Increased fees for rapid currency selling

While I believe that it's difficult (if not impossible) to control a market, I would be very interested in hearing other people's thoughts on what the impact of increased fees for rapid currency selling might be.

Proposal: if Linden Lab were to impose a fee of: ((price-target)/target)/2 as an extra fee for anyone who sold above the target price, and rewarded those who sold at or near the target price, would that encourage people to hold onto their L$ for longer, or at least until the market neared the target L$ value?

There would be a flight to other currency exchanges which did not have this artifical fee, but my study of the volume on the other exchange (SLExchange) makes me think that the flight will me a minor one at most.

The fee would have be set at the moment the L$ is listed for sale rather than when it actually sells. If the market shifts towards the target, the fee would have to be adjusted such that it goes away so that LL can cover their transaction / fraud costs.

In a way, the FOMC performs a similar function when they buy and sell treasuries on the market from a desire to control interest rates and inflation.

The economy is not sound.. so instead of fixing the economy and acting in ways that don't induce mass panic, the solution is to.. rig the market? No, no extra fees, no thank you. The market should be allowed to run free, as should the rest of the economy. The ability to enter limit buy orders would be nice though.

You can't control the market. There are other platforms to use. You have Anshe, IGE, and SLeX to name a few. If the fees are too high on one market, people will move to other markets to sell at a higher profit, even if it is less per L. Market control will only work if you have an unlimited supply and demand at fixed prices.

Well, you can 'influence' the market by providing, or not providing certain features, imposing certain levvies, etc. However; long term this isnt such a hot idea.

Having the default sell rate set to the days median transaction might be a way around this somewhat; since a single person selling way above the market rate, cant have that rate sustained.

-Adam

This would badly discriminate land dealers, because, in contrast to e.g. content creators, every day we need turn over the very huge volume to earn the slim margin. This mean by nature of our business we are constantly doing the "rapid" currency selling. The only result from such "feature" I could see would be higher land prices for end users.

That's a very interesting point, Anshe.

However, correct me if I am mistaken, but a part of your business is to buy up assets which people are trying to sell quickly and you will profit by providing a liquidity service.

In other words, by having a business balance sheet which lets you take on the risk of holding SL virtual assets, you provide a value proposition for SecondLife users and thus are compensated appropiately.

Ideally, a rapid currency fee would be the same thing. By purchasing L$ and holding it, you would be rewarded by a fee that others are paying for by not making that investment.

I can see that. But I think you still confuse one symptom with the problem.

It seem to me that you believe that for L$ market it is one problem when some impatient people underbid each other by sell L$ cheap to get it move fast.

However, one *healthy* market will very easily consume those fire sales. If on one given day there is as many buyer as sellers, then all those fire sale orders as well as the normal sell orders will have been filled at end of day. There won't be more and more and more sell orders piling up on top of each other because there would be as much buy orders.

The *real* problem with L$ is however that there is still more supply than demand. Obviously the money sinks is not enough and too many L$ are still added to SL. This seem to lead to the steady inflation. The only times we saw this trend seemingly reverse was when IGE horded L$ heavily! When LindeX was opened, IGE paid too high for L$ and increase their stock by more than 20 mio L$. As soon as they stopped this, the L$ started to loose value again.

Wether some people fire sell their L$ below market value or not has zero effect. None. Nothing. At end of day the only thing that count is: Have all sell orders been filled with buy orders? Or are unfilled sell orders left, piling up day after day after day?

Anshe is correct. One of the prime values of a free market is the ability to sell your (whatever) immediately, 24/7. Putting "collars" on price or frequency of transactions restricts the free market. It can have the temporary effect of postponing panic buying and panic selling. Sometimes this has merit. But except for extraordinary circumstances (such as the 9/11 event after which the markets were closed for a week, while market infrastructure was replaced and the transactors found new places to stand) collars simply put off til later the impact of market forces.