GOM vrs USD vrs EURO

Notice that the Euro has dipped in price and so has the L$.

Perhaps a part of the dip in the L$ is partially to blame on a strong USD.

(they're all 120 days)

Looking back six months and the relationship continues.

A bit too coincidental, I think

I wonder how much of this is Philip manipulating the market so his L$ is on par with the Euro (or whatever) and how much this really is clear currency exchange relationships.

You think that Philip is changing the exchange rate??

Well, Philip probably does set the exchange rate. Depending on how much land they put up for L$ auction, I suspect, could control that.

Oohhh, yeah, I thought you meant for Euro...

Within two months, probably less, the L$ is going to be worth about US$3 per 1K L$. How do you figure land is causing that and why would Philip want that to happen?

Not sure the point of this thread got through.

The Yen, Euro, and L$ have all tracked against the USD at the same rate in the last six months.

The drop in the L$ could be caused by a strong USD, and nothing to do with the economics of the L$ itself.

Philip could have seen this (a drop in international curriences against the USD) and decided that he didn't have to worry about auctioning off too much L$ land, as long as it didn't drop more than other curriences. In otherwords, he reduced the sinks.

If the USD weakens, he may then start auctioning off more L$ land.

On the other hand, the L$ supply/demand ratio hasn't changed and the L$ will merely strengthen as the USD weakens.

Or, third, the possibility is that internal economics to the L$ caused it to drop. It's a hard question.

However, it is important to note, on an international level, the purchasing power of the l$ has not dropped.

It's also interesting to note that Anshe Chung, a huge source of l$ turnover, lives in Europe and has family in China.

$L is dropping because there's no control mechanism (or maybe there is one and i dont understand it) over the $L "printing", and more important no mechanism to take the $L out of world (there are little things - buying LL land, or listing in find, but is too insignificant) over time more and more $L come in to world - stipends that get out of no where, group dividends etc. It means $L's are multiplying and probably at a faster pace than content (for sale) being added to the world. If a year ago we had X $L per Y Content for sale, now we 2X $L per 1.5Y Content for sale, which means more money per less content, which means the $L buying powers weakens, which means $L costs less bucks.
Correct me if im wrong, but thats how i see it.

That makes no sense. A quick trip to the land auctions

http://secondlife.com/auctions/index.php

will show you they can't even sell what they have. Putting more up there now wouldn't affect the Linden one bit.

Content doesn't make much difference. Buying something only causes L$ to change hands. There are only a few ways to get L$ out of the economy and none of them come remotely close to denting the ammount that come in on a given week.

The only way to stop the devaluation of the L$ against the US$ is have them consumed somewhere in the system so the supply is not ever increasing.

An example would be this: If I go to the store and buy a loaf of bread for $1. That dollar goes the store, and I have to pay tax to the state, say a nickel. That nickel is gone. Also, the store can't just rez another loaf of bread to replace the one I bought, they have to purchase another from a bakery. They also have to pay the clerk and the electric bill to keep the lights on, etc, etc. Back at the bakery it's the same thing. They paid employees who were also taxed on their income, they bought ingredients, etc.

None of those factors come into play in SL. You buy a widget from me for L$500...ok I now have L$500. There's no tax, and the only cost was a one time investment for me to build/script the item. Someone else wants one? Do I have to buy ingredients/resources? Do I have to pay laborers? No, I just rez one at no cost. There in lies the problem.

If I had to buy prims from LL to make a new object that would take L$ out of the economy.
If I was taxed on the sale of the item, that would take L$ out of the economy.
Hell, if you could reclaim prims from items, you could even have a secondary market where items would be worth selling 2nd just for the prim reclamation.

None of that exists in SL's economy, so it shouldn't be a real surprise that the L$ is on a linear decay trend towards the limit of $0 / L$1000. Anything like a mass influx of people or large land auctions would only cause a temporary spike in the price. The economy itself is flawed, and without some changes. any attempt to boost the value just holds off the inevitable.

I currently see 500,000 L$ worth of land being bought in one day.

If that had been in L$ instead of USD, then those lindens would have been pulled out of the economy.

There is no sink in all of SL greater than that.

Pretty much all of the land sales are in US$ now. There isn't very much flowing back through land. The other thing I would say is that only two of those auctions are bid on and linden value of that is L$263,000 assuming an exchange rate of $3.80. The other thing is those auctions take over 2 days to complete.

Edit: You are correct about the L$500,000. The 263,000 was for a single $1000USD sim. Still, considering how much money flows into the economy in a given week just from stipends alone, L$500,000 isn't much...

Looking at the completed auctions here:

http://secondlife.com/auctions/closed.php

Those are the only two full sims to be sold in the last week. The other auctions were all for L$:

No 001 (241, 50) - 16384m2 L$49,817 Aug-14-05
Hogback (202,70) - 672 m2 L$2,564 Aug-12-05
Dalton (120,16) - 1536 m2 L$5,860 Aug-12-05
Yora (23,124) - 3072 m2 L$11,720 Aug-11-05
Lusk 001 (212, 145) US$0.00 Aug-11-05

For a total value of less than L$75,000.

$2000 USD = 263,000 L$?

I wish!

No, $1000, see my edit above.