17.7M in Sinks to a whopping 59.2M in Sources!!

https://secondlife.com/currency/economy.php



No wonder the value of the linden has been on a constant and steady downward slide.

Where are all of the pro-stipend folk now who vehemently assert that sinks outweigh the stipend outflow, or that stipends aren't a problem?

* hears crickets chirping *

Tell it like it is Brother... Amen!!!

Linden Labs is flooding the currency supply and
pushing down the linden dollar valuation...

Welcome to 2 weeks ago: /130/f6/101285/1.html

Note that there's a big difference between these 2 statements:
- sinks outweigh stipends -> False but I haven't seen anybody who put it like that anyway
- stipends are not the problem -> True but the hype is they are

The fact that money is created says nothing at all. The question is not "Does the total money supply grow"? The question is "Does the total money supply grow faster than needed"?

In Mar 2005 every existing L$ was used on average 1.57 times.
In Mar 2006 every existing L$ was used on average 2.71 times.

Even though a lot of money was created since Mar 2005, every single L$ is needed significantly more today then it was back then. There are many more ways to look at it and all will tell you that the global economy is booming. It is in transactions, volume, ... Yes the L$ is slipping but in the end it won't matter as long as volume increases outpaces the devaluation (which looks to be true upto now). For an individual it may look like a bad thing but you can not measure the global SL economy by looking at the effect on individuals. As a whole the economy is healthy and if the L$ devaluation get somebody to quit the current boom will assure that others will be there to take their place. The consumers (who drive the economy) are spending and buying L$ like never before and for them the L$ rates are good.

Bleh...

I've never stated that sinks outweigh sources, personally. But I do believe that eliminating stipends (especially the basic stipend) would be a very bad decision. I still feel that people carrying more Tier than they can afford is the main cause for the devaluation, as they leap-frog each other to get their L$ sold asap.

The main cause for 'devaluation' is people undercutting eachother-whatever the reason. But getting them to agree to a price is like herding cats.

As for my stipend, I'm Premium. I pay for my stipend. Recompensate me or keep it.

surely you meant to say 'nah nah nah Ive got my fingers in my ears not listening'
or is that what 'bleh' means?

Where did this come from? I'm missing it on the page.

I am assuming he is looking at the turnover rate of the L$ according to total volume traded over the total L$ in circulation.

Why must people be forced to sell at some arbitrary price that
"you" feel is acceptable? Why not let "The Market" decide on what
the price is for the Linden Dollar?

If you don't like the L$'s decline in value, request a solution to
the LL economic policy that created the decline in the first place.
Controlling the market isn't the solution. It would only mask the
underlying problem of what created the demand to sell in the first place.

Free Markets are THE BEST ways to determine value. Not Controlled
Markets forcing prices that are pulled out of thin air. Just look at what
happen to real world economies who's governments tried to control
prices of goods, services, and their currency. Ask the Argentina Govt
why they pegged their currency to the USD and how it felt once it
drove them into the toilet with a currency devaluation.

Well the one thing missing in those statistics is the outward flow of US dollars in membership fees and Tier. You could then convert that to L and it would far exceed the inflow from stipends. Unless you figure in the cost of that membership flowing out, you are only looking at half the picture.

Um ... the reason that information is missing from those statistics is because that information is not relevant to those statistics.

Try as you may, membership fees and Tier cost fees payed in USD to LL are not sinks.

Furthermore, a make believe pretend conversion of those USD to $L to somehow project the appearance of a sink accomplishes nothing when you finally wake up and stop dreaming.

You know, the good net result is the value of the USD to the linden is rising, buyer side. Since I don't sell thats the only side I care about.


Maybe I'll drive the linden up some more tomorrow.

In Robins data:
GDP / Money Supply

It's one of the (many) basic metrics you can derive from it. Off course just like the rate it can be misleading but given the fact that all trends except the rate are pretty good (e.g. active users, trade volume on Lindex, ...) it's probably quite valid.

That's because membership fees and tier money have nothing to do with the Linden dollar whatsoever. That is money paid for a service rendered, it goes on LL accounting books to offset the cost of doing business (and hopefully generate a profit). Your scenario assumes LL would write off total revenue on the books as a liability since it would all be distributed back out again (paying the users for their virtual dollars). It would be a very aggressive approach to strengthening the SL economy but it's never good to show investors you generate no revenue.

Cries

Actually what it looks like to me is something very different.

17 million out, 52 million in, which means 2/3 of the money in remains within the community, and only 1/3 gets spent out of the game, the rest staying within transactions between players or own holdings.

Thinking of it as tax, I'd say 30% taxation was quite high.

Lewis

Then you better take away the ability to buy L$ as well. I'm usre if you added that influx to the statistics, you're gain in L$ would shoot through the roof.

A large percentage of those "stipends" come from premium holders. Thos 500L$ payemtns add up faster than the 50L$ ones after all. But they are PAID for, same as buying L$ directly.

I'm willing to bet that a true statistical anylisis showing only LL "generated L$" that is created out of nothing to pay basic accounts is far under the sink level.

Food for thought,
~Jessy

Most people rely on their stipend towards their regular spending, be it purchasing other stuff, uploads, classifieds, listings etc.

I know that if the L$500 a week premium stipend was stopped (assuming of course the premium account fee was adjusted to compensate) I'd probably just end up buying L$2000 a month from Lindex instead. So L$2,000 would still be entering the economy whether I pay for it on Lindex, or pay for it through a Premium account. I see things I want, make a note of them, and then when I can afford them I go and get them (be it through sales in my store, donations at my club, or game fees from my Lasertag set) - or if I can't wait, then I go and buy L$ on Lindex.

I'm willing to bet that the vast majority of players would do exactly the same thing.

So removal of stipends would most likely hardly affect the economy in any real way - giving the natural conclusion of save the hassle and upset and just leave 'em as they are.

Lewis

If stipends ended and you bought L$2000/mo off LindenX,
you would be buying existing linden dollars already in the
money supply. Whereas Stipends continue to add to the
money supply, causing the L$ valuation to fall. Assuming there is
no new widget/service/investment to spark increased demand
for the dollar.

If you leave the economy as-is, the most recent econ data suggests
shows the currency float is L$650/million with a growth rate of around
L$40/million per month. If supply and demand for Linden Dollars is
50/50 right now, the value of the L$ will flatline around L$300.
As Linden Labs continues to add New Linden Dollars to the currency
supply at the rate of L$40/million a month and there isn't a matching
Demand for L$40/million a month from the SL Community, you will
get a Supply/Demand imbalance. Too much supply, not enough demand.
The net result will equate to a falling Linden Dollar.

This is the number one reason the Linden Dollar continues to fall
month after month. There is too much supply and not enough demand.
The solution is for LL to either reduce the Stipend Supply or figure
out new tools, widgets, etc that will spark a demand for Linden Dollars.
Build up the demand side of the equation and you will see a rise in the
L$'s valuation.

Where is the 2005 data?

Cutting the ability to cash out would no doubt drasticly cut down on the supply too...

Lewis

Thanks for the economic lesson. I just asked where you found it, because I can't find anything from 2005 on that economic stats page. You mention Robin's data, so I guess you're looking at a different source altogether, or I'm just not reading closely enough.

If it's the former, could you tell me where I can find the source?

Actually, if you read Robin Linden's posts on this (sorry, not sure where the link was now), he goes over that the L$ is losing value due to there not being neough of a supply. The L$ is becomming rare and so it's value increases in the inworld market, driving prices up as the demand rises for the small supply.

That's why LL wishes to add an influx of L$ into the economy (and does so now through stipends). It puts fresh currency into the economy and lowers the demand for the L$ while raising it's value.

The actual problem right now is the explosive growth of SL. The economy can't keep up with the world, so-to-speak. Eventually it will level out, but untl SL reaches a poitn where the growth seems small, the ecomonmy will always seem to be suffering. It is, but only in the short term as it adjusts to the new world.

Yes, if LL flood the market with L$, it's jsut as bad. A good economy requires careful balance. To date, I've not seen anything worth panicing over. The info comming from LL shows they are looking into the future instead of jsut the here-and-now, and planning for that. Short term fixes (such as removing stipends which are a steady influx of L$ into the market) will simply cause larger problems in the future.

A view of teh whole needs to be look at and acted upon, and I believe LL is doing just that. We now return you to your unsubstatiated panic attack. Have a nice day. ^.^

~Jessy

I don't quite know how to respond to this Jessi, but did you actually think this through before you wrote it?

Try it and then get back to me, mkay?