Why is the $L falling?

Funny, I wrote about this days ago already, nobody seemed to be interested


The trading volumes are still in the same range, but the L$ supply went down dramatically. Two weeks ago we had an average of open sell orders of 30mio at 265 alone, with many more millions at other rates. Now all visible open sell orders together don't reach those 30mio, and 263 being the new standard sell rate. Yes, for the the only explaination is that LL stopped pushing out L$ themselfs to exactly the result we see right now. As someone who has to sell hundreds of thousands each month, i surely won't complain

Have yu seen the Dollare to the Yen ? 98.98 .................News In Japan that it well go $0.95 to Yen or less in the coming months. 12 year low...........Price here is alrady reflecting ..............

Exchange rate Euro vs USD will soon be 1:1 again.

1 Euro buys you 1 bucket full of dollars.

With all the good and bad effects.

Well let's see -

We have a Gartner report (which a lot of business and businesspeople take seriously) saying SL will die in 2009.

Then a few days later, the CEO and founder steps down.

Combined with the CTO and co-founder stepping down at the end of last year, I can see these combine events shaking confidence in SL (particularly given that people are on edge due to real world financial markets)

And stock markets (and stock market like things) are driven by confidence.

There's also a number of people who due to the RL financial worries have decided to cut back on their entertainment budgets or that pocket money deposited in SL, may not be pocket money afterall...

Matthew

This process started before gartner or Rosedale happened. And if that played a role, there should be MORE L$ on the market because people try to cash out - but it is the opposite, with trading volumes being on the same level as before. We would see an inflation - but in fact we see a deflation.

I don't see what international money rates have to do with the price of fish. The US dollar has been weak for over a year.

That doesn't make any sense in a situation where demand keeps on rising (new users join SL and want to buy L$) and supply stays the same (give or take the L$ coming in through the other L$ sources).

A "stronger" L$ isn't necessarily a good thing either. People's budgets are fixed in US$, if that buys them less then they'll just spend L$ or forego spending altogether if items go over what they're willing to pay for them. A flat-rate exchange rate does more good than bad (although I certainly wouldn't mind it if it climbed/sunk to the L$330-350/$1 when I joined ).

Reminder..........its not only a United States Population \

Your model of doesnt make sence.........

The US dollar is falling against the euro, while the UK pound is somewhere in between as it's falling against the euro but still rising against the US dollar.

Where the Linden dollar fits in is anybody's guess!

The dollars seems to be falling against the Linden.

I see 262 this morning.

Huh. I _thought_ I saw the top sell order at 262, but by the time I looked at the market data page then came back to the sell page, it was already back at 266. Would have thought I imagined it if Uvas hadn't mentioned it too.

i`d almost suggest to every one:

if you don`t need cash *now*, stick it at 254

if more people do it and the pot rises, there is a better chance of it dropping/rising as it will look like the new "standard"

can allways relist for free if it doesn`t sells but there is a good amount of money traded daily, abit of patience benefits us all in the end

um, isn't the point of a sink to reduce the money supply?

It used to be that way, what happened is the same thing that now happens on the stock markets. Day Traders did nothing but sit and flip money back and forth all day long, which destabilized the exchange and created a little cottage industry. Open it back up and you still won't get the market determining the exchange rate, you'll just get a bunch of wanna-be financial geniuses mucking around in it for their own profit.

QFT. Last night my sell order goes through at 262 while I'm out, and when I come back people are putting theirs in at 266? Come on. I think they're not checking before they sell, and just putting in whatever they sold for a week ago.

Another thought - is the US economy so bad that the US dollar is even becoming less valuable vs. the Linden dollar?!?

Editing to add a question: I thought I read at some point that Supply Linden only pumps in money to keep the L$ stable up to a certain amount per 24 hours. Is this right?

13 million now at 263. Think that's LL trying to stem the tide, or a certain land baroness trying to cash a few at the lowest prices in memory?

Watching this extremely closely.

I do *not* want LindeX turning into WSE.

At least when Supply Linden sells, it goes to support the platform.

Well, as a large part of SL residents don't budget/trade in US$, as they're not US residents IRL, then yes. That will influence the L$.




The 265/266 selling L$ rate is completely artificial for quite a while now, propped up by supply Linden sales. If supply Linden wouldn't pump millions of L$ into the Lindex, it would quickly drop to much lower levels.

But this stabilty is preferred over huge changes. It should reflect the value of the L$ on the 'global SL market' though. With a large part of the SL population not being US residents the current inflation of the US$ is actually causing a quick fall of the L$ compared to non-US currencies (euro, GBP etc.).

So if LL's policy to provide a stable L$ for the COMPLETE SL population, it should mean is should rise towards the US$ right now.

(And yes, this is probably tainted by me having an SL business and being in Europe...)

The L$ is deflating compared to US, not inflating. This is healthy, as it's now showing more stability towards the 'rest of the worlds' currencies. Having L$ pegged to the US$ while it's in freefall is simply not a wise idea.

Remember LL most (part of) their finances to the UK, so is running in GBP themselves. The linking of L$ to US$ is mostly artificial, historical and convenience based.

Typically LL sells between 45 million and 50 million new L$ every week. See the stats here http://secondlife.com/whatis/economy_stats.php. On 3/3/2008 the number of total L$ sold was 40,764,171. By 3/13/2008 that number was only 46,764,171 so LL is not selling new L$ anywhere near their historical average and that is reflected in the low amount of L$ being offered for sale currently. Why LL is doing this is unknown since the reason they instituted selling new L$ on the LindeX originally in July of 2006 was to stabalize the exchange rate. Until LL started selling new L$ on the lindeX the exchange rate could fluctuate wildly and after they started selling by December of 2006 it was relatively stable and has remained so every since. When LL started the LindeX their stated goal for the exchange rate was L$250/1 however by the time they had stabalized the rate in December 2006 they claimed they had no exchange rate goal just wanted a stable rate. Maybe they are now wanting the rate to drift back to the L$250/1 rate it was at briefly when they first started the LindeX.

They are doing this so we have something else to talk about besides all of the other normal issues.

well that and also because people truly believe that everything on the Internet should be free.

The more people who jump in, the more who want their free crap like all those who steal music and books using P2P. They think this is just another way to do that. It's just the way it is. Of course they're not going to buy anything to strengthen the economy.

I understand that, but it will:

- start to drive up the tier cost of land for residents in my region

- start to drive up the cost of every single item in the SL economy

- raise the barrier of entry into the world

Of course, merchants and sellers can correct and eventually will do so; I remember doing this because (like you) I have been around a lot longer than the controlled economy. But when things can go up, they can also go down.

The overall casualty is market confidence. And the overall attraction is the 'something for nothing' game that daytraders relish - excessive, fast and loose arbitrage of risk as a commodity.

Thus, we end up playing a much bigger 'game' than we ever have.

In microcosm, what does a shift from 266 to 264 mean to me: a gain of about 78 USD monthly, roughly speaking. And a loss of market confidence, and several hundred dollars worth of headache monthly managing risk to prepare for the inverse situation: market fall.

I prefer the managed economy, quite frankly. Allowing market float is like having the Fed.. but then not using them.

It wouldn't be so bad if it weren't for the fact that most residents don't know anything about the Lindex and even less about currency trading in general and how to do it smartly.

I'd relish the day where I could get 50USD for 1L (probably not going to happen but possible if LL doesn't repeg the currency and hyper-inflation ensues) since I'm exactly what you'd envision when reading the threads in the forum whining about freeloaders, other than their trading fees for L$ to USD conversion LL doesn't get a cent out of me anymore and I'm essentially a sink in terms of L$ since I take in and either sink (for upload fees etc...) or convert to USD 999/1000 Lindens that I take in.

I agree with you on the financial genius wannabes though, a lot more people would probably try to play the market and either lose big time or just destabilize the market.

i'm thinking of getting trader status so i can buy up linden...i think it is headed to 250