Dealing with the devaluation of the L$

what alternatives can LL use to stabilize the L$? right not LL mints L$ such that players can pay for goods and services with stipends, but the money they pay L$ for their stipend never reaches the content creators and service providers, thus aruguably deflating the L$ value. what can be done to make money exchange hands effectively?

posts from derailed thread:

Apparently, all you have to do is announce the closing of the most popular currency exchange. The linden has bounced up to $3.60 and appears to be gaining fast.

http://www.gamingopenmarket.com/market.php?symbol=SLL

The Lindens are renting out the new combat sims for 8000L$ a day.. Lots of little things like this are the way to go if you ask me!

there is a scramble to stock up before GOM closes. So there is some hoarding going on, which does NOT bode well for the longer term value of the currency.

Buster

who is the "they" in this statement? Are you saying the RL currency paid to LL in service fees, which is then given back to the consumer in $L stipend (in part) never reaches the business owners within SL?

Why not just cut out the middle man and create a secondary economy based on local (national) currency? USD, GBP, EUR. I know Linden Lab can't do it directly, but if you start to advertise your stuff in local terms, are we just looking for a central clearinghouse, essentially? So, why not? Why bother with the micro-economy of L$ anyway, besides convenience?

I know we wanted a 'country' of SL with its own currency to thrive, but perhaps its just too inefficient.

Just throwing it out there. I don't sell stuff, but I'm not going to tell people who *do* to just 'stop doing that'. I think we can both be happy, creators and sellers.

yes sorry for consufing run on sentences.

Convenience is a big player in a micro-economy.

Actual L$ value relative to other currencies only comes into play if you want to convert your L$ to those other currencies. Businesses in RL that trade with different countries and currencies have exactly the same problems as we do with varying currency values.

I meant that the underlying economies have less of a chance of imploding, but I do see your point about convenience. Perhaps there are other ways to foster ease of transfer other than using lindendollars?

As a microcurrency, the $L is probably the most successful example, like, anywhere online. As a concept, it's been touted for at least 5 years now, but no one really got it going, until LLab.

Once/If the Lindens get their currency thing up and running, the economy will go back to normal.

In the meantime, I'm investing my money into a few of the companies that work within SL... I intend on making some money while I'm waiting.

LF

One word: TAXES
Three letters: VTA

1. Micro payments will probably show a huge overhead in costs. The way L$ can be 'bundled' on exchanges fixes this.

2. Account data from LL can't be transfered, which means the whole paypal/credit card debacle again for all residents.

3. Most institutions will not back up trades in virtual items, because of the (real or imagined) risks involved.

4. It will not allow for stipends (pay LL 10US each month, and get 4-8 US back???) This would be stupid (and ruin LL in the process, as atm printing L$ cost them nothing. ) Without stipends SL will become unattractive for a lot of the 'game' oriented players.

5. It will strip the 'less real' psychological effect of the L$. People often have less problems spending money which they consider less 'real'. When everything in SL is priced in RL money, people will compare SL virtual items agains their budget more quickly. It's no longer: buy the cool virtual shoes, or buy the cool virtual car? Now it's: buy the cool virtual shoes, or (eventually) buy REAL shoes.

6. It won't effectively change anything. (except for the stop of stipends). Any RL currency is as real or imaginary as the L$ is. Most of the world's money is numbers in big databases. Being more established and having a larger backing of users, doesn't make them more or less real than the L$.

I absolutely agree. We were talking about this subject in a meeting the other day IW. I think we need more "luxury" things like this, that don't cost LL anything, are desirable by resident but not essential to their fun, and are paid for in L$ only of course.
The hard part is finding these ideas ; the combat sims is a good one.

Agreed. In the real world, you have the ability to hedge your exposure to currency fluctuations, but it still hits businesses when an exchange rate falls the wrong way (or too much the "right" way).

We are cross-border by default, since most business expenses have to be paid in RL$. Unfortunately, I don't see hedging structures emerging anytime soon.

It may be that there was a certain amount of inflationary pressure due to excess L$ creation by LL, but now with the changes, we shall see the exchange rate steady out around the mid $3 dollar range. Prices of in-world goods might rise accordingly and then stop while the currency once again steadies out.

However, so much of the equation here is simply market psychology and fluctuating demand for in-world goods (or lack thereof), so who knows...

yes, and then they pay out thousands of L$ in prize money -- newly created and issued currency, not currency purchased from the exchange -- essentially buying creative and development services for free

The payout amounts may be a drop in the bucket right now compared to overall L$ creation, but i still see it as a symbolic slap in the face to the creators in world. Dilution is dilution. It may be a smart business practice, but it's kind of exploitative.

Actually, the money sinks are the things that cost LL real money, as they're basically offering a service to the residents which requires payment, and costs LL RL money/time to provide (just like all the other services residents provide). And afterward, instead of selling the L$, they burn them.

IMHO They're basically obligated to the community to provide these sinks though. As they're taking real US payment for stipends, which cost them nothing to make. And I think that LL should provide as many of them as needed to counterbalance the printing of L$ and stop the resulting inflation. They're paid to provide the sinks with the monthly tiers.

This could even be a 'wealth tax'; pay a percentage of your L$ each month, as the current system and caused inflation basically does the same in an obfuscated manner. This isn't my preferred solution, though. I'd love to see better/more intelligent sinks.