Supply-Side Economics (or why Inflation will continue to persist)

I believe the current inflationary environment will continue for the forseeable future due to a couple of supply-side economics.

1. Money inflows are greater than outflows
2. Content is never destroyed - every month MORE content is introduced to the virtual world and directly competes against all other existing content (not saying this is bad, just saying it happens).
3. The increasing amount of content has to compete against existing content, resulting in a gradual reduction of content prices (old content's prices get slashed to be more competitive).
4. As the world gets older there are more Freebie items, therefore less need to buy "Premium" content.
5. LL may start printing L$'s to sell to the public directly.

So, all in all, I believe it is possible we are experiencing inflation due to supply side economics. Some will say that we need to examine the demand side, but the number of concurent users is growing slowly, much less quickly than the supply side.

Just my current thoughts.

Doesn't matter about old content..... people develop better content.

People will spend money buying the new "x" and leave the old one in their inventory, sell it on, or just delete it.

Happens in real life, why not in SL?

Not everything will be available as freebies, ever... so there's still a market for everything.

Lewis

#3: I noticed something funny over the time that I've been playing. I've sold a copy/mod/transfer pack of games, that I got for 15k when I started. Today, they are available freely around, some people still sell them for $100-200 each.

#4: We just need more people like you to counter that. (So sorry, just bandwagoning here. )

Yes Lewis!

You can add some more thousands of (unrelated) reasons :
- We're in may, and it's just after April
- The USD is falling against Euro
- There is more private sim
- There is too much "land baron"
- LL Sell too much land
- LL has planed to sell L$
- This forum isn't enough moderated
- Intelligent design is unpopular
- There isn't enough cultist in SL
- LL is sued by a player
- Anshe didn't created the A$
- Yard sale is evil
- In the beginning, before bandwidth, there was nothingness. Out of that endless void God and His heavenly host created...Arpanet, and it was good.
- <insert some ponzi scheme business>
- the so-called "french fries" aren't french.
- The impeash bush guy left the game.
- ...

That's good - because content inflows are also greater than outflows. All the time, there's new stuff being added to the world; stipends just keep the money supply balanced with that.



It's more usually new content creators who slash their starting prices, because a) they can't charge a premium when they're unknown and others are known, and b) they'd rather sell to a large number of people and thus get a wider established reputation, than sell to a few even if doing so would make more money.

Supply-side didn't work the first time, when RR the dimwit tried it in RL.

Maybe the whole problem is due to corruption? Example....ppl who sell a million L's on e-bay at 500 per USD so they can drive prices down adn pick up 2 million? Or maybe it's "employers" who not only do NOT pay thier employees but take a percentage of whatever tips thier workers earn? Or perhaps it's those ppl who search hard for free content to resell to unsuspecting newbies at 400-600 L's? ( didn't name names)...or perhaps it's a combination fo all of the above. To my6 mind the obvious fix is enforcement in the form of Linden cracking down on those aforementionned ppl.

Who in their right mind would sell 2 million Lindens at 500 per USD?

Arbitrage will fix these issues.. If Linden Dollars on eBay are
being sold for L$500, somebody will snap them up and sell them
for L$310 on LindenX.

The market will balance itself out to find the correct price.
Any assumption of what the Linden Dollar should be, is a
misplaced assumption.