Devaluating the L$?

Bad idea, so many reasons. Many of them mentioned above.

First, people hold both $L and real currency. They can convert between the two, and the exchange rate has been relatively stable, which is a good thing. If you change the exchange rate suddenly, you harm anyone holding the currency that's devalued, and benefitted anyone holding the currency that's up-valued. A good economy tries not to harm and benefit people arbitrarily.

Second, most players have a pretty good handle on what a $L is worth. L$1000 is 4 bucks: it's not hard to figure. Sure, it can be a bit confusing at first, just like going to another country where the exchange rate is high, like French Polynesia, where a Franc was worth about a penny when I was there. Small bills seem like lots of money, but you get used to it.

Third, it's GOOD that we can charge as little as L$1 for something, or L$5. It's GOOD that
a girl can go on a shopping marathon, buy lots of upscale items, and it costs her less in hard cash than a Big Mac (lower in calories too). After all, this is not RL. Let's not try to make it be RL.

I wonder why the Linden is so stable at $2.70 over the lat 2 years despite all the "world ending" events and changes?
It seems too stable and constant to me.
I would suspect some newer worlds could try working in just $US, so you work off an account balance like Paypal or similar. Stuff here is always going to sell cheap because it isn't real and it's so cheap to make after an original design is finishedwith no raw materials being required.
Cars in RL would probably be $20 each too if they could be cloned for free.

In my opinion, "devaluating" is not a word.

/thread

This is assuming that the market reacts quickly enough in altering its prices.

It's stable because Linden Labs sells L$ on the Lindex which acts both to essentially peg the L$ where they want it and also make them a lot of money in the process since they can make as much as they want of their "virtual" currency and sell it for real negotiable US dollars..

But, they don't control the price of L on the lindex. The "price" is whatever any of the current residents the have buy orders up at the moment set. No one buys $L from LL, you buy it from residents offering to sell it.

Actually they do because when they sell it (the same way a resident would) they sell it as a limit sell set at a particular price so it's essentially the same as if you dropped a couple million lindens on the market at a sell price of 270 L$/1 USD. The major difference though is that instead of money that was already in the economy just moving around they create it out of thin air which would normally devalue the money if it weren't for the sinks that take money out of the economy.

I have a sell order that has sat at 263 since April because Supply Linden keeps putting out millions of L at 264. Supply Linden keeps it stable and it's an automated process that triggers once certain conditions have been met.

Actually, there would be. Because many people who are using SL as inexpensive entertainment would find that it is now expensive entertainment.

If I'm going to pay $10 US for something, I want it to be tangible.

My stipend stays in SL. I'm shopping for hair right now, and feel quite rich because I can pay 200 Linden for something I may never use. If that were $2 US, I'd have to re-think it - that could have covered my lunch! (and then some - today's sandwich cost $1.50)

Once lindens start looking like "real" money, people will tighten their purse strings. Then we'll have a new word in SL - "recession".

People who can't sell their buildings for 500 Linden either have a marketing problem, or their creations aren't worth 500 Linden to buyers. It's the same here as anywhere else - if it looks like it's worth the price, someone will buy. If not - well, I've turned down quite a few freebies just because they were worth less than 0.

We've already got a system that handles micro transactions well. Changing the value of the currency would mean going decimal, which just adds a level of complexity.

How much is an electron worth, anyway?

Yeah to me it sounds a lot like a government just printing more or less bills to effect it's currency.

The whole thing is simply much easier if you are American.

My partner tells me some people are not American, and have their own languages even. Ha ha.

Yes, but really....always get a kick out of the "own languages" part. Like the English came up with the language for example. Anyway...

I didn't say the government had to be American or anything about languages.

I am not getting your point Tegg ? Why not ?

That is absolutely what it is. If Supply Linden didn't print new L once the alarms go off, the value of the L would shoot upward because there aren't enough people selling L to keep the L stable.

Well yeah, maybe I am not getting the gist of the thread, but in offering a 10k linden prize yearly are people assuming they are buying the currency ?

Because other governments of the world muck around with their currency just as much as the USA and many of them are non english speaking too.

I know Tegg, I was not being serious. C'mon now. Imagine other countries not speaking english. Yeesh.

There's not a great deal of gist to be got here, really.

Of course LL uses the LindeX to manage money supply. The value of every major RL currency is managed, otherwise the stuff would behave like the precious metals markets and a loaf of bread would cost $1 one day, $10 a week later, and $0.10 a month after that. And the effect of speculation and market manipulation would be even worse in the case of the L$ because the total L$ float is so tiny. (If two brothers in Texas could manipulate the entire world's silver market--successfully, for a while--imagine how easy it would be to screw SL residents by cornering the L$ supply, were it not for "central bank" intervention on the LindeX.)

And yeah, it's a good deal for LL. They get some income from selling L$s on the LindeX. Nothing remotely like tier and island fees as a revenue source, but enough to keep some Lindens on the payroll. The important thing to take away from this, though, is that L$ sinks really do make money for LL, and "competing" L$ sources (like stipends, or annual awards) really do cost them: sure, they just "print" the currency, but each L$ handed out is one fewer that gets sold on the LindeX.

And even though I tried to take the thread half seriously above, the whole revaluation thing is just silly. Maybe in some isolated corner of the world there are people who don't deal with different RL currencies every day (hmmm... actually, that might be in the US, come to think of it), but most of the world is quite used to the euro and the dollar units being two orders of magnitude more valuable than the yen, three more than the won, and four more than the rupiah. And it would not improve the economy of Indonesia if they just revalued the rupiah 10,000 to 1.

I apologize for seeming light, but I could not see Mitch Kapor handing the accounting guy $30.00 and saying hey, let's lay some green on a pioneer with some radical influencing technologies.

If the "linden" were to have a genuine concrete currency value, it would then be subject to applicable law regarding the trading of, well, currency. If they follow that path, they are in a deep poo-poo, as Mitch Kapor will have to pay the accounting guy $30.00 in December and likely will have forgotten about it by then and be sore that the Euro (or yen) has now increased in value against the dollar prior to the election.

It is by nature an artificial economy and cannot be a regulated one unless subject to the rules of regulated economies...which isn't going to happen because it cannot be in the interest of a software development corp to become a regulated economy.

Maybe someone should have mentioned that to Phil before he went off on the "Real World Economy" kick.

It's so much easier to understand if you just think of LindeX as the Federal Reserve.

I don't disagree that someone might have mentioned it to Phil. To be honest I don't have a sense they realize they are playing with real money, Pie.

But no, it is not easier if you think of LindeX as the Fed, not gonna happen. Can't. Won't. Does not apply, never will. Sorry.

[/url]

It's those "for other purposes" that'll get ya.

Seems pretty close to the LindeX to me.

How is it different? What is the US dollar based on that the Linden Dollar is not?

The US dollar is a government backed commodity, the "linden' is an electronic ghost. A Fed fine for missing end of day balance, where a bank confirms concrete dollars and government registers it, could destroy Brazil.....a linden outage makes people gripe on the forums.

When Sl announced it would gift 10k lindens, Phil was not thinking he would pony up $30.00 but some data entry guy or chick would key it in, does not have to be backed by anything, is pure make believe. Your tangible money is accounted, but there are no rules to keep them from tripling it.

You sort of cannot take that too seriously when the SL grand prize for achievement is $30.00 vs., oh a billion or so in fines for a regulated entity clearing through the fed.

You could make a world, take cc transactions, call them a Pie, regulate them as you want to within your pre acknowledged TOS and not be subject to Fed. Would your Pie dollar be tangible ? Nah. If you want more you type in a number.

The diff, Fed guarantee of bigger bucks than LL can shake a stick at really. Government backed. Arguable if everyone called in debts at once, but if they did, LL would not even register on the charts.

$10,000 US, not L$10,000, little bit of a difference there .