Why does the $L value keeps going down??

Incidentally, I'm predicting L$282.5/US$ at the beginning of April, L$286.5/US$ by the end of May, and L$290/US$ by the end of the summer. Those are from a model, calibrated using the data Lawrence provided yesterday.

Meanwhile, FurryCat falls in with Foxy Woxy, a silken-haired vixen with dreams bigger than her oddly unvulpine, anthropomorphic chest. It is almost spring, and nearly mating season.

Time passes, spring arrives, and nature takes its course. A den is built on the 1024m, and all thoughts of selling are forgotten.

In fact, they look to expand, but like creatures everywhere they are hemmed in by urban sprawl. They get by as best they can, for they have each other.

The LindeX runs along its gyre with the seasons, touching 265, 275, 285, 275... but nobody in this idyllic scene is concerned.

Summer comes, and the 1024m is rampant with brilliant shades of the season. But danger ever lurks in the Wilds of the grid.

It is nearly autumn. Volf Lupus, a suave, rich creature with underground ties in the gambling and escort business, runs across Foxy Woxy as she DJ's at a popular club. He finds her sexy, funny, and alluring. Before the night ends, he makes sure to compliment her tail.

Foxy, bored with FurryCat's economic travails and a long-running feud with the neighbouring Dawg brothers, starts staying later and later at the club.

FurryCat falls into a bitter ennui... only to spill his troubles over a bowl of catfood to his ex, HentaiKitty. Having had her own troubles since, she remembers with fondness her newbie days with FurryCat, how she laughed when he just couldn't get the box off his head; how he saved her when she accidentally turned her fur green.

The 1024m is placed on the market for $L 3000, and snapped up by the Dawg brothers within 13 hours.

The LindeX stood at 281 at that moment, but nobody cared.



And that, my economic friends, is how land is usually bought and sold in Second Life...




epilogue:

- Foxy burns through Volf's $L in a record 26 days, then starts her own club.
- Volf quits, and joins the Horde in World of Warcraft as a Tauren.
- The Dawg brothers start a line of men's clothing, and become first-life rich.
- HentaiKitty reveals that he is really a 35 year old male virgin living with his mom.
- FurryCat deletes his account, makes an alt, and gets into the Goth scene.

Don't be talk'n smack about FurryCat...

Isn't furry cat one of those vamp/furry/pixie/immortals?

I love you Desmond!

*pays for her stipend, if it's taken away she'll drop premium and sell her land to the Dawg brothers*

The 500L$ per week is part of the value proposition that LL makes to premium account holders.

Premium account holders pay for their stipend it should not be taken away without a commensurate reduction in the price of premium membership!

Ricky-

Sounds like a reasonable estimate, excel's chart wizard and a few trendlines seem to agree with it as well. (I'm not trying to belittle your analysis, I'm just saying that even without complicated models it is easy to see the trend. ) And you estimates on the increase in volumes over that same period?

If the linden continues to lose value this gradually/linearly, I can certainly see there would be unpleasant ramifications for certain business models in SecondLife. Land leasing in particular. Perhaps at this rate it will allow the more savvy landlord types to duck out early enough to minimize their losses.

Considering leasing land is (effectively) an end-run around paying premium and tier fees, perhaps Linden Labs is content with letting this continue as a natural way of swinging people back to owning land instead of leasing it.

Just a hypothesis.

--
Neither a borrower nor a lender me.

Part of my analysis involved determining the trend and volatility robustly (assume t-distributed returns, iterate to find the student-t that best fits the observed data), which de-weights the few outliers. Over the span of time from the beginning of October to the present time, I find a 1-day mean drift of 0.000216 and a 1-day volatility of 0.00566. Given the span of time, those numbers include both the upward- and downward movements experienced since LindeX opened. I'm confident they present a realistic view of the situation.

The value of the different International Currencies fluxurates a lot more than the Linden Dollar rate. If the Linden was traded on the world market it would be one of the most stable in the world!

Stop Crying! Take your small losses like an Adult! Take a look below! It is the value of the American Dollar in Japanese Yen. Remember one time the Yen was broken down into 100 parts like the American Dollar.

1971-01-01 358.02, 1972-01-01 312.72, 1973-01-01 301.79, 1974-01-01 298.13, 1975-01-01 299.68, 1976-01-01 304.64, 1977-01-01 291.05, 1978-01-01 241.08, 1979-01-01 197.76, 1980-01-01 237.89, 1981-01-01 202.37, 1982-01-01 224.81, 1983-01-01 232.73, 1984-01-01 233.80, 1985-01-01 254.18, 1986-01-01 199.89, 1987-01-01 154.83, 1988-01-01 127.69, 1988-02-01 129.17, 1989-01-01 127.36, 1990-01-01 144.98, 1990-02-01 145.69, 1991-01-01 133.70, 1992-01-01 125.46, 1993-01-01 124.99, 1993-02-01 120.76, 1994-01-01 111.44, 1995-01-01 99.77, 1996-01-01 105.75, 1997-01-01 117.91, 1998-01-01 129.55, 1999-01-01 113.29, 2000-01-01 105.30, 2001-01-01 116.67, 2002-01-01 132.68, 2003-01-01 118.81, 2004-01-01 106.27, 2005-01-01 103.34, 2006-01-01 115.48, 2006-02-01 117.86

Fluctuation != instability

Volatility is part of any exchange-traded asset. Persistent trends, on the other hand, reveal something deeper about the asset in question.

Also, quoting the JPY exchange rate over the past 35 years doesn't bolster your argument. Clearly the currency strengthened through the 1980's and since then has traded consistently around 115 JPY/USD. Even the 'Asian crisis' in the '90s didn't cause a large fluctuation in the rate. And it's definitely not consistently losing value like the L$ clearly is.

Glad that you finally see the light Jopsy...

Econ 102 Class Now can Begin...

Your recommendations for a Resolution?

The linden after an initial fall has been very stable lately. Try doing the books of a large firm that has the value of its goods rise and fall 15 to 20 percent within a short time frame. I think the chart proves my point! The dollar has fallen to 1/3 of its value since 1970. It has been stable since the 90's but the flux causes problems.

What has been the percentage of difference this year?? Linden vs Dollar??

I disagree. There was a rally back in October as people switched from GOM to LindeX and were able to reset their prices. Since then, the rate has continued its slide.

Year-over-year, the L$ has lost over 12% of its value. This quarter alone, the value has dropped by 5.9% (which is over 23% annualized!). Not really what I would call terribly stable.

Now, since you're quoting a 35-year timescale, I'll do the same. In March 2041, the L$ should have an exchange rate of roughly L$5458/US$. In 35 years, the Japanese Yen has gained in value by a factor of 3. In the same time period, the L$ should drop in value by a factor of almost 20. When it's put that way, they don't really seem on an even footing, now do they?

I"ll take the Yen over the L$ any day. The Sun is Rising
after a 20 year sleep. The old saying "You won't secede in
business without speaking Japanese" will soon come back
into the American lexicon.

I'm not sure if it's so much that JPY is coming back as that the USD has been really weak lately...

Actually, the JPY has falling from 114 to 119 in last few months.
So really, the USD might be gaining ground...




Its had a nice run over the last year.

*Grin* Okay okay, William Sealy Gosset I am not.

I have to ask though... does model take into account that it's winter? More people stay indoors on the computer in winter than in the late spring. People with more at stake will be doing their thing in Secondlife... but fewer casual players will be online doing the consumer thing... which may cause enough of a hiccup to seriously accelerate when we hit your predicted price points. As the A/C season gets under way folks return to the online pasttimes again, but by then the Linden may be even cheaper than you predicted.

My main quip with RBD is that he fixates on stipends as the be-all and end-all problem and solution. Personally, I think that the current 'relative stability' is floating precariously on Linden Lab's ability to recruit players fast enough to keep the merchant to consumer ratio sufficiently lop-sided.

--
The perky pessimist: I'm always happy when things don't go as badly as I expected.

If you really believe stipends are that big an issue, get in world and do something about it. Do something that encourages players to use the money sinks more.

Start hosting 'Best SecondLife Snapshot' contests in-world. Hold a contest and offer $1000 to the person that rates the most people in an hour. Start a marketing campaign for merchants and have them send you all their best publicity shots.. (and they must be current!).

Might not be much, it's something you can start today without having to sit around waiting for Linden Labs to deploy a change that is clearly not in their best interests.

Ultimately the value of the Linden Dollar just isn't that important to me,
I just don't want to see your short-sighted 'blame the stipend' campaign
left uncontested.

My recommendation for players that have vanishing profit margins is to find a new business model. If you're in competition with someone who has few or no on-going costs associated with their SL business, they'll keep undercutting you on the sales floor.

--
socialism: You have two cows. The government takes them and puts them in a barn with everyone else's cows. You have to take care of all the cows. The government gives you a glass of milk.
capitalism: You don't have any cows. The bank will not lend you money to buy cows, because you don't have any cows to put up as collateral.

First off, like any method of supply and demand the entire structure doesnt have a purpose. It is solely based on the random whims of the people who were around at a given time. Its like lemmings jumping off a cliff by the thousands. Or any stampede concept. Someone idiotically was doing something stupid, a few people followed and the rest thought that if a that small crowd was doing it then it must be good. Idiots.

Basically:

The one and only reason that the L$ is losing value is because of PEOPLE WHO WANT TO SELL THEIR L$ FASTER THAN THE COMPETITION. Thats it. No hidden logic. No mystical explination. And it has nothing at all in the world to do with stipends. I myself had a few thousand stipends that i wanted to sell an i looke at the values. On the day i checked the lindex it had said there was 250,000 L$ exchanged that day. It was early so it might not have been an accurate daily measurement. But i then noticed that there were 10's of millions of stipends already on the market and that was at the rates most generous to THE BUYER. Not the rates favoring the seller.

My choice? I looked at the total numbers of stipends avialable at the cheapest rate and counted down the categories till i figured something that would reasonably sell this week. Needless to say that was near to 280. And guess what? They sold in the following week before i bothered to check up on them again.

Its not "inflation" by any means. The price of objects in game has seemed to be fairly constant in the time i've played. There will always be goods at various prices. If you are trying to base your real world income on the exchange rate of in-game currency you have issues. Remember this is a game. The subscription accounts expect their allowance because not everyone WANTS TO WORK in a game. They want to relax and play.