overpricing that looks even uglyer than y2k1 techstock crash, my optimistic future estimates:

November Turnover = $2,50 (sold stipend at avg rate of 3,00)
December Turnover = $1,25 (sold stipend at avg rate of 2,50)
January Turnover = $0,625 (sold stipend at avg rate of 2,25)

(L$ is still too expensive at jan)

Think a healthy rate will be when we see a usd/1kL$ rate of around 1,5 to 2,0.

The question is how fast we can make this decline, the faster the better for long term usd/l$ rate, because we'll have lesser people trying to speculate on creating farming accounts autoselling stipends at gom and rather closing them instead, if we can just crash fast enough people will propably stop farming, or eventualy we'll end up see a "bombarded" ginko with more L$ than the top 100 wealthiest players combined.

So let's do our self a favour, dump the ls, cut the corner, get to the $2.00 for 1k ls and then we can all enjoy a stable growth without these "stipend-for-usd-moneygamers" killing the system slowly.


The gom rate works prety much like Alan Greenspans rates, it crashed, he didn't set it down by 0,10% each time, he killed it fast to get things back and running (while pissing off a minority), now they're all rocking again. Every crash just opens a new era of profits, it's all about when to sell and when to buy, timing is far more important than the price itself

That is exactly the intention behind this "rating bonus cut", Caroline, yes, together with a sense of fairness. If enough people believed it would work, the effect would have started already. It hasn't yet, so it looks like we are mistrustful, and we are just going to have to wait and watch to see if it grinds slowly through in practice, over the next 6 or 8 weeks.
Heaven knows if the rate will go on dropping meanwhile.
I'm not happy. I'd like to see firmer, faster-acting action.