Has Second Life Outgrown The Linden Dollar?

Has the Linden dollar crashed out for the last time, do we need a real currency for continued growth, like the US dollar?

Some would argue that the USD is not quite as "real" as the EUR

No. I think this world needs it's own currency. As "countries" develop within this world, it would be nice to see other types of currency created as well. But I imagine that will be something that would only happen over the years and no time soon (though it is something we are already talking about in Neualt).

I do not think the US$ should be the currency of SL. I think the Linden Dollar should be. If we screw up our economy, it is our fault, and our charge to make it right again.

Those are my thoughts at least.

I don't think I'll ever feel happy about linden dollars anymore. They're like the mud under my shoe. They're nothing to me. Their value just sinks and sinks

The L$ has a lot going for it. Built-in support for L$ transactions in the world is a big one. Also the legal fiction that it's only "play money".

However, a stable L$ is more useful than a volatile one. To have a stable L$, we need sound monetary policy. Hm, maybe LL can hire Greenspan after his impending retirement as Fed chief... because Philip apparently is no Alan Greenspan.

I suggest LL look to the in-world banking system (ie ginko). My pet theory is that in their economic models, they do not consider the increased liquidity to the system brought about by banks. If they even have models.

Riddle me this: Why is the L$ going down when the median balance is also going down?

Sometimes I wish I were an economist.

With so much L$ in circulation how could we possibly switch over now? Who will take all these surplus linden$ for real currency once linden$ stops being used?

besides, the value of the Linden is still the same 1L$ = 1L$ The Linden is quite stable.

It's the value of our time investment that is getting cut in half.

Everyone's obsession with profit has made us lose sight of value.

After all it is the residents who decide how much to sell things for not Linden lab, they just supply the means to trade goods and services. So instead of complaining how the value of the L$ is not the same as it was a few months ago etc. do what they do in the real world. Adjust your prices.

--- I predict that by 2006 you will see things in shops selling for 1000's that used to be 250

I know right now Im cotting close to breaking even with tier, so Phobos Design is likely to be adjusting prices. I still design for fun, and as long as I can cover my land (private sandbox) that's all that matters.

Maybe this is a bit off topic and belongs in a new thread though.

Try saying that in Weimar germany, when hyperinflation hit, and notes were worth less than the paper they were printed on. But hey, I bet a worthless mark then was still equal a worthless mark.

We should all go about our business. Inflation of the linden dollar is all in our heads.

Also, I just wanted to say, when you say we should charge more, that IS inflation! You charge more, and each unit of currency becomes devalued. THAT IS INFLATION and that is the problem. It's not proof there is no problem, not by a long shot.

Keep the Linden! As long as I have 1 paypal payment for *dues* I can buy whatever I want. When all these transactions start to pop up for a little here and there I'm gonna get in trouble with my husband.

Ok have to be a pedant here

Strictly speaking what we are seeing here is not inflation but currency devaluation. Inflation presents itself as an increase in the general level of prices within an economy, that is to say the purchasing power of money within an economy has decreased. So if all the prices of stuff in SL has shot up then thats inflation.

What we see here is more of a Currency Devaluation and this is the fall in the market value of the currency against other currencies.

But it's not like there is a shortage of L$ to be had, or a shortage of work either.

The economy is player driven it isn't controlled by Linden Lab, and it sure as hell better NOT be controlled by Linden Lab when they open their financial trading market.

All Im saying is that my time is worth what I say my time is worth and Im not going to wait on a market to "repair" in order to keep meeting my tier fee.

Im not going to hinge the fun I have in SL on some prayer that the fairy god parents are going to wave their magic wand and put the economy back to where it was a year ago.

There is plenty of L$ available, that is painfuly obvious. which means more volume in trades.... And then it becomes abundantly clear why LL wants to open a trade biz now doesn't it?? More volume in trades = more trade fees right? But I digress....

Look, if you need to make L$ to survive here then you gotta do what ya gotta do.. I think your USD trade idea is a solid one, been following your thread, and seriously hope it works out. Not being a keen scripter myself, I have to go another route within the game structure. I.E. raise prices...

Actually the two are the same, because it's all cause and effect.

In the hyperinflation of weimar germany, that actually came about because the Germans printed off many more notes to pay reparations for WW1. So they put more currency in circulation, and that meant the currency was worth less, and prices inevitably rose because people wanted more value for their goods than they were getting with some worthless paper.

This is exactly what's happening here. There's several million more lindens on the GOM. But they're a frozen ice block. Nobody can afford the $1m linden chunks, so they're out of our economy for the moment. But if either a rich baron buys them and puts them in circulation OR the seller breaks them up into bitesize chunks, there will be several more linden dollars.

That WILL have the effect of making the linden worth less, and prices will rise, and it's Weimar before you know it.

Note: I said "worth less", not "worthless".

Yeah, what you said =]

Hence why GOM has partial fills , small buyers can nibble away at those large blocks. The problem is there is a lot there and thats going to put a lot of pressure on the rate until those blocks are eaten away.

I didn't realise GOM had partial fills. That's a bad thing

I recommend switching to a complex bartering system using seashells and the pelts from small woodland creatures. An additional amount of sinks would also be needed to clean these seashells and skin these critters, and we have been looking for more money sinks, right?

<runs away>

No that is a good thing.

A very good thing.

What does that mean? "Partial Fills"

If I want to sell 100 blocks of lindens (a block is 1000L), I can put them up for a particular price. When a buyer comes along they can buy however many blocks they want from my order. They can only buy 10 or 20 blocks and partially fill the order. That's a partial fill. The remaining blocks are still available for sale.

A few months ago, if I bundled 100 blocks at a certain price, I had to wait for a buyer who wanted to buy the entire 100 block order from me.

Oh! Ok thank you! Yes. Why would that be a bad thing?? (question directed at those who think it is bad, not those who think it is good).

Well I prefer the old way, where one had to buy the entire order.
This allowed for variations in pricing for more convenient quantities of $L.

For instance let's say that someone put up 1000 blocks to sell at $3.30 per M.
A buyer would have to buy all 1000 blocks to get that price.

Now if I wanted to sell 100 blocks at 3.40 and the next buyer only wanted to buy 100 blocks, they would buy mine for $3.40 per block.

This was how it often worked with the old system, allowing some people to make more money by setting more convenient block sizes while allowing the big liquidators of $L an opportunity to sell cheaper without dragging the whole market down.

In other words, buyers did not get the best possible price like they do now. It's better now.

It is better now in that regard, but now I can't give "bulk discounts." I think the best way is to have both options there, just select if you want to partial file your order or not. I think that will make the most people happy.

Better for the buyer, for now. But as the value(cost to the buyer) of $L goes down, prices in SL will increase. Sellers look to their return in real money, not $L.

Why don't we go back to the old way?