Privacy versus Transparency and Inflation

I can give you a really good reason.

Transparency and simplicity prevent errors and fraud. For example, last month I found a sizable error in our accounting system. We were using L$ as our base currency and falling 15% short because of it. Since this discovery, all our payments are now based on US$. The only thing we're discussing now is if we should just write things down in US$. We might as well since everything is now based in US$. hrug:

Remember, the goal isn't to trust a person because they hold a position of power, rather it is to have a system that is simple and open such that the newest member can glance at our books and have confidence and understanding.

~Ulrika~

Where did I deny the burden of accepting dual currencies?

Since all expenses and investments are now officially based in US$, the only issue here is whether or not we publish data that simply gives numbers in US$ or both (US$ and L$). Personally, I think this is trivial. I already have the whole thing coded up on our land page. That page right now is capable of showing constant prices in US$ and floating prices in L$ as the exchange rate varies.

The obstacle here is that you want to publish currencies in L$. I still have yet to see the benefits it provides in a bulleted list.

~Ulrika~

Stop putting words in my mouth.

I find your attempts to cast other peoples motives in terms of your own predilections are counter-productive and insulting. Just because you can concieve of such low motives does not mean they are present in others.

I specifically tried to withold the statement and sucessfully did so for ages. I then post it with specific instructions on how I wish it to be taken and all the appropriate apologetic remarks, and you insist on casting in the light of some kind of trick or confidence game. At least that is the way I interpret your remarks.

I did not mean it that way, and I think it was fairly obvious that I didn't.

Here's how I would handle a register.

That way the register doesn't have to be retroactively updated every month. It's easy to understand without losing any information.

Note that we haven't discussed a register yet but it's coming as soon as we make a decision on which currency to use. It has to wait because if we do accounting in L$, we're going to have to figure out how to retroactively update every single monthly report and registry entry to reflect the new exchange rate (or just leave it with an exchange rate at the top, leaving it to others to convert by hand to compare month by month).

~Ulrika~

*sigh* There was no "error" in the accounting system. We launched our Neualtenburg Land Sale Price and Monthly Fee payment system with a set of assumptions, printed clearly on the top of every page of the Neualtenburg Land Journal, accessible to everyone thru the link on the website.

Those assumptions would be perfectly usuable assumptions had the value of the Linden not dropped rather precipitously since the spring. Since it did change so much, I pointed out the existence of a serious problem affecting our cash flow and caused by this drop.

What is needed is a reasoned consensus on how to adjust our exchange policy to deal with this problem.

is unfortunately not the case. The people whom you have assured can continue to pay their monthly fee in lindens would not experience "everything based in US$". And so long as the Lindens exists in the economic activities of Neualtenburg, there are dual currencies; one the home currency, one the foreign.

The values of these two currencies will always fluctuate against each other. Please do not ever expect Even the basic books of single currency companies do not meet that criteria. We do the best we can, we adhere to standards set by thw world-wide accounting community, and we continually tweak to make it better.


Sudane

You said:
You gave an ultimatum and then said that you hope it's not perceived as an ultimatum. I was just doing my job as a member of the SC to keep all departure ultimatums out of political discussions.

It's really no big deal, Dianne. It's something I have to do because it's in the constitution. If I didn't point it out that would be worse.


Oh! It also hit me that you think we won't be accepting payments in L$! This is false. We always will accept payments in L$. The price would just be the land-use fee in US$ times the GOM exchange rate plus 5%. You won't even notice a difference. We're discussing whether or not to publish the monthly reports in US$ or L$. That's it. (Although now I'm thinking Sudane might still be pegging rates to the L$ or worse pegging some to US$ and others to L$. I'm so confused. )

~Ulrika~

But you ARE a guild member --and in that the treasury and currency, as well as the methods of collecting that sum are Guild issues and not RA issues, your opinion is invaluable.

Sudane is the Guild treasurer and I have complete faith in her abilities, but do understand that she does not set Guild policy --and ANY meister can call for a vote on this topic.

Sudane, I am so confused by your posts.

Let's start from the beginning. Could you state briefly exactly how the accounting system currently works, specifically stating which investments and prices are pegged to the US$ and which are pegged to the L$. If something is pegged to the L$, could you tell me the exchange rate?

Let's keep things short and simple and step through them one at a time. I think we could all benefit from it.

~Ulrika~

No, I'm advocating using the L$ as a standard and accounting in it, but keeping in mind that we must pay a certain bill in US$.

This is no different than, say, a Canadian publishing company doing business with an American printer and having to pay the American company in US$.

I see.

I should correct you that it's not a certain bill rather it's the sim bill plus every single land purchase and land-use fee that should be pegged to the US$. Right now that's 40 different bills which is currently 100% of our bills.

Aren't you worried that transactions will either have to be retroactively changed to a new exchange rate or that one will have to convert entire months, one at a time, to compare monthly statements? Doesn't that seem like a lot of work?

Why don't we just do everything in US$ for simplicity and then hire someone to keep a second set of constantly-changing, difficult-to-use books in L$. That way we'll have the easy transparent way with US$ and the difficult confusing way with L$ and we can all be happy.

~Ulrika~

No, it's one bill. We have many different sources of income.



No. All this requires is changing, month to month, the listed land fees in Lindens. All else is constant.



Because it's so far out of generally accepted accounting practice it isn't funny?

EDIT: Let me restate that to sound less confrontational, since I don't actually feel that strongly about things.

We need to have one set of books. The majority of our income is likely to be in L$, and a significant portion of our outgo (sure, there's the sim bill. But then there's the city paying Guild members for work, or advertising ourselves as we expand, etc, etc... anything that's in-world is likely going to be in L$, not US$).

Therefore, the suggestion that we keep the books in L$ is not entirely unfounded. The books themselves will not change (given they are already kept in L$), only the land fees we charge from month to month, which have nothing to do with the accounting itself, save being a reason for it.

I'm not an accountant, but I dimly recall enough of what I took in college to recognize that Sudane's suggestions aren't out of left field.

That said, I'm not the one doing the accounting, and the arguments I myself made about US$ remain just as valid.

All I see is someone who thinks we should re-do the entire fiancial setup a different way from the way we are currently doing it, even though it's against the advice of our leading finanical expert, who is by the admission of this same person the only one who understands (completely) the way we do it now.

Pretend Government aside, that's the bottom line to me.

I am just getting so tired of these debates where no one says much of anything but one person (and the poor soul trying to defend themselves from this one person), and the odd time someone chimes to help them or say what they think they are just brow-beat into submission or ignored. I have had to comfort several of my friends at times who are shaking and upset at the end of the day (as I have been myself), over this stuff, and it's just wrong.

These kinds of debating tactics are childish in my view, and they leave the person engaged in the debate with this person few options.

1) get mad on the forums (the other person wins)
2) walk away (the other person wins)
3) argue consicesly about the subject at hand in a logical way (the other person ignores you until you go away)

(then they win)

It's easy to see why someone would employ such tactics, but government by filibuster or merely through exhausting your opposition is not government, it's just rule.

WTF is the point of all this?
Are we all having fun?

I'll try.

There is only one "pegging". And it's published at the top of every page of the Land Journal. It was set back in May. It currently says that the US$ is equal to 250 L$. It also displays a conversion rate for those payments received in Lindens, to cover the GOM conversion fees, which we had decided to charge. It is written as .1, which means 10% (sorry I never converted that cell to display in the percentage format).

Those numbers are the "rates" which we apply when we prepare a deed, or when someone asks: What will I pay in Monthly Fees for such and such piece of property. As you know, all the parcels of land have a dollar purchase price, a linden purchase price, a dollar monthly fee price, and a linden monthly fee price. Those "rate" numbers at the top of the page, along with the m2 of the parcel, and the location of the parcel (whether inside or outside the walls) determine the prices listed next to each parcel. If, for eaxmple, the US$/L$ rate is changed from 250 to 300, all the Linden prices, both purchase and monthly, will go up.

If in fact I am instructed to set the monthly fees according to the GOM rate on the first of the month (which I feel is a reasonable strategy), then changing that number is exactly what I will do. Changing it will affect all the Linden prices on the page.

In that sense, it could be said that all our Land Rates are already based on the dollar. Only, we have never taken the step of changing the exchange rate in that box. And, please, it was never the stated policy to do so. We factored in a substantial (10%) GOM rate, and a substantial m2 price and fee, well over break-even, with the intent that this should cover any of the fluctuations in the value of the Linden that we had seen for at least since I joined SL in November. It was felt that when people signed a deed for their land, and decided to pay in Lindens, they should have the priviledge of knowing, from month to month, what their fee would be. If it was going to change (for whatever reason) it should be so decided among everyone.

That Land Journal is the underlying economic document. The assumptions are there, in the box at the top, and changes should be made to those rates as needed.

The accounting system keep track of all the actual transactions. There is no "pegging" that we have done in the accounting system. The funds that have been loaned to the City in US$ are recorded in US$. Funds which have been loaned or paid to the City in L$ are recorded in L$. *And*, there is a place in the books where the current exchange rate, as published on the GOM site, is entered.

So where is the confusion? the confusion is there because we *must*, as we all agree, do stuff in both L$'s and US$'s. Sometimes in the one, and sometimes in the other. And, because the GOM exchange rate changes, the value of any sum of money will change.

When monthly fees are paid to Rudeen, the value of her account goes up. If everything is reported in US$, the Rudeen account must of course appear on the statement (Rudeen is officially known on the statement as the Treasurer Avatar), and the balance in her account will be one number on one day, and a different number on the next. Nothing has changed. No futher funds went into or out of her account. Only the exchange rate changed.

With a dual currency system, you can't help this. In fact, there is an account on the Income/Expense Statement to take care of this, called the "Gain/Loss from Currency Exchange". Whether we report in US$ or L$, there will always be some accounts in US$ (the Paypal account) and other accounts in L$ (the Treasurer Avatar). The exchange fluctuations will some days make us money and some days lose us money. The changes go into that account, so that the books stay in balance.

There are two issues here that I see. One issue is the setting of the US$/L$ exchange rate on the Land Journal. This will change what people will owe for their monthly fee, and it will change what new purchasers will pay the City for their land. We must decide what our policy will be regarding each of those "rate" numbers:

1) US$/L$ exchange rate
2) Fee on top of the exchange rate for L$ payers to pay for the GOM conversion.
3) Percentage representing how much more land costs within the walls than outside.
4) Basic m2 rate to buy and to pay each month.

The other issue is reporting. Since US$ accounts are kept that way, if people need any particular account register published, we can do so in US$. Same goes for L$ accounts. All the accounts appearing on the Balance Sheet, the lists of money accounts, the lists of loan accounts, can be reported this way.

The bigger problem are the Income and expense accounts, and the overall accounts: the Balance Sheet and the Income/Expense Statement. These reports include funds, even in one account, which could be in L$ or in US$.

A really simple example. Our primary Income account is "Land Tier Revenues", my name for the monthly fees. Since some people are going to pay in US$ and some people are going to pay in L$, the account has to contain amounts in both currencies. How do they relate into a single list of values? Via the exchange rate inserted into that box. How does that report display? In the "Home" currency as originally established. The "Foreign " currency amounts are listed, too, but they are all converted by the program into the home currency. You can only add up a list of numbers if all the numbers have the same basis. Otherwise the report is meaningless.

Here's a suggestion. Let us identify each of those accounts where we want information in the currency of its transactions. An example might be a bond account. A bond holder might logically wish to see there account in the currency it was purchased in. So the bond holder might receive a monthly "register" (list of transactions, with running balance) in US$. That would be no problem.

If it is decided by the citizens that they want published the monthly "register" of the Land Tier Revenue account, in US$, then we have more of a problem, but a solvable one. With the "Home" currency set as L$, that report would only be available in L$, with the raw US$ in the report, but converted to L$. But if thats what people wanted, that report could be exported to a spreadsheet, and converted using the current GOM rate, to the other currency.

Finally, the same could be done for the most important reports, the Income/Expense Statement, and the Balance Sheet. Nothing is as important as these; you cannot judge the health or sickness of a company without these. If the people want to see them in US$, then perhaps the same technique of export amd convert can be done.

Sorry. Its not short. Its not simple. Maybe we can eventually see some clarity about this, because the decisions that we face in the financial area are really very very important.

Let me add one more thing. I have been lobbying for some weeks now, probably months, for a "Finance Committee", a group who can commit themselves to getting a bit more in depth understanding than we are able to achieve here in the forum. This group could share the understanding of the issues, make certain decisions, and bring larger issues to the citizens as a whole. I completely share the opinion that people should not have to rely on my word alone about these matters. They are far too important for that. And yet, thats just what we have to do at the moment. Forgive me, but I do understand accounting, and I do understand the complexity of two currencies. What I am not is necessarily very good at is explaining this. A committe, I feel, would be a very wise way to plan the finances of Neualtenburg in a responsible manner.

I have prepared a detailed job description of my job, in which I have landed by default, for examination and approval by the Guild, which appears to be the appropriate entity to establish such a position. I'll give that to Kendra shortly, for her to decide what to do with. I have not included any reference to my interest in a Finance Committee, but I will do so if people welcome such a proposal.


Sudane

Excuse this humble subject for the interruption my Queen, but you do *not* know what I think.

If you check your posts, particularly on threads where you are arguing with me, you will find that you continually employ this rhetorical device that you, "know what I think" (and then procede to prove that what I think is wrong).

It's very clever, but innacurate.
Please stop, thanks.

From the perspective of the city we have one large bill and 25 sources of revenue all locked to a US$ fee. From the perspective of the citizens they have 25 bills being issued by the city that are pegged to a constant US$ fee or a floating L$ value.

As you can see the city's income and expenses are entirely in US$. The small amount of money we do collect in L$ is converted to US$ before paying a bill. (Note that I don't know how many people are paying in L$ because we have no registry. Also, I can only hope L$ payments were converted to US$ before the dive o' the L$ otherwise we lost a bundle. Again, I can't tell because we have no registry.)

This is false.

If there is a registry, how does one compare the health of the sim (or land ownership of citizens) from month to month. Here's an example.

Nburg Jan Total Income L$5000
Nburg Feb Total Income L$6000
Nburg Mar Total Income L$4500

Did these values change because of a floating exchange rate or because we have more or less citizens? Which month did we do the best? Is each month recorded in it's own exchange rate or were Jan and Feb normalized to the Mar exchange rate?

Let's do the accounting in the only stable currency that matters and then list it in L$ for those who want to see it that way. For things like in world sales, we can list things in L$ since that's what the currency of sales is.

~Ulrika~

huh? All I was saying was as a guild member you have a say in this. I'm confused.

Sorry.

I was trying to be kind by seeking understanding. Let's go ahead and take this offline, if you're upset about it. You can send me a PM if you'd like.

~Ulrika~

While I am not in a mind right now to address this thread. I will address this part of a post.

With all due respect. If you think this is a "pretend" government... then perhaps the government negotiations are something you should not partake in. You can be a citizen of Nuealt and not partake in our government.

To call our government "pretend", insults a lot more of us than your intended target.

I am only thankful this is not a government of dictators like some claim. Because after a crass post like this, you would be gone in many opinions. Thankfully we have free speech here. Perhaps we can use that advantage and remain adults?

Understood.

This means that the cost for land is constant (pegged) in terms of L$, which means the revenue collected in US$ changes in time. This means that the revenue collected in US$ by the city has been dropping as the L$ devalues, while our bill remains constant. It also means that those paying in US$ (myself) are paying about 15% more per m^2 than those paying in L$ right now.

Is this correct?

Also, I need to know if the investments are constant in terms of L$ or US$. I believe you said that they were constant in terms of US$, which means the devaluation of the L$ didn't affect investments.

Is this correct too?

If so, I'll dive back into your post and go further. I know we can find a solution, if we just get on the same page.

~Ulrika~

And then how do we list those sales in the books, Ulrika?

Again, I see advantages in doing it both ways. But I want to make sure the advantages of both ways are throughly understood before we make a snap decision.

(Also, since I'm editing this, to save a reply: I don't care which way we go with the books, ultimately, save that land fees need to relate to a percentage of our total US$ sim bill, but I am *definitely* against adding artificial middlemen in an attempt to have it both ways. If you want to convert, we've got a perfectly serviceable open market for that.)

::::mumbles something about a cottage industry of shylocks and userers and wanders off:::::

We list the city finances which relate to land-purchase and land-use fees in US$, since that is what our liabilities are in. Is that what you're asking? Be very specific.

~Ulrika~

ALL of our income sources, Ulrika. Or are you now proposing that Neualtenburg shall only lawfully derive income from land-sale and usage fees?

I am not suggesting we pass any laws to limit sources of income.

I'm just discussing the appropriate currency to lock our land fees to (since I just discovered they are floating with the L$) and then discussing the appropriate currency to display the information in.

You all understand we can publish numbers in both US$ and L$ right?

It's just that we must lock our income to our debts and not allow a drifting currency to make a mess.

~Ulrika~