Has Second Life Outgrown The Linden Dollar?

Sellers were allowed to set the price they wanted to sell a particular quantity of $L. If you wanted to sell cheaply, but in bulk, you were able to.

Buyers were able to select the best price for the block size they wanted.

Yes, now buyers get to purchase at the cheapest possible price.



I disagree. Part of the reason the market has fallen so rapidly IMO is that sellers are now more apt to "leapfrog" the lowest sell order.

Alot of people do not agree with my school of thought (Ricky and Philip included).

Some people beleive that the price of the $L should be the same, regardless of quantity purchased. They beleive that the person who is buying a smaller order should not have to pay additional. I respectfully disagree.

Then they must not like land dealers either. Dealers buy in quantity for less and sell in smaller chunks for profit.

I'm not getting into the problems that arise from trying to compare the $L situation to what happened in Germany, though I understand the point you are making.

I will say that, for some people, the $L IS worthless. As in, it holds no real value to them, except as a placeholder for whatever World Currency they prefer to pay their mortgage in.

This places a very real strain on the exchange rate. When I exchange $US for Euros (not being in the business of currency hedging), I do not view the two as essentially different. However, I do (and I think others do as well) view a $L as an entirely different animal.

Aside from the psychological barrier, the small total market of $L in circulation allows for unhealthy exchange rate swings from single actors. The market will see growing pains until it reaches a magnitude of $Ls that allows for equilibrium.

Though this is undoubtedly true, this is irrational market behavior and a true market would absorb this. Unless, of course, people truly feel the currency has no value.

A slice of A. Greenspan's remarks on economic flexibility today at the National Association for Business Economics Annual Meeting, Chicago, Illinois

Full Text: http://www.federalreserve.gov/boarddocs/speeches/2005/20050927/default.htm


"It is important to remember that most adjustment of a market imbalance is well under way before the imbalance becomes widely identified as a problem. Individual prices, exchange rates, and interest rates, adjust incrementally in real time to restore balance. In contrast, administrative or policy actions that await clear evidence of imbalance are of necessity late."

Until there is a minimum wage set in SL, the value of the L$ will never be even close to being realistic. With people selling things based on RL time spent and the value they put on that time ver. the Amount of L$ and average SL'r make ingame, they will never balance out. There needs to be a set minimum wage. From there people of all skill seets can base their fees and wages off of that. At this point there in no way a new person to the game can even come close to living "within their means" in this game. With the ability to basically make your own money, i.e. just go buy more when you run out, will ultimately be the downfall for the value of the L$. Some have argued that this ability equates to a loan from a bank and not making your own money. I disagree. If you never had to pay a bank back for your loan they would go under.

Im getting off topic as usual. KEEP the L$. Just need to come up with a minumum wage, LL, so that we can see that we are asking people to work 4 RL months at two hours a night just to buy an outift to wear.

Since a seller is probably not ever going to sell for
less than they paid, then even the BEST "discount"
would provide the seller with a small profit.

In that case, w can better look at it as:

The rich (who can afford LARGE amounts) can pay
and amount closer to seller cost, while the majority
of the "players" who impulse buy smaller amounts
are forced to pay your higher markup prices.


Yes, I can see how the old way is better then this
new way of partial fills.

Gabrielle

The value of the $L is very real. What would you consider realistic?


A premium account gets a $500L per week stipend. That is pretty good.
Basic members are pretty much required to earn or buy $L if they want $L to spend. Remember, the fact that people will buy $L w/ RL money is what gives $L's value...


Purchased $L are not created from thin air, they are purchased from other players. This adds no currency to the economy.

The point is... The less you pay for $L, the more you will end up paying for stuff in SL. Either way you pay the same in real dollars.

Yes... I understand that in the end people want to make
a certain amount of $US. Depending on the exchange
rate that might be a lot of $L or less $L.

You missed my point...
Which was:

When people sold "entire complete blocks" and gave
higher prices for smaller amounts, then this meant
that the normal impulse buyer/player was paying
more (more $US per $L) than the rich people buying
the larger blocks.

Gabrielle

Yes, I saw your point. But the idea is, if you, as a small buyer, pay more for $L, small businesses within SL can sell their $L for more(what you pay). If only big sellers sell for less, then you would be forced to buy from the small guy from whom you buy goods, or buy from an $L dealer. That will keep the overall price for $L higher.

Well, that's the idea anyhow..

I think the disagreements ultimately lie on peoples perception or point of view about how GOM should work.

I think one school of thought, namely the people who think its ok to put in different prices on quantity view the market like a high street supermarket where the more you buy, the more discount you get.

Then there are those who see GOM as a the start of fully fledge Forex Exchange in which case, discounts don't exist and its all about the market and ensuring that the market is open and fair to all.

Personally I'm in the Forex Exchange camp, I think having to pay more for smaller order size makes the market less liquid.

This is simply not true. The linden was falling before partial fills and after partial fills, the longer term trend was simply not altered much if at all by the introduction of partial fills.

Keiki has the right of it. The big traders can make the GOM "bump" a little in one direction or another, but they cannot stop the overall trending, which is the result of pure market supply and demand.

For a while now, the average demand for lindens has been lower than the average supply being put up for sale. When this happens, the price drops.

LL has taken two measures to attempt to increase demand again:

1. Kill the weekly ratings bonus.
2. Entice more players into the game (yes it's a game =P) by offering free basic accounts.

It takes time for government intervention like this to show its effect on the market. Will these two measures be enough to counterbalance an increase in the supply that is created by lack of confidence that the exchange rate will rise again? Will there be even more people dumping linden on the GOM (thereby increasing supply even more) than LL can counteract by their two recent measures? That's anyone's guess at this point.

As long as LL allows a "lasseiz-faire" market for the GOM, we are all subject to both the long term supply-demand trends *and* the day-trading "bump" effects of the major capitalists who can afford to trade million-unit blocks on the market. The only way to directly stabilize the GOM would be for LL to establish the SL-equivalent of a Securities Exchange Commission to regulate the market value more directly by limiting the effect of large trades by the major capitalists.

Here is how I understand why we need a Securities Exchange Commission. The SEC doesn't control the number of trades. It watches for cheating. An example of cheating would be when a trader corners a market by buying up the supply, thereby increasing the value greatly; then sells quickly before the market can adjust for the flood.

Another example would be, selling a very large number of shares to flood the market, then buying them back at a discount after the market adjusted to the flood.

This is my understanding of why we need a watchdog agency such as the SEC.

While I think these kinds of scenarios are possible, usually there are almost immediate bounces that make this kind of trading extremely risky. For instance someone (maybe a few people) must have sold some huge orders today (probably mostly the IGE dump). Briefly, very breifly, the price was forced all the way down to $3. It's now bounced back up to $3.30. If those sellers had in mind driving the market down, they only really succeeded for a couple of hours, if that. If they bought back in now, they would have to pay much more than they sold for.

Markets tend to be very elastic in the shorter term. There can be big swings but they tend to bounce back making people who are trying to manipulate it fail.